Another Incorporation question...
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hello
I've done the accounts for a partnership for the past 2 years (since they started) and now they're thinking about incorporating.
Now I've been on the Revenue's workshops for setting up Ltd Companies and have sucessfully set up 2 companies myself without any bother, but both were previously sole traders.
Is there anything that I should be extra cautious about with it being a partnership?
The way I'm thinking of setting it up is with both of them being directors, each holding 50 shares, and each drawing a 'director's salary'. The rest of the profits obviously declared as dividends.
What's bugging me a bit though is what happens if, say, one of them is sick for 2 months so doesn't take any money while he's off? The money that the other man takes during that period couldn't then be declared as a dividend and would be taxed under PAYE. A way around that would be to issue 2 classes of shares & then they wouldn't have to take the same dividends, but I'm sure it's not going to be that simple! Is there any harm in doing it that way?
I'm also a bit worried that if I get the wording wrong in the articles or memorandum of association that it could cause problems in the future. For example there should probably be restrictions on who the shares could be sold to. They get on fine at teh moment but I'm worried of what might happen if there's a conflict between them.
If I were to use a company formation agent would they make sure that everything's worded to protect both parties or is that my responsibility? If anyone's got any recommendations of good agents to use please let me know.
Hope someone's got something to say on this - I don't know if I'm being overly cautious or if it is something that I should be passing on to someone else. I know that once they're set up that I can do the accounts, so I don't want to loose the client.
thanks
jodie
I've done the accounts for a partnership for the past 2 years (since they started) and now they're thinking about incorporating.
Now I've been on the Revenue's workshops for setting up Ltd Companies and have sucessfully set up 2 companies myself without any bother, but both were previously sole traders.
Is there anything that I should be extra cautious about with it being a partnership?
The way I'm thinking of setting it up is with both of them being directors, each holding 50 shares, and each drawing a 'director's salary'. The rest of the profits obviously declared as dividends.
What's bugging me a bit though is what happens if, say, one of them is sick for 2 months so doesn't take any money while he's off? The money that the other man takes during that period couldn't then be declared as a dividend and would be taxed under PAYE. A way around that would be to issue 2 classes of shares & then they wouldn't have to take the same dividends, but I'm sure it's not going to be that simple! Is there any harm in doing it that way?
I'm also a bit worried that if I get the wording wrong in the articles or memorandum of association that it could cause problems in the future. For example there should probably be restrictions on who the shares could be sold to. They get on fine at teh moment but I'm worried of what might happen if there's a conflict between them.
If I were to use a company formation agent would they make sure that everything's worded to protect both parties or is that my responsibility? If anyone's got any recommendations of good agents to use please let me know.
Hope someone's got something to say on this - I don't know if I'm being overly cautious or if it is something that I should be passing on to someone else. I know that once they're set up that I can do the accounts, so I don't want to loose the client.
thanks
jodie
0
Comments
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Re:Another Incorporation question...
We've always used Jordan's to set up limited companies.
http://www.jordans.co.uk/
Never ever had a problem with them.
Annette0 -
Re:Another Incorporation question...
Thanks, do you just do everything online or can you phone them up & talk through it with a person?0 -
Re:Another Incorporation question...
Jodie
We've done both with them, they are really helpful and my boss has used them for years.
Annette0 -
Re:Another Incorporation question...
Hi Jodie
Why not set them up as a Limited Liability Partnership??
Siany0 -
Re:Another Incorporation question...
My answer to this would be because LLPs are a right pain
Claudia
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Re:Another Incorporation question...
Probably a good point about the LLP but, being an LLP virgin I do hope it's not the right option for them or else they'll have to be looking for a new accountant who knows what they're doing there!
I think that after looking at the figures they will incorporate, so I will be contacting Jordan's shortly.
thanks for your help
jodie0