Limited company

Michelle
Michelle Registered Posts: 4 New contributor 🐸
Hi,

I have just started doing bookkeeping for a small IT consultant who has two Limited companies.

He transfers cash from one Ltd company (A) to the other (B) to cover the payment of his staff.

His P&L has a massive loss due to the high salary costs but no sales.

Would this be classed as a loan in company (B)

Thanks

Comments

  • deanshepherd
    deanshepherd Registered Posts: 1,809 Beyond epic contributor 🧙‍♂️
    You could classify it as a loan but it's not going to work very well from a tax point of view, unless they are group companies.

    I would probably advise putting a management charge through so that the losses are not wasted.
  • Michelle
    Michelle Registered Posts: 4 New contributor 🐸
    They are seperate entities.

    I have advised my client to charge the other company for management time. However I've a inclin that he might not want to invoice the other company as company B is vat registered and company A isn't.
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