1. This site uses cookies. By continuing to use this site, you are agreeing to our use of cookies. Learn More.

  2. Not all business & social networks are the same. UK Business Labs brings people together and makes blogging, networking, discussion and marketing easy and effective. The software is used by tens of millions of people worldwide so it's simple to use too. UK Business Labs integrates with Twitter, Facebook, Google+, LinkedIn, WordPress, Tapatalk and countless other social media tools; which enables you to share your content quickly. You'll need to register before you can post but registration and basic membership is absolutely FREE. Click the image above or the 'Register' link to get networking with thousands of other business owners. We're looking forward to welcoming you!

Two Ltd companies - pros & cons of one business owning the other

Discussion in 'Business Advice for Start-ups' started by loulou12345, Aug 27, 2013.

  1.  
    loulou12345

    loulou12345 Applicant

    Joined:
    Aug 23, 2013
    Messages:
    5
    Likes Received:
    0
    Trophy Points:
    0
    Hi!

    I have a ltd company already for some consultancy work I do every once in a while. Im looking into starting a new unrelated business and want to go the ltd route with that as well. I do want to have separate companies rather then just offer the other services with my original company because it will help with my branding and Id like to be able to sell the new one in the future.

    So my question is, should the new business be owned by the original business? I think thats called a subsidiary? Or should I just have 2 businesses?

    It would be nice to have the same bank account for both businesses... I have an accountant so keeping track of it all is doable, Id just rather not have the hassle of 2 accounts..

    Also if I do sell the new business presumably technically it is my original business that sells the new business and so receives the funds, I wonder if that is advantageous from a tax perspective since I could conceivably draw funds from the original business that resulted from the sale of the new business.

    Can anyone help? Do I need a subsidiary? And is that what that means!?
     
  2.  
    Ray Stewart

    Ray Stewart Lab Manager

    Joined:
    Jul 30, 2008
    Messages:
    1,205
    Likes Received:
    123
    Trophy Points:
    63
    Location:
    Leicestershire
    As you have an accountant - ask them ASAP :tup:
     
  3.  
    loulou12345

    loulou12345 Applicant

    Joined:
    Aug 23, 2013
    Messages:
    5
    Likes Received:
    0
    Trophy Points:
    0
    Well it will certainly get to him eventually I was wondering on the strategic implications perhaps from somebody who has made that decision themselves.

    My experience of accountants has been that they are not particularly proactive and are interested in doing whatever you tell them to, spelled out, step by step.

    If I asked any of the accountants I have had the above strategy like question they would say 'I can administer another one sure thing that'll be £x more. What precisely do you want me to do?'. To which I would say 'advise me!!'. 'so what do you want me to do exactly?'

    :D
     
  4.  
    Ray Stewart

    Ray Stewart Lab Manager

    Joined:
    Jul 30, 2008
    Messages:
    1,205
    Likes Received:
    123
    Trophy Points:
    63
    Location:
    Leicestershire
    If you speak to them ASAP - they will tell you that trying to mix 2 companies in one bank account is a mess that will cost more than 2 separate accounts fees to resolve.

    But I am assuming they have told you that.

    Even the most staid accountant would advise you against your proposed course of action.

    Whilst you are thinking that they are refusing to "pro-actively advise" you - are you sure it isn't you who is not really listening because the advice you are getting doesn't fit your ideas?
     
  5.  
    loulou12345

    loulou12345 Applicant

    Joined:
    Aug 23, 2013
    Messages:
    5
    Likes Received:
    0
    Trophy Points:
    0
    Ok thanks for that it's not obvious to me why but it would be cleaner certainly and its not so hard having a new account so thats probably a sensible thing to do.

    It isn't their role to offer business advice so I understand their reluctance I am simply stating the reaction I and others I have spoken to get from accountants when such advice is sought. They probably say to their colleagues 'another one wanting me to run their business for them!' when they put the phone down. :D

    Id be interested to hear other opinions on the other content of my initial post from entrepreneurs, the account combination was quite a minor point.
     
  6.  
    ISS

    ISS Son of Victor Meldrew Premium Member

    Joined:
    Aug 15, 2012
    Messages:
    2,042
    Likes Received:
    497
    Trophy Points:
    83
    Location:
    York
    No Ray it's actually not possible. In fact it's illegal if you're talking about Limited companies....
     
  7.  
    Ray Stewart

    Ray Stewart Lab Manager

    Joined:
    Jul 30, 2008
    Messages:
    1,205
    Likes Received:
    123
    Trophy Points:
    63
    Location:
    Leicestershire
    I have seen it done though :(
     
  8.  
    james murphy

    james murphy Sarcasm in bucketloads - Say hi though!

    Joined:
    Aug 30, 2013
    Messages:
    288
    Likes Received:
    48
    Trophy Points:
    28
    Location:
    Sheffield
    totally separate the companies. If one owns the other and goes bust its assets are taken. If you own them separately only one goes.
     
  9.  
    ISS

    ISS Son of Victor Meldrew Premium Member

    Joined:
    Aug 15, 2012
    Messages:
    2,042
    Likes Received:
    497
    Trophy Points:
    83
    Location:
    York
    Things have changed in the 24 years since I started in business. Considering "one company going bust" would have been something people would have been ashamed of back then.
     
  10.  
    james murphy

    james murphy Sarcasm in bucketloads - Say hi though!

    Joined:
    Aug 30, 2013
    Messages:
    288
    Likes Received:
    48
    Trophy Points:
    28
    Location:
    Sheffield
    Whilst I agree ISS there have been times we could have shut down but pride meant we carried on and it all went well.

    Sometimes an external factor means it is impossible to carry on. Big client goes under owing a load (ok should have been managed better but it happens) A supplier causes a problem, cue huge lawsuit from customers, new legislation ruins a part of the business.

    Its just a descision you can make that offers a little extra protection with no downside. Company owning another company really has no benefit I don't think.
     
  11.  
    SetupaCompany

    SetupaCompany Trainee Lab Tech

    Joined:
    Aug 24, 2012
    Messages:
    213
    Likes Received:
    48
    Trophy Points:
    0
    To be honest I would disagree with this. When the advice is clearly relating to the structure and finances of your business I think that is totally what an accountant should be advising you on.

    Yes they are not there to tell you whether or not you should set up a new company, but they are there to tell you HOW it should be structured if you do decide to go ahead and what you can and cannot do in relation to your other company.

    If the accountant isnt willing to advise on it then I would suggest finding yourself a new one! :tup:
     
  12.  
    ISS

    ISS Son of Victor Meldrew Premium Member

    Joined:
    Aug 15, 2012
    Messages:
    2,042
    Likes Received:
    497
    Trophy Points:
    83
    Location:
    York
    If you were diagnosed with some horrible flesh eating bug in your left hand, wouldn't you rather be able to cut off your hand rather than die?
     

Share This Page