Capital introduced - advice

[Ty Korrigan]

In 2014 I loaned our ltd company some €20k for equipment which it re-paid within a year or so.

 The accountant bawled at us for not leasing the kit on the grounds of tax efficiency.

TBH, buying the kit was a gamble which paid off, yet at the time we thought we where up to our credit limit with the banks which is why I injected funds.

 

  Stuart

 

[Inoff the Red]

19 minutes ago, Ty Korrigan said:

In 2014 I loaned our ltd company some €20k for equipment which it re-paid within a year or so.

 The accountant bawled at us for not leasing the kit on the grounds of tax efficiency.

TBH, buying the kit was a gamble which paid off, yet at the time we thought we where up to our credit limit with the banks which is why I injected funds.

 

  Stuart

 

Well, I could have an interesting debate with that accountant about his view of the tax efficiency of leasing rather than buying with own resources. Was he getting a commission from the finance company for introductions? If there is no other option than leasing is a way of getting stuff but don't forget that the leasing companies factor their costs and profit  into the lease payments so there is a cost compared with using own funds. 

[Ty Korrigan]

Error.

 

Edited January 11, 2019 by Ty Korrigan
Double post

[Ty Korrigan]

Risk too, if the company had problems, you might lose your capital before the debt is repaid.

 Stuart

[Inoff the Red]

Just now, Ty Korrigan said:

Risk too, if the company had problems, you might lose your capital before the debt is repaid.

 Stuart

Obviously if your company is a bit wobbly then you wouldn't put money in, but then if that was the case you probably wouldn't get a lease anyway....at least not without a PG that puts you in the same place regarding potential loss.

[Mr. Squirrel]

Cheers for the input guys. I spoke to my accountant and am putting some of it through this year as capital gains, if I remember correctly? It was such a crap year of business for me that putting much of it against my books this year would've just been shooting myself in the foot for next year. 

I spoke pretty in depth with the accountant last year about going LTD and being VAT registered but it didn't seem to offer many benefits to my situation to be honest. I don't have any finance etc. so there's no financial risk to my 'company'. The VAT on my van was a bastard, but given I work for a lot of private customers, and contract for a few guys who aren't VAT registered I was willing to take the hit to keep the people happy. And save myself having to do VAT returns... There's a reason I climb trees for a living, I'm bad with numbers, and I don't need extra numbers to play with...

[Inoff the Red]

On 14/01/2019 at 11:56, Mr. Squirrel said:

..... I don't have any finance etc. so there's no financial risk to my 'company'. The VAT on my van was a bastard, but given I work for a lot of private customers, and contract for a few guys who aren't VAT registered I was willing to take the hit to keep the people happy. And save myself having to do VAT returns... There's a reason I climb trees for a living, I'm bad with numbers, and I don't need extra numbers to play with...

The real protection of trading through a limited company rather than as a sole trader/partnership is that if you make a mistake on a job and a tree drops on someones house any claim would be against the limited company and not against you personally.

 

With regards to VAT, at present the UK has the highest VAT registration limit (£85k) in the EU where the limit is significantly lower (Germany €10,000, France €12,000). This is perceived to give UK businesses an unfair advantage (dubious)while simultaneously depriving the EU of VAT revenue (probably the main reason for future change). In the event that Brexit is thwarted or we are tied into the EU, then brace yourself for the VAT registration limit to come down to levels consistent with other EU countries.