Business lease in my name BUT running as a ltd company

[Dan101]

Some advice would be sincerely appreciated. I am about to make my dream of having my own restaurant a reality. I found a premises in a great spot in my price range and have been able to negotiate some good terms for myself such as 6 months rent free, no liability for any roof issues and a break clause at 3 years. However I have had to put the lease in my name.

The bit that is stumping me now is I have decided to go the ltd company route to trade as I will have fingers in other pies and so feel it best to group everything in to the company. My question really is will I be OK claiming rent I pay as an expense for my company even though the lease is in my name and the first 6 months rent will be paid cash by me and not the company?

If I am walking into a mine field here then perhaps I need to run the business as a sole trader? If I do that is there any inbetween road between that and a ltd company to hang on to a bit more of the profits from my ventures when they come?

Many Thanks,
Dan

 

[Newchodge]

I don't understand: if the first 6 months is rent free in your name, why will your limited company be paying the first 6 months' rent, and to whom?

 

[Dan101]

I'm sorry I should have typed more clearly. How it is working is upfront I will be paying a debosit and 6 months rent all in cash. I then don't have to pay anything again for a year.

 

[Scalloway]

You could set up an agreement between yourself and the company to pay the rent.

 

[STDFR33]

There may be VAT issues.

It would be cleaner to but the lease in the name of the company, and have a personal guarantee in place.

 

[MikeJ]

Dan. Please realise that if this business fails, you will have to pay the rent on the premises for three years. Even if you move out after a year, you're still paying rent for another two years. If you can't pay it, you'd face being made bankrupt. If you've a house, then you could lose this in order to pay the rent.

Please realise what you're taking on here.

 

[Dan101]

Thank you so much for the replies, you have been really helpful. Yes I am well aware of the risks involved but it was a well researched decision I made. Premises like this with a3 in my price range are rare as hens teeth and in my name is how I had to do it to make the deal. I do not own a home nor do I have any assets other than cash. Paying the rent for 3 years wouldnt be nice, but also wouldnt destroy me financially.

Ok so I am thinking set up a ltd company and have a solicitor draw up an agreement between me and my ltd company saying that they will take the rent and rates on as an expense and from there my ltd company can then claim those expenses against profits.

 

[STDFR33]

Is there any vat on the rent?

 

[Dan101]

No VAT payable on the rent at all

 

[NickGrogan]

negotiate some good terms for myself such as 6 months rent free, no liability for any roof issues and a break clause at 3 years.

Premises like this with a3 in my price range are rare as hens teeth

These two statements don't work together. If the unit was in demand they wouldn't be offering 6 months free, etc as there would be no need for incentives.

What experience do you have in the restaurant trade?

 

[Dan101]

I should have added the place needed refurbishment, entirely cosmetic. In my immediate family are a building and decorators. I am getting the works done at cost.

My family have owned restaurants, i have managed one, my sisters have all worked in them for several years.

 

[NickGrogan]

If you're ok paying for the unit for 3 years, regardless of the business success, then it shouldn't be an issue. You can lease the unit and then charge the company for it. Talk to your accountant about the best options and how to take the profits.

 

[Dan101]

Thanks so much for the advice. I am indeed preperared for the worst and accept my personal liability.

 

[Chris Ashdown]

What happens after three years don't forget a break clause can in some cases also give the landlord the opportunity to make the break

 

[rach88]

There may be VAT issues.

It would be cleaner to but the lease in the name of the company, and have a personal guarantee in place.

This. It would be cleaner from the landlord's perspective as well.