- Original Poster
- #1
Hi All,
I feel this is more of an accounting question than a pure employment/HR question, so hope I have posted in the correct group.
Can a UK Ltd start-up company legally distribute a discretionary cash bonus to employees if said company has not made a profit in the first year of operation, but has an adequate cash balance through initial equity investment?
Assume that this would be agreed by shareholders (but ignore whether or not this is advisable!). Therefore the company may break-even in year 1, but the bonus would be paid via cashflows from financing activities, rather than reserves from operations.
The business in question is in a field where bonuses are an expected form a remuneration, so this is a question of attracting and retaining the appropriately qualified team members in the first year of operation before the entity is profitable.
Best,
Jim.
I feel this is more of an accounting question than a pure employment/HR question, so hope I have posted in the correct group.
Can a UK Ltd start-up company legally distribute a discretionary cash bonus to employees if said company has not made a profit in the first year of operation, but has an adequate cash balance through initial equity investment?
Assume that this would be agreed by shareholders (but ignore whether or not this is advisable!). Therefore the company may break-even in year 1, but the bonus would be paid via cashflows from financing activities, rather than reserves from operations.
The business in question is in a field where bonuses are an expected form a remuneration, so this is a question of attracting and retaining the appropriately qualified team members in the first year of operation before the entity is profitable.
Best,
Jim.
