Injecting Cash in a business

Discussion in 'Accounts & Finance' started by wyptaj, Oct 13, 2011.

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  1. wyptaj

    wyptaj UKBF Newcomer

    4 0
    Dear All,

    I'm wondering if you can help me on the following question.

    I had a sole trader entertainment company which was making a nice profit. I then expanded and opened up a limited company and registered for VAT.

    Due to dealing with bigger companies, and having staff I need to inject some money into the business to help the cashflow.

    The 2 directors have put in directors loans, but we still need a cash injection. I want to put the profit into the company from the previous sole trader account, as its not really my money, but more the companies. However I don't want to have to pay VAT on it, as all that means is I would lose 20% of it right away. As it's the previous profit I don't want it back like a Directors loan.

    PLease can you someone advise how you can put money into a limited company without attracting VAT ?

    Many thanks in advance.
    Wyptaj
     
    Posted: Oct 13, 2011 By: wyptaj Member since: Oct 13, 2011
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  2. Truemanbrown

    Truemanbrown UKBF Big Shot

    898 180
    Sorry, how would loaning the company attract VAT.

    Are you saying that money has been put into your old sole trader account, which should have been the income of the limited company, in order to avoid VAT being paid on it?
     
    Posted: Oct 13, 2011 By: Truemanbrown Member since: Jul 23, 2010
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  3. wyptaj

    wyptaj UKBF Newcomer

    4 0
    Thank you for your reply.

    I was going to keep the profit from the sole trader but the business needs it for cashflow. Is it as simple as just putting a payment into the account as 'cash injection' ?
     
    Posted: Oct 13, 2011 By: wyptaj Member since: Oct 13, 2011
    #3
  4. Truemanbrown

    Truemanbrown UKBF Big Shot

    898 180
    If this is from the sole trader then you just inject the monies into the business as a director's loan.
     
    Posted: Oct 13, 2011 By: Truemanbrown Member since: Jul 23, 2010
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  5. MyAccountantOnline

    MyAccountantOnline Full Member

    13,639 2,590
    You have to remember you and the company are separate 'people'.

    You'll pay tax on your self employed profits regardless of what you do with them.

    When you put funds into the company you'll generally do that as a directors loan - that's not taxable income and the company wont pay any taxes on loans from you.
     
    Posted: Oct 14, 2011 By: MyAccountantOnline Member since: Sep 24, 2008
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