Limited company shares help.

[boddy09]

We are in the process of setting up a limited company. Straight forward shares between myself and my partner I can handle but we also have a business partner who will own 25% of the company. What is the best way of handling the shares? We have been advised that it is better to pay salary up to the free tax limit then take the rest of the wage as a dividend. If the shares are all the same it would mean that we would have to pay our business partner a dividend each month also. Is there a way of giving shares that don't pay a dividend but pay an end of year profit?

 

[taxattack]

We are in the process of setting up a limited company. Straight forward shares between myself and my partner I can handle but we also have a business partner who will own 25% of the company. What is the best way of handling the shares? We have been advised that it is better to pay salary up to the free tax limit then take the rest of the wage as a dividend. If the shares are all the same it would mean that we would have to pay our business partner a dividend each month also. Is there a way of giving shares that don't pay a dividend but pay an end of year profit?

You can have different classes of share with different rights. There is another important point while you are setting up, which is that you will each have a minority share; ie any 2 together have a controlling vote. Obviously all is harmonious at present, but things dont always remain so. Do take professional advice.

Chris

 

[Bob]

Unfortunately you probably need to speak to a lawyer about a shareholders' agreement and directors' service contracts. Not cheap but can be even more expensive if you haven't got them and there's a problem/disagreement