Multiple Company Formation or Multiple Contracts

[BGD]

Hi

I have a small events company. I am close to partnering with two people on two separate new event ventures.

To get them fully integrated (and locked) into the process I need to determine the best way to effect a profit share arrangement.

My preference would be to have a separate company for each venture so that the shares are equally held and each venture is kept wholly separate.

The alternative option would be to create the events through my own company (sole director) and draw up a basic contract for each arrangement.

I am not legally trained and am not at this stage of my development able to spend sums on employing a solicitor to go through the cost / benefits of the two main options above.

Are there any potential significant pitfalls that I am not seeing with my preferred method of proceeding?

Thanks in advance

Ben

 

[elaine@cheapaccounting]

I am not legally trained and am not at this stage of my development able to spend sums on employing a solicitor to go through the cost / benefits of the two main options above.

Are there any potential significant pitfalls that I am not seeing with my preferred method of proceeding?

the main pitfall would not be getting a legal agreement signed up with said partners

Have a read of this:

http://www.cheapaccounting.co.uk/blog/?p=286

 

[Lime One]

There are some issues of liability to consider in the arrangement where your limited company is seen as offering the service, which is reliant on others. This can be covered by the other parties carrying insurance, have a legal agreement which clearly outlines the responsibilities and liability for all. We can help with this and our costs start from £35 for a template DIY option with instructions in writing and also can provide a fully insured bespoke option to make sure you are covered.

 

[BGD]

Thank you Elaine and LimeOne.

Elaine as an accountant would it theoretically cost more to oversee the accounts of three firms rather than of one firm with three ventures. Additionally would it be more or less sensible for tax minimisation purposes to pursue one route over the other?

The profit range for each venture is likely to span from 30k up to 130k depending on the successful completion of the process. Of course from Ground Zero and without any talents in divination that is difficult to determine.

 

[elaine@cheapaccounting]

Elaine as an accountant would it theoretically cost more to oversee the accounts of three firms rather than of one firm

easy answer - yes and I don't think this is the best structure tax wise for you!

 

[Lime One]

Our clients normally set up one limited company for ALL joint ventures to ring fence any legal issues as well as having a robust agreement in place. Happy to talk to you about the other legal options there are open to you.