Hi
Friend and me are considering starting a business. We will also consider branching out later - infact we have 3 totally unrealted business ideas.
We want to be a partnership. Question is when we go to having more than one company we will probably want to go Ltd so we cna reduce our liability.
Quetsion is is it possible for a ltd company to have like 5 seperate subsidiary that all trade in different things but have them all audited at once.
Or would you need 5 seperate ltd companies?
You are confused.
A subsidiary is a separate company.
You could have one company doing five separate trades or a holding company with five subsidiaries.
What would be the advantage of such a group structure (holding plus
5 subsidiaries) over just having 5 companies each directly owned by the two people involved, without a holding company inbetween?
Various economies of scale. For example: one PAYE scheme instead of five, maybe one VAT scheme.
Management Charges provide a simple and effective way of distributing Overhead Expenditure tax-efficiently throughout the group, and you can do that *after* all the accounts have been finalised.
I take it to be a subsidiary you would have to be Ltd companies? i.e the main company would be a ltd company as would all the ones below it? - otherwise its just like a aprtnership running 5 seperate companies and being liable for all of them.
And if I had 5 seperate trades I suppose its better to have it as 1 ltd company because of the risk?
You can do it either way.
The Holding Company would own some or all of the shares of the Subsidiaries.
It is quite unusual for small companies to have multiple trades. It makes control more difficult, and the P&L Overheads section becomes a nightmare. Each trade is taxed separately, so Losses in one trade can only be carried forward (or back) to be set against Profits in the same trade.
"Troy Steadman" wrote
How are the Management Charges shown in the accounts, if the accounts are finalised
*before* the management charges are calculated?
"Finalising the accounts" takes a long time and involves lots of alterations :0)
"Troy Steadman" wrote
OK, so you are saying that the Management Charges can be done *after* "a long time ... involv[ing] lots of alterations".
Again - *how* are the Management Charges shown in the accounts? ;-)
In the Management Accounts they don't appear at all. In the Subsidiaries' Financial Statements they appear as Overheads. In the Group Accounts they don't appear at all.
"Troy Steadman" wrote
Well, where do you put the "Management Charges" that you said you calculate: "*after* all the accounts have been finalised" ?
Tim, there is a concept which you sometime fail to grasp known as "Real Life". In Real Life a phrase like "all the accounts" can mean "get all the figures together so we can see what the situation is, and tie up any loose ends".
If in Tim-speak the phrase "all the accounts" means every account for every business, factual and fictional until the end of time....and also every "description", because a description is an "account", and every description of an account...
You grasp the left lace and the right lace, and you place the left lace over the shoe...
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