Any constructive thoughts or observations regarding the situation described below would be welcome. Sorry the description is so long, but I wanted to make it clear as mud ... Help! -------------------------------------------------------------------- Myself and my wife are directors and shareholders of a small limited company (each holding a £1.00 share). We are the only employees, and we earn a living rather than make loads of money. Our 2005/6 turnover was approx. 50K net, & we pay ourselves 16-20K per annum each, depending on turnover. Pay means PAYE; we do not take dividends. In August 2004, I was diagnosed with, and began treatment for cancer. Debts have accumulated since then, and we have been able to work limited hours due to treatment and care, often with periods when I have been unable to work. In the times when we have been able to work we have focussed on generating income. Paperwork had fallen behind, and PAYE & NIC, and VAT payments have too. Over the last week I have been working on our book-keeping. We have the following liabilities: VAT liability (3 preceeding quarters) 7011.64 VAT liability (current quarter) 1603.78 Tax/NI (05/06) 15406.72 Tax/NI (06/07) 3706.34 We have minimal fixed assets (perhaps £500), approx. £1000 cash at bank & in hand, and the directors owe the company approx. £9000. The business could not be sold, as the clients are very personal, and would be likely to follow us rather than the company. So the company's assets are roughly £10,500 and the liabilities are £27,700. Normally, I'd have said we could make arrangements to pay, and would be able to trade out of this. However, due to my illness and the fact that I'm likely to start chemotherapy in the next month, I'm not convinced that this is possible, as both employees are likely to be able to work in only a limited capacity. So: - the company has more debts than assets - the directors believe it is unlikely that the company can trade out...

Could you employ someone to do the work for you? Do you have any medical / loss of income type insurance? Have you had any meetings with your business manager in the past and did they recommend that you saw a financial adviser?

"John Boyle" wrote I thought that was just in relation to his role as an officer of the company? For any other work done for the company, isn't NMW relevant? "John Boyle" wrote Hmmmm. Then why did you say "not so" in your following reply? :- > Fred wrote on 30/08/2006 at 18:45 > >If the company has enough money top give the directors > >a loan then it's got enough money to pay them the salary. > "John Boyle" wrote on 30/08/2006 at 22:22 > Not so...

Make sure that your quote is for a fixed price come what may and get it in writing. Do not trust any professional. | In message , Richard C | writes | >Any constructive thoughts or observations regarding the situation | >described below would be welcome. Sorry the description is so long, but | >I wanted to make it clear as mud ... Help! | > | >-------------------------------------------------------------------- | > | >Myself and my wife are directors and shareholders of a small limited | >company (each holding a 1.00 share). We are the only employees, and we | >earn a living rather than make loads of money. Our 2005/6 turnover was | >approx. 50K net, & we pay ourselves 16-20K per annum each, depending on | >turnover. Pay means PAYE; we do not take dividends. | > | >In August 2004, I was diagnosed with, and began treatment for cancer. | >Debts have accumulated since then, and we have been able to work | >limited hours due to treatment and care, often with periods when I have | >been...

How should our Limited Company die?

Aug 28, 2006 25 Replies

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John Boyle 19 years ago

In message , Tim writes

If it was excessive to the detriment of creditors or shareholders, then yes.

Not if he knows the company is insolvent and trading at a loss and the payment of that salary is to the detriment of creditors.

Except doing it your way is likely to lead to him being barred as a director and of course the IT and NI wouldnt be refunded. Not a very good idea.

Far better to do it the other way, as most small companies do. Take it as a loan then at the end of the year when fiddling, sorry I meant 'finalising' ,the Company accounts and the Directors Tax return it can be cleared or not with salary, bonus or dividend. Far more tax efficient that your method.

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Tim 19 years ago

"John Boyle" wrote

I wasn't thinking about anything *excessive*.

"John Boyle" wrote

What about National Minimum Wage? [Not on tasks related to being an officer of the company, but on tasks related to the day-to-day business.]

"John Boyle" wrote

He also can't pay less than NMW!

"John Boyle" wrote

I didn't say anything about the tax-efficiency of the method. Just that it was *possible*!

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John Boyle 19 years ago

In message , Tim writes

Yes, an acceptable salary would likely be OK, after all, wages up to a certain limit are preferential creditors.

He can to a director.

I didnt say it wasnt possible. I just said my way was better.

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Tim 19 years ago

"John Boyle" wrote

I thought that was just in relation to his role as an officer of the company? For any other work done for the company, isn't NMW relevant?

"John Boyle" wrote

Hmmmm. Then why did you say "not so" in your following reply? :-

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John Boyle 19 years ago

In message , Tim writes

Yes, but that wouldnt be for his role as a director.

You are combining different posts from different people incorrectly, as I think you well know.

This is quite a different point isnt it? Just because the company has cash does not always mean it has enough money to pay a salary. It may do sometimes but on other occasions it may not, as I think I have made clear. This is quite a different point to whether has the ability to, or which is the best way.

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Stickems. 19 years ago

Make sure that your quote is for a fixed price come what may and get it in writing. Do not trust any professional.

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