Partner Buying a Business for me??

[tonilee]

Im a little baffled to say the least!!!!!! I was looking at local premises and businesses for sale this weekend, as it stands my partner is the breadwinner in our house and we have no mortgage.......I dont have the funds to buy my own salon or business can my partner do this?? Sorry that seems like such a stupid question doesnt it.....bu if she were to take a loan out or mortgage for my business how does she stand in terms of tax etc..... Help geeks I get so confused when it comes to borrowing and mortgages (despite the fact I have a mortgage for 10 years!!) Can anyone enlighten me???

 

[angel fingers]

i part own the premises that my husbands business uses, and he pays 'rent' to me. this is then counted towards my taxable income when the accounts are done.

if she purchases it , she could then 'let' it to you.

 

[tonilee]

Ah gotya....but does this effect her tax???

 

[Sparklepink]

Ah gotya....but does this effect her tax???

i reckon it would as it is i gues classed as extra income

have you got an accountant??

I think you mite be better spking to them if you have one as they know all the things you can claim etc...

they can offset things like loans rent and property etc... plus im sure stuff we dont even think of!

mine got me lots of saving with salon and my tax return

 

[angel fingers]

Ah gotya....but does this effect her tax???

yes, it is counted towards your taxable income.
but she would be able to claim back certain things like maintenance and fittings which will offset it a bit.

 

[oey]

i reckon it would as it is i gues classed as extra income

It all depends on how she raises fund to buy the premises/business? Any money/income she receives would be offset against any liabilities she has taken on (money raised to allow the purchase). This would be of benefit from a tax point of view as any of her expenditure could be offset against the income.

Hope that makes sense.

 

[angelina221]

hi-my husband is the main breadwinner in my house. i got made redundant last year and decided to buy my own salon. as i wasn't employed nobody would give me a loan so i thought i would have to sweet talk my husband. amazingly though they will give you credit cards! i've funded it myself by taking advantage of credit cards that give you 0% interest for so many months. i will have managed to do it all by myself and once i'm classed as self-employed i can get a personal or a business loan. my husband applied for the same credit card as me and they actually gave me a higher credit limit than him even though i don't work! seems silly but it worked for me!!

 

[skymark]

Any new business interests your partner has she will have to declare to the inland revenue, as if she is charging your business rent etc then she is still making some income from it.

Remember also that any loan or mortgage she takes out in her name she will be liable for whether your business is a success or not. It will be her assets or security at risk should it fail. Even if she is co-signing a loan or mortgage for you, if it doesn't suceed and you don't have any personal assets then they will go to her for all of the outstanding amount.

If you are looking at the possibility, the you could both go along and make some appointments with some banks and see just where they stand with it and how much they would be willing to offer to lend her based on her personal circumstances and what the differences are between the banks, eg if theres a difference in their terms and whether they have a gap between borrowing and first payment or of they start taking payments back right away.

 

[Ruth Mills]

How about if you and your partner started a limited company together, e.g. you could be the managing director and she the company secretary, and then the company would pay for the salon rather than either or both of you personally? Might be an option, but you would probably be best talking to an accountant to see if it would offer you any advantages.

Ruth

 

[skymark]

Good thinking with that Ruth. Certainly worth looking into. Only pitfalls to that are that a full set of accounts need to be submitted to companies house each year which means employing an accountant. Limited Companies also have corporation tax to worry about. Also, with the company having no security for a loan, unless you have a kick ass can't lose business plan, they would see it as high risk. They always like to have somebody to come after for the money as a just in case.

A lot of the banks have a small business section on their websites, which lay out a lot of their requirements for each type of loan and what they offer to people who are sole, partners, Limited Liability Partnerships or Limited Companies.

Also maybe check out the government websites for setting up and financing business.

 

[tonilee]

Thanks for your advise everyone some ood ideas there but yes definitely have to see an accountant or lender to discuss but thanks so much for your help!!


:hug::hug:

 

[Ruth Mills]

Good thinking with that Ruth. Certainly worth looking into. Only pitfalls to that are that a full set of accounts need to be submitted to companies house each year which means employing an accountant. Limited Companies also have corporation tax to worry about. Also, with the company having no security for a loan, unless you have a kick ass can't lose business plan, they would see it as high risk. They always like to have somebody to come after for the money as a just in case.

I run a limited company myself with my wife as the company secretary; we have an accountant where I keep an online record of invoices, expenses, etc, and then send the accountants bank statements, receipts, invoices, etc, every quarter (along with a cheque for the VAT man).

Corporation tax shouldn't be such a big worry - you only pay it on profits (e.g. if you are a shareholder, you can pay yourself a dividend out of the profits), so you don't pay any corporation tax on top of money paid out as salary (which attracts PAYE tax and national insurance, including employer's NI). It can work out more tax-efficient to pay yourself a smaller salary and take a quarterly dividend (even though dividends can attract additional higher rate tax liability) but an accountant would be able to advise you fully on this.

Although there's the down side in terms of the company being able to provide collateral for a loan, there's also the plus side that if the company goes bust, then you and your partner would not be personally liable for any debts that the company owes.

Ruth

 

[skymark]

I run a limited company myself with my wife as the company secretary; we have an accountant where I keep an online record of invoices, expenses, etc, and then send the accountants bank statements, receipts, invoices, etc, every quarter (along with a cheque for the VAT man).

Corporation tax shouldn't be such a big worry - you only pay it on profits (e.g. if you are a shareholder, you can pay yourself a dividend out of the profits), so you don't pay any corporation tax on top of money paid out as salary (which attracts PAYE tax and national insurance, including employer's NI). It can work out more tax-efficient to pay yourself a smaller salary and take a quarterly dividend (even though dividends can attract additional higher rate tax liability) but an accountant would be able to advise you fully on this.

Ruth

This is sort of what I meant by having the corp tax to worry about. Most salons in their start up year don't make too much money, so to be taxed on salary and profits feels like a bit of a double whammy.


Going to get an appointment with your own bank is always a good step and trying to build that relationship. If you've been with them for a while, then they feel a little bit more like they know you and your spending habits.

With banks starting to get stingy with their lending, you have to give them lots of reasons why they should lend you money, and as little as possible as to why they shouldn't.

If you've already had a profitable home or mobile business and made it work all that info will be positive for you as the bank can see that you know how to make your business work and you're not a beginner.