work for service fee advice

[lantus]

What is the legality of having a member provide work or a trade (that we need) in exchange for their service fee.

Well aware that this is far from ideal and the idea is not something I happily entertain but how do we deal with the gap in the accounts if we decide to do this? Do we just note and income and then equal expenditure for the work done? i.e. paid 1000 cash and then handed it straight back but in reality the money never really existed?!?

 

[mathepac]

You will need to register the management company as an employer, with all that that entails IMHO. AS a non-trading entity this may prove difficult for a management company.

 

[mandelbrot]

You will need to register the management company as an employer, with all that that entails IMHO. AS a non-trading entity this may prove difficult for a management company.

Whether or not there is an employer/employee relationship is a question of fact, if the person is a self employed person in business on their own account it would be unlikely to be an employment.

 

[mandelbrot]

What is the legality of having a member provide work or a trade (that we need) in exchange for their service fee.

Well aware that this is far from ideal and the idea is not something I happily entertain but how do we deal with the gap in the accounts if we decide to do this? Do we just note and income and then equal expenditure for the work done? i.e. paid 1000 cash and then handed it straight back but in reality the money never really existed?!?

If the accounts are prepared on an accruals basis there should be a debtor for the amount in question so you'd be reducing this debtor, and increasing the appropriate expense in your income statement.

If you haven't got the amount accrued already as a debtor (ie. income of a prior period) then you credit income / debit expense, as you said above.