Starting multiple business and more...

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sean.c

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161
Hi all,

firstly, great forum. Lots of interesting advice. I know I need to talk to an accountant but I'd like to first get some idea of whether I'm crazy or not.

First question is this; is it possible to start multiple limited companies under an umberalla ltd company?
Background; I'm currently an IT contractor, director of an umberalla company with CXC in Cork. I've been offered a new 6 month contract. I'm also a keen photographer.
I'd like to set up a LTD company to receive the income from the IT contracts, and another LTD company that I can use to buy extremely expensive photographic gear, pay for photography courses etc. and later receive income from photography jobs.
I need them to be linked so I can transfer cash from the money-making IT company to the (for now) loss-making photography company. The idea is, I never have to draw down money to for personal use to buy the photography stuff.

Or am I just mad and should a) do both things under one company, or b) do the photography stuff as a sole-trader and stay with CXC?

Second question; is it possible to rent a house for 6 months in Dublin and put it down as an expense?
Background: I've been remote working for many years, living in different places internationally, and my fixed address is my mum's house in the Midlands (and has been for 5+ years). But the new contract is onsite with the client in Dublin, so I will have to transfer there. My wife will be living with me in Dublin. I claimed per-diem for a month once when I had to be onsite in Dublin, no problems, but 6 months?

Oh, and can anyone recommend an accountant? I've had issues in the past...
thanks in advance!
 
Okay, there's quite a bit there. I'll do my best for you. Initially, I would go with the suggestion of doing the photography as a sole-trader (unless there is an added advantage re claiming daily subsistence rates if working away from the principal place of business... can a director claim the subsistence rates?... can anyone advise?...).

As for the limited company, if you're doing IT for the long-term, you should probably set up a company yourself. Umbrella companies are good for short-term contracts as you can be parachuted in and taken out quite easily but there can be pretty high fees.

Re your query about having two limited companies... There are higher start-up costs, higher ongoing administrative costs and higher closure costs for a limited company. Plus, you're restricted by company law in terms of directors' loans so you might want to set up a holding company... more money... more administration.

If things improve in both businesses, you can look at setting up a different structure but I wouldn't see the need to change things.

Re the house, I would claim the rent against the business in proportion to the amount of the house that is used in the business. So, if 1/3 of the house is used for office/studio/darkroom, I would claim that portion against your taxable income. 1/3 is what is usually claimed anyway.
 
I think you are right you need to sit down with an accountant and draw out the picture to get a good grasp of the pros and cons of doing what you propose.

Billy appears to have answered most of your questions but I would stress that having a group of companies can be expensive and also it is not a simple matter of just transferring money between them. Also, you really need to be aware of the tax implications of the whole thing.

Are you looking for an accountant in Dublin or Cork?
 
1
The easiest way would be to have one ltd company.
This would do both IT and photo, drop the umbrella company.
earn money from IT work to fund the photo side, means you don't have to withdraw cash from IT company (pay tax on it) then loan it to the photo company.
If the equipment is very expensive, you could end up having a corporation tax bill, as equipment is a capital expense so can't be written off in one year.
ie Earm 60k Pay You 30k(expense) Equipment 30k, so tax on the 30 profit.
or
you would need to setup a holding company structure to easily transfer the money around, not worth it unles teh figures will be very large 100ks

2
No you can't do that, what you can do is negotiate a deal with the revenue on overnight rates.
ie If you were only travelling to dublin for 2 weeks you could claim civil service overnight rates, but once the duration goes beyond 30 day (check) you have to agree a rate with the revenue.
 
First thing first - chose a good accountant with a large amount of tax experience as well. I suspect thats where things went wrong in the past for you and you were caught for large sums of tax as it was not initially set up correctly.

My advice - if you have different trades, have different companies. Having 2 or more trades under the one company is messy - seperate accounts of each trade must still be maintained. Hence, the cost saving will not materialise from my experience.

I would set the photography as a sole trade and register personnaly for VAT. I am assuming this is not just going to be a hobbie!

Good luck!
 
patftrears said:
1
The easiest way would be to have one ltd company.
Click to expand...

I would not suggest this as if one of the business struggles or gets into any sort of trouble then the other business will also suffer.

Also down the line it might cause problems if you get an opportunity to sell.
 
The background to this is a friend of mine, former IT worker, is now running two completely seperate businesses. He funded the first one with his savings, in the form of loans. That business is just ticking over and is more of a hobby, whereas the second business is a roaring success.

Thus far, he's managed to minimise his tax by shifting profits from the successful business into the less successful business, and repaying himself the loans, which were in the region of 400k. So the extra costs made sense for him. Unfortunately he's in Oz so he is no help in the Irish context!

re. jack2009, that's right, my friend has always had it in mind to sell one or the other if the right buyer comes along.

re. patftrears - as Paddy199 says, that could be a problem. I'm keen to keep 'em seperate. I intend not to be working in IT for many more years, so I'd like to be able to close down that side of things when the time comes, and have no spill-over at all into the other business.

The problem with running the photography as a sale trader is that I'd be paying PAYE on the money I take out of the IT business. Sure, I can get something back when the photography business starts earning, but I'd rather find a more tax-efficient funding mechanism.

I think I'll have to talk to an accountant - BTW, looking in Dublin.
thanks for all the advice/suggestions and input!!!
 
sean.c said:
re. patftrears - as Paddy199 says, that could be a problem. I'm keen to keep 'em seperate. I intend not to be working in IT for many more years, so I'd like to be able to close down that side of things when the time comes, and have no spill-over at all into the other business.
Click to expand...
It's not a problem, you want to stop working in IT, just stop.
No more taking on contracts it has no affect on the company.

If it has no spill over into the other business you will have to pay tax,prsi,level on the money you earn in IT and loan it into the photo company, costing you nearly 50%.
 
@patftrears - bloody good point, mate. Not seeing the woods for the trees.

As an aside, looking at it from another angle, the risks are from the photography side (losing all the photos of a wedding, for e.g.) not from the IT side. As the IT side will have practically zero assets (a Dell laptop), I should be protecting my IT income from my Photography liabilities.
 
sean.c said:
@patftrears - bloody good point, mate. Not seeing the woods for the trees.

As an aside, looking at it from another angle, the risks are from the photography side (losing all the photos of a wedding, for e.g.) not from the IT side. As the IT side will have practically zero assets (a Dell laptop), I should be protecting my IT income from my Photography liabilities.
Click to expand...

You can minimise the risk of your photography business by getting a decent insurance policy and a tight contract for clients to sign.
 
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