One of the soul traders has a business loan of approx €290k payable over 7 years( paying approx €60k back a year) interest rate of 6.75%.
We have savings in standard deposit accounts of €180k varing from .25%-3% interest.
Can you jsut clarify this line. I think you're saying you have only one mortgage between you which is 40k left on it.We have personal personal mortgages of just our mortgage with a balance of approx €40k on house worth €500k.
the company we take wages of cicra €35k and pensions of €24k combined,
SorryCan you jsut clarify this line. I think you're saying you have only one mortgage between you which is 40k left on it.
One of the soul traders has a business loan of approx €290k payable over 7 years( paying approx €60k back a year) interest rate of 6.75%. This business has assets of approx value €1.5m
The company has profits of circa €100k after pensions and wages, it wouldnt be cost effective to take that out as wages at high rate of tax and than leave it sitting in deposit accountsHave you discussed this with your accountant and tax advisor?
I don't like people saying "we take wages"
You should probably be clearing out the profits in full every year and not leaving the profits subject to Corporation Tax in the company and more tax when you eventually take it out.
But you need a written strategy on this so you can understand it and keep it under review.
Due to the nature of both business it isnt advisable to go into limited company at the present moment, the assets held are all in personal names and would be subject to stamp duty, and the loans are in personal names and repaying them from company would mean drawing repayments down as wages again subject to the highest rate of taxThat sort of size suggests that you should probably be operating through a limited company.
You should sit down with your accountant and tax advisor and go through the pros and cons.
Could this business become insolvent? If so, the protection of a limited company would be very useful.
it wouldnt be cost effective to take that out as wages at high rate of tax
Not if we leave it and take a termination payment if we decide to close this business. This is a possibility in the future, running three businesses is not easy.If you take it out now, you will pay 50% tax and get 50% into your hand.
If you leave it there, you will pay Corporation Tax on it at 12.5%
Then when you eventually take it out, you will pay 50% tax on the 87.5%
So you will get 43% into your hand.
Take the cash out and repay your personal loans.
Not if we leave it and take a termination payment if we decide to close this business.
Yes, I am happy with our tax strategy.If you have a written tax plan with all this worked out and a definite plan to close the business in the short to medium, then this might be worth it.
But otherwise, just take out the profits and cash.
Agreed.If you have a written tax plan with all this worked out and a definite plan to close the business in the short to medium, then this might be worth it.
But otherwise, just take out the profits and cash.
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