Capital for a new limited company

[MarkSh]

Hi all, I'm a company director (small company) Im looking to setup a new company and need access to capital in same.

My current limited company is a sole venture. The new limited company is a joint venture with a relative.

What I was intending to do was give the new company a short term loan of approx 25k for what I would foresee to be 3 month duration from my established company. This will allow me cover the startup costs of the new company. Is this allowable with some words of magic in a contract or are there tax implications?

If this is not the best idea what do you suggest I do to get the capital i need to start the new company? Thanks in advance for any advice.

 

[T McGibney]

Is this allowable with some words of magic in a contract or are there tax implications?

I don't know what you mean by words of magic.

There are significant tax implications. If the value of the loan exceeds 10% of the net assets of your existing company, it may also be illegal.

You need to talk in detail with your accountant.

 

[dublin67]

You can lend from one company to another where it exceeds certain limits provided the loan is approved by a summary approval process. Talk to your accountant who will be familar with the process of knows somone who would be (e.g. company secretarial firm or solicitors). There should not be any tax implications provided the loan is from one Irish company to another company. As T McGibney mentions there can be tax implications where the loan is made to an individual.