Z
Zigmund
Guest
Hi all, I'm new to the site; stumbled across it while seeking some financial information, it's a great resource. However, I've had a search through it and there's some questions I have that I haven't found answers to, so you may be able to help. I'm in no way an expert in financial terms or business in general, so please bear with me.
Formation & Grant Approval:
I'm a director in a limited company with two others, in which we have equal shares. Last year, we applied for an Enterprise Board employment grant, which we got, of €5000. This grant was payable to the company secretary (not me), and we have already received the first 50% of it. We were completely forthright about what we needed the money for, which was to purchase the equipment we needed to start working: computers, desks, etc. We are now currently filing tax returns in order to get our tax clearance certificate, so we may draw down the second half of the grant. No big problem.
State of the Company & Secretary Tax Issue
However, our situation has changed somewhat. Our company secretary (to whom the grant is payable to) has had to get a full-time job in order to support his family, as there has been very little profit in our first year, which I imagine is the norm. His main problem is that he is unable to use any tax credits in his full-time job, as they are apparently allocated to our company, reducing his income significantly. So, our initial plan was to claim the employment grant to pay for some expenses in the company, such as a freelance contractor we are working with on a project, and for our secretary to either leave the company as a director so he can get his income up, or remain while still being able to claim tax credits for his job.
Issue with Grant Spending
We have, however, been lead to believe by our accountant that we've been misbehaving. He claims that the employment grant is to be used ONLY to pay our secretary's salary, and spending it on equipment and the like is a violation of the terms. According to him, if the company claims the grant and our secretary leaves, we are liable to pay back the grant in it's entirety, and effectively be at the centre of a s**tstorm. There is also some concern that if, in a few months time, we shut down the company, we will be held accountable to pay back the grant.
Issue with General Spending
Another thing our accountant has reprimanded us for is the method in which we used the money in our company accounts. For the most part, when we needed to buy something, or had expenses, we simply took out cash via the company credit card, which would then be paid off every month from money in the account. We would usually take out a lump sump of a couple of hundred euros to use as petty cash when needed. We're not talking huge amounts of money, just for things like stationary, paper... and the odd pizza delivery for those late nights working. We have been told that there is absolutely NO way to just take out money like that, every red cent needs to be accounted for. We kept receipts for larger purchases such as computers, so we could claim the tax back, but not for things like pens!
Where we want to be
To conclude, I'll describe the ideal situation we want to be in, and hopefully you will be able to help us achieve this, or give us any advice in general.
We would like to be able to claim the rest of our grant, and continue with business as usual. As our secretary is over-a-barrel in terms of him not being able to claim tax credits from his other job, we would like to resolve this somehow. Most likely, he will have to remain a director in order to avoid having to pay back the grant. I've read on this site that having less than 15% shareholding makes you "non-proprietory", and so eligible for tax credits, hopefully someone can shed some light on this regarding our situation.
Thank you for reading, my apologies for the long post, and now I cross my fingers...
Formation & Grant Approval:
I'm a director in a limited company with two others, in which we have equal shares. Last year, we applied for an Enterprise Board employment grant, which we got, of €5000. This grant was payable to the company secretary (not me), and we have already received the first 50% of it. We were completely forthright about what we needed the money for, which was to purchase the equipment we needed to start working: computers, desks, etc. We are now currently filing tax returns in order to get our tax clearance certificate, so we may draw down the second half of the grant. No big problem.
State of the Company & Secretary Tax Issue
However, our situation has changed somewhat. Our company secretary (to whom the grant is payable to) has had to get a full-time job in order to support his family, as there has been very little profit in our first year, which I imagine is the norm. His main problem is that he is unable to use any tax credits in his full-time job, as they are apparently allocated to our company, reducing his income significantly. So, our initial plan was to claim the employment grant to pay for some expenses in the company, such as a freelance contractor we are working with on a project, and for our secretary to either leave the company as a director so he can get his income up, or remain while still being able to claim tax credits for his job.
Issue with Grant Spending
We have, however, been lead to believe by our accountant that we've been misbehaving. He claims that the employment grant is to be used ONLY to pay our secretary's salary, and spending it on equipment and the like is a violation of the terms. According to him, if the company claims the grant and our secretary leaves, we are liable to pay back the grant in it's entirety, and effectively be at the centre of a s**tstorm. There is also some concern that if, in a few months time, we shut down the company, we will be held accountable to pay back the grant.
Issue with General Spending
Another thing our accountant has reprimanded us for is the method in which we used the money in our company accounts. For the most part, when we needed to buy something, or had expenses, we simply took out cash via the company credit card, which would then be paid off every month from money in the account. We would usually take out a lump sump of a couple of hundred euros to use as petty cash when needed. We're not talking huge amounts of money, just for things like stationary, paper... and the odd pizza delivery for those late nights working. We have been told that there is absolutely NO way to just take out money like that, every red cent needs to be accounted for. We kept receipts for larger purchases such as computers, so we could claim the tax back, but not for things like pens!
Where we want to be
To conclude, I'll describe the ideal situation we want to be in, and hopefully you will be able to help us achieve this, or give us any advice in general.
We would like to be able to claim the rest of our grant, and continue with business as usual. As our secretary is over-a-barrel in terms of him not being able to claim tax credits from his other job, we would like to resolve this somehow. Most likely, he will have to remain a director in order to avoid having to pay back the grant. I've read on this site that having less than 15% shareholding makes you "non-proprietory", and so eligible for tax credits, hopefully someone can shed some light on this regarding our situation.
Thank you for reading, my apologies for the long post, and now I cross my fingers...
