I am looking to buy a business and taking out a substantial bank loan to do so.
Rather than paying the bank loan back personally is it possible to take the loan out in the name of the business and pay the loan back as part of the expenses of the business?
If you set up a company and the company buys the shares/business and borrows the money then the company can pay back the loan out of 12.5% profits.
Thanks for all the replies.
Just to confirm.
Business has turnover of £1,000,000.
GP 400,000
NP 90,000
NP after 12.5% tax 80,000
Sale price 500,000
New Business Ltd acquires shares of company and takes business loan out for 500,000
Repayments over 180 months are €5500 per month or €67,000 a year.
This €67,000 can come from the €80,000 net profit???
The interest on the loan comes out before tax. The capital repayments after tax.
Just a tangential question. Is the €80k profit after tax, after charging a salary for you. Will you have to work full time in the business. ?
If you're investing a substantial sum in a business, you need proper professional advice. The issues are far too layered and complex for proper consideration on an internet site like this.
I am inclined to agree. No disrespect, but you seem to be out of your depth on the financial aspects of this, and it is a huge commitment.
If the €90k profit is AFTER your salary, this seems expensive, if it is before your salary, then you seem to be significantly over paying.
If the €90k profit is AFTER your salary, this seems expensive, if it is before your salary, then you seem to be significantly over paying.