Re: Moving to a Ltd Company structure with existing personal business liabilities.

On 14 Feb, 20:35, Peter Saxton <p...@xxxxxxxxxxxxxxxxx> wrote:
On 14 Feb 2007 07:03:30 -0800, "G.J. Heirophant" <n...@xxxxxxxxxxxxxx>
wrote:





On 14 Feb, 11:42, Peter Saxton <p...@xxxxxxxxxxxxxxxxx> wrote:
On 14 Feb 2007 02:19:18 -0800, "G.J. Heirophant" <n...@xxxxxxxxxxxxxx>
wrote:

Hi,

I have a question relating to moving personal business assets into a
Limited Company Structure.

Ordinarily this should be straightforward - set up a new company with
the relevant capital, and use this to acquire the business assets that
were being used on a sole trader basis (as the assets relate mainly to
computer equipment, internet domains, intellectual property and
computer source code, this should be pretty simple). Basically, I need
to acquire the protection afforded by a Limited Company (and yes, I do
understand the responsibilities that go along with it), along with the
fact that it conveys a more professional image.

However, there is one big complication. I had a big legal complication
about a year ago, and ended up settling it for a not inconsiderable
amount of money rather than risk fighting it in the courts and losing.
I had to finance part of this via a loan, and while I've moved on and
can easily finance the repayments via regular cash flow, the
outstanding loan is starting to feel like a bit of an albatross around
my neck with regard to my ongoing plans.

As this debt is in my name, I suspect I can't just hand it over to XYZ
Ltd for a pittance (and as the loan was in my name, it will have to
remain in my name, even if the repayments originate elsewhere). The
thoughts I have come up with are:

1. Just pay it off completely (I could do it in about two years, but
would rather use my capital to set up a company sooner rather than
later).

2. Just keep it in my name, but keep back about 12 months worth of
repayments, set up the company, then in 12 months time extract enough
dividends to cover the next 12 months worth of repayments, etc.

3. Let the company acquire the debt and service it as part of the Sale
agreement.

Point number 3 is where I start to get a little unsure about A)
whether it is possible, and B) how it would be structured?

i.e. would I need to inject enough capital into the company to pay me
back the face value of the debt (in which case it would be no
different from just paying it off myself), or is it possible to
"discount" the cost of acquiring the assets taking into account the
debt (surely this must be a possibility).

I'm wondering, firstly, what if possible, but secondly, which would be
the most effective route.

Obviously I will employ an accountant to handle this sort of thing,
but right now, for my own interest, I'm curious about the best way
this can be handled.

Do 2

Does your business have any goodwill you could sell to the limited
company?

--
Peter Saxton from London
p...@xxxxxxxxxxxxxxxxxx Hide quoted text -

- Show quoted text -

There is some goodwill, although it is difficult to be objective and
peg a true value to it (esp. as what I effectively would be doing is
selling a business to myself).

I realise that but it is in your interests to do it.

Because...

Dr: Goodwill
Cr: Director's Loan

....gives him a fund from which to draw down?

.