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Private Limited Company and the introduction of capital?

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  • 24-11-2003 2:22pm
    #1
    Slydice
    Registered Users Posts: 10,501 ✭✭✭✭


    How do you go about introducing personal finance into a private limited company?

    Say i just got 500 euro from the horses... how can i put that into a PLC where i am a 50% shareholder?

    the money would be used to pay off expenses the comany usually has to deal with.


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    #2
    Victor
    Registered Users Posts: 78,370 ✭✭✭✭Victor


    Two ways - loan the money to the company or buy shares. Loaning the money means you don't own any of the company, but at least make it to the creditors list if the company goes down the tubes. If you charge interest, that interest is subject to DIRT / Income Tax (worst case 42%). If you get a dividend instead (from shares) you are also subject to Corporation tax at 12.5%.

    PLC = public limited company. Most PLCs are very large companies and / or are listed on the stock exchange. The difference is the number of shareholders the company is allowed have.


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    #3
    Slydice
    Registered Users Posts: 10,501 ✭✭✭✭Slydice


    Originally posted by Victor
    Two ways - loan the money to the company or buy shares. Loaning the money means you don't own any of the company, but at least make it to the creditors list if the company goes down the tubes. If you charge interest, that interest is subject to DIRT / Income Tax (worst case 42%). If you get a dividend instead (from shares) you are also subject to Corporation tax at 12.5%.

    So If I loan, as a private person (is this allowed?) i.e not a sole trader - just a random person off of the street, to the company and ask for no interest back.... an interest free loan. Do i get charged any tax on the repayments of the loan which the private limited company makes to me?
    Originally posted by Victor
    PLC = public limited company. Most PLCs are very large companies and / or are listed on the stock exchange. The difference is the number of shareholders the company is allowed have.


    Sorry you get me confused... when i said PLC i meant Private Limited Company. Am i supposed to use LTD as the proper abbreviation?


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    #4
    Victor
    Registered Users Posts: 78,370 ✭✭✭✭Victor


    Originally posted by Slydice
    So If I loan, as a private person (is this allowed?) i.e not a sole trader - just a random person off of the street, to the company and ask for no interest back.... an interest free loan. Do i get charged any tax on the repayments of the loan which the private limited company makes to me?
    Samson -v- Samson Ltd. makes it clear that a loan to the company can be made by anyone and remains as a loan, not equity (shares). And no you won't be charged tax as the company is merely repaying a loan, not paying interest.
    Originally posted by Slydice
    Sorry you get me confused... when i said PLC i meant Private Limited Company. Am i supposed to use LTD as the proper abbreviation?
    Yes, your typical small business is a Ltd., I think a PLC has to have at least 10 shareholders.


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    #5
    ur mentor
    Registered Users Posts: 237 ✭✭ur mentor


    Lending money to company for no interest so they can pay off their running expenses sounds like a poor idea to me.- even if you are a 50% shareholder.
    If you are lending company money then it may be better if it is for capital purposes- say expanison, buying new equipment etc.
    To lend a co money to pay off running expenses means the co is out of cash. this means either its customers are not paying it or the expenses are greater than income.
    Most cos fail because they run out of cash not because they run out of sales.
    if you just lend in money you will be unsecured creditor and it would appear to me in a worst case scenario you may never be repaid. You can also do preference shares and a debenture if you wish but for 500 yoyos its hardly worth it.


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