Q: I'm already a limited company, but now I have a new business idea. Should I register a new company for that business right away? Is it a problem to run everything through my existing company initially and separate the businesses later?
Mar 29 2011
Answered by: Clive Lewis Ask a question
You do not mention the nature of the businesses which may have an impact on the way the new business idea is set up. Nor do you mention how it will be financed – for example whether there are any other shareholders. Your own personal tax situation would also have a bearing on the decision. Any response must therefore be very general. You would be advised to discuss the format of the new business with your accountant.
You are very clear that you plan to build up the new business idea and ultimately sell it. For that reason alone I would suggest that you should set the new idea up as a separate limited company. The sooner you start separately accounting for the idea and recording the business’ assets and liabilities and income and expenses the better. When you come to sell the business, having a complete trading history will facilitate discussions about its value. It may also make the tax position regarding the gain on disposal of the business easier to calculate.
Prior to the sale of the business, having a separate limited company with its own accounting records helps with the management of the business. If you need to raise finance, a separate trading history will help. Also if the business is eligible for grants from the government or the EU it is vital to maintain a clear distinction between your various businesses.
So from a number of points of view it is desirable to start a separate limited company. But you should talk the situation over with your accountant who will know your full personal situation and the circumstances of your various businesses.
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