Limited Company


P

PlusNet

Can anyone give me a little advice, please?

I have a Limited Company that has traded for five years as a business
network, business advice & selling various items. There are now virtually
no assets (all have been written off anyway) and in any case are only the
logo, website and a pop up display unit. There are no debts and no
creditors; the business has not traded for almost a year, however there are
around £9000 in Directors loans plus two years declared losses of around
£4000.

Is this business worth anything? If so how can I sell it? Or should I just
close it down?

Many thanks

Ian
 
Ad

Advertisements

R

Ronald Raygun

PlusNet said:
Can anyone give me a little advice, please?
The irony of it. If you've been in the business of giving
business advice, it seems to me this is the sort of question
you should be in a position to answer yourself. :)
I have a Limited Company that has traded for five years as a business
network, business advice & selling various items. There are now virtually
no assets (all have been written off anyway) and in any case are only the
logo, website and a pop up display unit. There are no debts and no
creditors;
"No debts" would normally be interpreted as meaning that the business
owes no-one anything. Creditors are people to whom the business owes
something. Therefore to say "there are no debts and no creditors"
means exactly the same as just "there are no debts" or as "there are
no creditors".

Did you perhaps really mean to say that there are no debtors and no
creditors? Debtors are people who owe you money, and so this would
mean that there exist no debts in either direction, i.e. nothing is
owed to the business, and the business owes nothing.
the business has not traded for almost a year, however there
are around £9000 in Directors loans
What kinds of directors loans? Is this money the directors have lent to
the company, or the company has lent to the directors? And whatever the
answer is, this is contrary to your claim that there are no debts.
plus two years declared losses of around £4000.
Is this business worth anything?
I wouldn't have thought so. The purpose of a business is to make money,
and its real value is related to its capacity to make money, rather
than simply to the value of its assets. A business which has made a loss
for the last two years it has traded is hardly going to be an enticing
prospect for a budding entrepreneur.
If so how can I sell it? Or should I
just close it down?
I think you should just close it down.
 
P

PlusNet

Ooops Sorry I meant no debtors or creditors. The directors loans is money
that I lent to the company, apart from this there are NO outstanding debts.

As far as the value goes - surely this company would be a good buy for
someone just starting up in business or someone who is at present a
sole-trader. I may not be an accountant and may have got my words slightly
incorrect but wouldn't the new owner be able to offset future profits
against these directors loans and (if in the same line of business) against
previous losses?

Perhaps I posted to the wrong news group, I thought there may be some
accountants out there with some business acumen.
 
T

Troy Steadman

Ooops Sorry I meant no debtors or creditors.  The directors loans is money
that I lent to the company, apart from this there are NO outstanding debts.

As far as the value goes - surely this company would be a good buy for
someone just starting up in business or someone who is at present a
sole-trader.  I may not be an accountant and may have got my words slightly
incorrect but wouldn't the new owner be able to offset future profits
against these directors loans and (if in the same line of business) against
previous losses?

Perhaps I posted to the wrong news group, I thought there may be some
accountants out there with some business acumen.
The loan is a problem - would you buy a company that owed somebdy
£9,000? The company ought to pay it off...

Yes the losses have value to someone starting out in an identical
trade. But having a pristine company with no baggage has value as well
- who wants to take a risk on Tax & VAT etc being handled properly in
the past?

Your company is more trouble than it is worth so - as Ronald advised -
proabbly best to strike it off.
 
P

PeterSaxton

Ooops Sorry I meant no debtors or creditors.  The directors loans is money
that I lent to the company, apart from this there are NO outstanding debts.

As far as the value goes - surely this company would be a good buy for
someone just starting up in business or someone who is at present a
sole-trader.  I may not be an accountant and may have got my words slightly
incorrect but wouldn't the new owner be able to offset future profits
against these directors loans and (if in the same line of business) against
previous losses?
What have directors loans got to do with future profits? Directors
loans are capital and profits are revenue.

How are you going to find somebody in the same line of business who
wants or needs a company? The tax losses are worth a few hundred
pounds. Nobody sensible would be interested in that given the
disadvantage of an old company.
Perhaps I posted to the wrong news group, I thought there may be some
accountants out there with some business acumen.
It's pretty obvious why the business failed. You didn't get the answer
you were hoping for so you resorted to childish insults. Who would
take advice from somebody that immature?
 
M

Mike Lewis

PlusNet said:
Ooops Sorry I meant no debtors or creditors. The directors loans is money
that I lent to the company, apart from this there are NO outstanding
debts.

As far as the value goes - surely this company would be a good buy for
someone just starting up in business or someone who is at present a
sole-trader.
<snip>

It's not a good buy. Nice shiny new companies with no skeletons in the
cupboard are dirt cheap.
 
Ad

Advertisements

F

Fred

PeterSaxton said:
What have directors loans got to do with future profits? Directors
loans are capital and profits are revenue.
I thought directors loans were loans where the money is to be repaid. Share
capital would be capital which can only be "taken out" after paying
corporation tax and personal tax when appropriate.

I would have thought the loans would only be repayable to the directors and
can't just be assigned on a whim?
How are you going to find somebody in the same line of business who
wants or needs a company? The tax losses are worth a few hundred
pounds. Nobody sensible would be interested in that given the
disadvantage of an old company.
Corporation tax on £4,000 is closer to a £1,000 than a few hundred, though I
agree with the sentiment it would would relaistically cost a few hundred of
accountant's time to sort out the mess.
It's pretty obvious why the business failed. You didn't get the answer
you were hoping for so you resorted to childish insults. Who would
take advice from somebody that immature?
I feel you're both being unfair to each other. It doesn't matter why the
business failed, it has; and the question the OP was asking was how to use
the loss to his advantage.

As long as the company has a good credit history, there are advantages to
having an older company when it comes to credibility. It is something I've
been asked.

With the director's loans being repayable on demand, I this is all very
maginal and not without risk.
 
P

PlusNet

OK Guys - thanks for all your help & comments. The company has absolutely
"no skeletons in the
cupboard", it has an excellent credit record and has not traded for over a
year (this would surely give time to get rid of any skeletons if there were
any).

I now work for someone else, I enjoy the job and am well paid but on PAYE.
So I don't have the opportunity to earn any money through the Limited
company which is a shame as I pay high rate tax and there is £9000 which I
could repay to me if I could put anything through the business (and be worth
around £3600 to me.

I had imagined that if I sold the company then I could transfer these loans
to the new directors who could then repay themselves these loans out of
earning or profit.

Anyway - thanks for all your help.

Ian
 
P

PeterSaxton

I thought directors loans were loans where the money is to be repaid.  Share
capital would be capital which can only be "taken out" after paying
corporation tax and personal tax when appropriate.
They are. The OP acted like you can get some tax relief on them. They
would either be written off or repaid making the company even less
valuable.
I would have thought the loans would only be repayable to the directors and
can't just be assigned on a whim?
It's not a whim but a sensible decision.
Corporation tax on £4,000 is closer to a £1,000 than a few hundred, though I
agree with the sentiment it would would relaistically cost a few hundred of
accountant's time to sort out the mess.
Depends what you mean by a few hundred. Certainly it's not worth the
effort of trying to find a buyer.
 
Ad

Advertisements

J

Jonathan Bryce

PlusNet said:
OK Guys - thanks for all your help & comments. The company has absolutely
"no skeletons in the
cupboard", it has an excellent credit record and has not traded for over a
year (this would surely give time to get rid of any skeletons if there
were any).
That may be so, but other people don't know that. And given that it only
costs about £50 to set up a new company, why would anyone want to buy
yours?
 

Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Similar Threads


Top