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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3774
Experience:  Solicitors 2 years plus PQE
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I want to open a ltd company with myself as the only director. i am re

Resolved Question:

I want to open a ltd company with myself as the only director. i am retired on a state pension plus a small pension credit supplement. I receive 95% housing benefit and 90% council tax benefit. i do not want to draw any income from it, just pay the corporation tax, until I build up a bigger working capital and then pay myself a taxable salary and pay full council rent etc in Haringey. will my income position be more favorable if I have more company directors not drawing wages, so diluting any notional income?
will i have a problem with notional income?
Submitted: 1 year ago.
Category: Law
Expert:  Alex J. replied 1 year ago.
Hi, Thank you for your question and welcome. My name is ***** ***** I will assist you. Will the limited company trade? Will you also be shareholder of the limited company?
Customer: replied 1 year ago.
Hi Alex, yes it will be selling a card game and I will be director/shareholder.
Expert:  Alex J. replied 1 year ago.
Thank you. The company is not obliged to either (i) Give you salary or (ii) Distribute its profits. The issue you have is, if the shares become valuable and worth something would this affect your benefits? I suspect it might if the council started to do some digging. Is there anyone that can potentially hold the shares for you?
Customer: replied 1 year ago.
Probably family, but I think housing benefit will see 'income available' not taken, and I think they may work on a principle of you may not arrange affairs to gain or increase benefits?
Customer: replied 1 year ago.
Although the I'm not technically gaining as I'm already on benefits and am not trying to increase them
Expert:  Alex J. replied 1 year ago.
Hi, Thank you. If you do not own the shares then you will have no director legal entitlement to the income.
Customer: replied 1 year ago.
Hi Alex, in what way will I be able to arrange this? So will I still be the only director?
Customer: replied 1 year ago.
If I had other family members who have their own jobs elsewhere, as director shareholders, say three for example, who put in capital, would this reduce my profit liability to 25%? I can function with that. I'm worried HB will see someone else holding my shares as a dodge, a move for no reason? It might not be good to be seen chopping and changing company arrangements to keep my benefits. I would like to present a company setup first time that is more unbreakable so to speak.
Expert:  Alex J. replied 1 year ago.
Hi, Thank you. The point is you do not have to be a shareholder to be a director, therefore you can still manage the company and in the future potentially pay yourself director remuneration. If you own the shares, then you are potentially entitled directly to the profits and that could jeopardise future entitlement to benefits.
Customer: replied 1 year ago.
Hi Alex, I think I'm getting this now. Two directors and the other one has both or all shares? (The card game is my invention and the name is ***** ***** me). So if the other director is putting all the capital in, this looks better than putting in half each? As the other director will want to take his capital investment back first at a future date? And I'm managing it until there's enough money to repay his investment, and then take the game forward from there.
Expert:  Alex J. replied 1 year ago.
Hi thank you. Are you transferring ownership of the trademark and invention to the company? Kind regards AJ
Customer: replied 1 year ago.
Hi, What will happen if I do or not?
Expert:  Alex J. replied 1 year ago.
Hi, Thank you. You would need to licence this to the company for the company to be able to use it. This act would presumably cause you to be entitled to an income?
Customer: replied 1 year ago.
Hi Alex, Can we go at this from the angle of two to four family member directors including myself, with equal shares? And all putting in equal capital. I assume this would mean I receive an equal share of the profits which will be left in the company anyway with everyone else's. I would do the buying and selling of products for the company. We could all be directors and not employees?Then Housing Benefit can re-assess me on my share only, of one half, third or one quarter, and I would be happy with that, rather than trying to infer I'm not receiving any money at all, which I think they will not accept, and sour their whole approach to my benefits.
Expert:  Alex J. replied 1 year ago.
Hi, Thank you. That would work to the extent that your contribution is the assets (preferable you should license them to the company so you can get them back if the company goes insolvent) and the other family members will insert capital for their shares. The only point to note is, in order to declare a dividend you need 51% of the voting share capital to vote in favour of the dividend. Kind regards AJ
Customer: replied 1 year ago.
Hi Alex, I do not mind contributing some capital if necessary. I presume I can open the company myself and add family members later before any sales occur. I will bear in mind your good advice on licensing the game to the company. I understand my questions are a bit obvious in one way, but I have learned a few things so thank you. If that's all the advice I need now about my question, apart from any comments on this post, I am very happy, and satisfied.
Expert:  Alex J. replied 1 year ago.
Hi, Thank you - if you would like to discuss any thing further please let me know. I am happy to talk through some more general aspects of company law. In the mean time I would be most grateful if you rate my answer. Kind regards AJ
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