£50K of own money or business

[pallavkumaria]

I am running a company within the UK and currently on a PSW visa and need to apply for UK Tier 1 (Entrepreneur) visa. I have a business turnover of over £100K and I have been able to generate £50K+ with the business. As per what I have read on the UKBA site it mentions that PSW visa holders should invest there own money and business should have access to the same.

So, would my situation be alright that My business and I being the owner of the company have access to the money as it is already in the business or do I need to use my personal money and invest it in my own company to show that my company and I have access to £50K.

[entrepreneur123]

you can withdraw money as dividends then it will be your own money

I am running a company within the UK and currently on a PSW visa and need to apply for UK Tier 1 (Entrepreneur) visa. I have a business turnover of over £100K and I have been able to generate £50K+ with the business. As per what I have read on the UKBA site it mentions that PSW visa holders should invest there own money and business should have access to the same.

So, would my situation be alright that My business and I being the owner of the company have access to the money as it is already in the business or do I need to use my personal money and invest it in my own company to show that my company and I have access to £50K.

[pallavkumaria]

I thought so but when you withdraw money as dividends you need to pay all the taxes prior to doing so but if I keep the money in the business account and then invest that would be considered as a business expense, so would have to eventually pay less taxes and reuse the money. But the only thing that am not sure of is if the £50K money needs to come from outside the business or the money in the business can be considered.

[entrepreneur123]

oh ok. yes that's true, you will have to pay tax. According to policy you should have access to money for intial application, and money should be in your personal account. Now money your company have is not your money and belong to company. So i think easy option is just to withdraw it (i.e pay tax) and keep in your personal account (or later on transfer or invest it back in company by transfering back in company account) to keep things simple. wait for others reply.

I thought so but when you withdraw money as dividends you need to pay all the taxes prior to doing so but if I keep the money in the business account and then invest that would be considered as a business expense, so would have to eventually pay less taxes and reuse the money. But the only thing that am not sure of is if the £50K money needs to come from outside the business or the money in the business can be considered.

[KickAss]

Ok what I am suggesting is not recommended but still ill put it here

As a director of the company, you can put money in multiple business accounts. A major question here is, when is your companies financial year end date ? If you think you have plenty of time then you can for the time being Tx money from business account to your personal account. File the visa and then wait for outcome. After successful application, you can then move the money back to business account.
One wrong thing here is that money should be in business account. but as a director, I might find it more profitable to put money in savings account and earn interest. which is a debatable issue..

At the end of the day

1) You cannot take out money from business account for your personal expenses unless declared as dividend or its a legitimate company expense.

2) If you pay taxes and take out 50,000 pounds from your business account and then tx it back as an investment, then its a tax paid money and when ever company will make a profit that 50,000 is a directors loan and that can be txed back to you from company account.

So one way or the another, proper tax is being paid by you and the company.
One slight advantage of following my step is that one can apply as soon as company has 50-60K , keeping in mind the company has enough money left to meet its upcoming expenses and before filing returns for the company at the end of financial year, all the companies money should be back in company account.

P.S :- Many might not agree with my suggestion and I am not an accountant either, but I don't see anything wrong in my suggestion.
Would love to have experts advice me on this.
Cheers

[rehan01]

@ KickAss All i can say is you KICKED it again .............. SIR lol

[KickAss]

@ KickAss All i can say is you KICKED it again .............. SIR lol

Mate !
The way you keep on calling me SIR is making me feel like R Jadeja (Jr)
and sooner or later Admin's will block both of us !

You know any accountant on this forum ? if so PM him to advice on this please ..

Cheers

[rehan01]

i don't but I am sure couple of them who applied Tier 1 as Accountancy business but i guess they are not an active member on forum anymore

regards

@ KickAss All i can say is you KICKED it again .............. SIR lol

Mate !
The way you keep on calling me SIR is making me feel like R Jadeja (Jr)
and sooner or later Admin's will block both of us !

You know any accountant on this forum ? if so PM him to advice on this please ..

Cheers

[entrepreneur123]

you can do that if you want. However, if HMRC will caught you during investigation(they usually carry it after few years) then it will be trouble for you under s455, that this is extractions. However it really depends on HMRC inspectors. They might agree that even if you have transferred funds in your personal account under your own name, you are only acting as trustee of company funds. However they might object it. One way is to inform HMRC that you are moving funds because you are getting higher interest etc(you will need to transfer interest as income back in business account) and chances that HMRC will agree on this are low. I will suggest you to consult accountant before you make any transfers from your company account, and i doubt hardly any of them will recommend you to do that.

Ok what I am suggesting is not recommended but still ill put it here

As a director of the company, you can put money in multiple business accounts. A major question here is, when is your companies financial year end date ? If you think you have plenty of time then you can for the time being Tx money from business account to your personal account. File the visa and then wait for outcome. After successful application, you can then move the money back to business account.
One wrong thing here is that money should be in business account. but as a director, I might find it more profitable to put money in savings account and earn interest. which is a debatable issue..

At the end of the day

1) You cannot take out money from business account for your personal expenses unless declared as dividend or its a legitimate company expense.

2) If you pay taxes and take out 50,000 pounds from your business account and then tx it back as an investment, then its a tax paid money and when ever company will make a profit that 50,000 is a directors loan and that can be txed back to you from company account.

So one way or the another, proper tax is being paid by you and the company.
One slight advantage of following my step is that one can apply as soon as company has 50-60K , keeping in mind the company has enough money left to meet its upcoming expenses and before filing returns for the company at the end of financial year, all the companies money should be back in company account.

P.S :- Many might not agree with my suggestion and I am not an accountant either, but I don't see anything wrong in my suggestion.
Would love to have experts advice me on this.
Cheers

[pallavkumaria]

Option 2 is the safest case that you pay all of your taxes, take the money out as dividends and then reinvest it back and use the money as business expenditure. But I suppose still there must be some options for businesses that are already running and have funds with them which they can use for business expenditure in the future.