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Original poster

Any bookkeepers/accountants able to give some advice?

35 replies

Helpmepleass · 22/10/2022 08:13

My DH and I have recently inherited my FIL business after he passed away unexpectedly earlier this year.

We are really wanting to make things work so neither of us are currently taking a wage out of the business in order for it to grow (as there wasn’t much in it to begin with).

My DH and I found out after FIL death that he and my MIL had virtually no money. Since then we have had to pay (from our personal accounts) for the funeral and now we have had to take on their mortgage and some other bills which is a massive strain.

We do plan on taking a wage out of the business at some point but we wanted to wait until there was more money in it.

Anyways, cutting to the actual point. We’re worried we can’t afford Christmas presents for our children this year and was wondering what our options were for taking money out of the business account. Is there anything we can do without it being classed as a wage? It’s a limited business.

OP posts:
jollyjester · 22/10/2022 08:18

If the business was a limited company your FIL should have an accountant engaged.

You and your DH need to speak to the accountant regarding everything.

Please do not listen to unqualified advice on an internet forum as there will be many legal hoops to satisfy.

Sorry for your loss Flowers

SedentaryCat · 22/10/2022 08:23

Agree - you will need to speak to an accountant as they will advise.

Sorry to hear of the loss of your FIL. Flowers

Original poster
Helpmepleass · 22/10/2022 08:24

Thank you

We do have an accountant however he’s quite difficult to talk to about things and we are planning on changing accountant when we get everything into order.

OP posts:
Hoppinggreen · 22/10/2022 08:26

If you are company directors you can take dividends out as long as you leave enough in to keep the company viable and declare them on your year end Self Assessment as income.

nicknamehelp · 22/10/2022 08:27

So long as you mark on book keeping records exactly what it was for accountants will sort it out when have accounts prepared. I've had clients pay for all sorts on business account.

FinallyHere · 22/10/2022 08:27

planning on changing accountant when we get everything into order.

I understand that you would prefer to do things in the order. The fact of business as you are already finding out is that you need good advice in order to get the business into good shape.

Get a different accountant

Ask around and get a recommendation. Talk to potential people and go from there.

DaphneduM · 22/10/2022 08:34

This sounds very difficult for you. You mention taking on their mortgage - is this for their business premises?

Original poster
Helpmepleass · 22/10/2022 08:46

Hoppinggreen · 22/10/2022 08:26

If you are company directors you can take dividends out as long as you leave enough in to keep the company viable and declare them on your year end Self Assessment as income.

Our accountant mentioned a few months ago that we can take out a dividend OR get a wage. As we are planning on taking out a wage eventually, would this stop us from taking out a dividend just now?

OP posts:
NorthernDuckling · 22/10/2022 08:47

@Hoppinggreen you can’t take dividends as a director you need to be a shareholder to take dividends. Often in small businesses they are the same people but not always, the shares may still be owned by FIL’s estate.
you need to ask your accountant or get another one if they don’t get back to you. Look on the ICAEW website and find a good chartered accountant.

Original poster
Helpmepleass · 22/10/2022 08:49

nicknamehelp · 22/10/2022 08:27

So long as you mark on book keeping records exactly what it was for accountants will sort it out when have accounts prepared. I've had clients pay for all sorts on business account.

Ok thank you.

I would be planning to take cash out of the business account to pay for the presents, would this still be OK as long as I tell the accountant?

OP posts:
NorthernDuckling · 22/10/2022 08:50

Also you can only take dividends if there aren’t retained profits available to draw on. I suspect if @Helpmepleass has had to put money in there are not reserves available and these dividends would be illegal dividends.
Op needs to get advice from an accountant who knows the shareholding, their personal financial situation and the reserves of the business.

Wardrobemalfunction22 · 22/10/2022 08:51

You say you've "taken on the business" but how? Did you buy shares? Have you been appointed as a director? Are you employees as well as being either shareholders and/or directors?

The answers to this will indicate how you can extract money from the business.

Original poster
Helpmepleass · 22/10/2022 08:52

DaphneduM · 22/10/2022 08:34

This sounds very difficult for you. You mention taking on their mortgage - is this for their business premises?

The company address is registered under the mortgage address of my MIL. Due to the type of business there is no business activity that happens at this address

OP posts:
Original poster
Helpmepleass · 22/10/2022 08:52

NorthernDuckling · 22/10/2022 08:47

@Hoppinggreen you can’t take dividends as a director you need to be a shareholder to take dividends. Often in small businesses they are the same people but not always, the shares may still be owned by FIL’s estate.
you need to ask your accountant or get another one if they don’t get back to you. Look on the ICAEW website and find a good chartered accountant.

Ok thank you for this

OP posts:
Motnight · 22/10/2022 08:54

You need proper advice.

Business sounds like a money pit!

Original poster
Helpmepleass · 22/10/2022 08:57

Wardrobemalfunction22 · 22/10/2022 08:51

You say you've "taken on the business" but how? Did you buy shares? Have you been appointed as a director? Are you employees as well as being either shareholders and/or directors?

The answers to this will indicate how you can extract money from the business.

It is a private limited by shares company and I am the sole director. Im not an employee.

I feel so out of my depth with this! I’ll give my accountant a call on Monday and ask if he can meet with me.

OP posts:
OhNoOhDearOh · 22/10/2022 08:59

You can take out a directors loan and will need to pay the money back, or dividends if you’re a shareholder.

but ultimately the solution sounds here that you need to not be paying this extra mortgage…

AuditAngel · 22/10/2022 09:01

I’m a qualified accountant and I think you really need to get some professional advice as you currently don’t have the business experience to make decisions. This isn’t a criticism, I don’t know what you’ve done in the past, and I certainly don’t have the skills for all jobs.

One person on this thread gave incorrect advice, which fortunately has been corrected. If the accountant is hard to get hold of, find out if they have a support team, one of them is likely to have the skills to assist you. My boss is really hard to get hold of, so I field lots of calls on her behalf.

Summersdreaming · 22/10/2022 09:02

Do not use the business bank account as your own. Have you both given up work to take the business on? Who's mortgage are you paying? If it's MILs house can it be sold to buy another property outright? You are going to end up in a mess very quickly here. Find another accountant ASAP, once you have signed letters of engagement and passed anti ML checks they can start to advise you whilst the rest of the company paperwork is moved over to them (make sure you ask for back ups from the accounting software if the book keeping was done in house and not on software owned by the company).

Autumndays123 · 22/10/2022 09:13

Helpmepleass · 22/10/2022 08:57

It is a private limited by shares company and I am the sole director. Im not an employee.

I feel so out of my depth with this! I’ll give my accountant a call on Monday and ask if he can meet with me.

Show quote history

A director is an employee

burnoutbabe · 22/10/2022 09:15

It may well be better to close down this business and get it struck off.

If it's making no money and had a large mortgage (and no assets?) then its potentially insolvent and you should not be trading further.

But you need an urgent meeting with the accountant to understand who owns it /what's it worth etc.

Autumndays123 · 22/10/2022 09:15

Options are:
Pay dividends if a shareholder. The nil rate is 2k, you won't pay tax on less than this
Withdraw money from the business account as a director's loan. Either pay it back before the year end, or the company pay tax on it. When you repay the loan the company will get relief.
Take a salary

Indigoo03 · 22/10/2022 09:17

Assuming you have no other dividends you can take £2k tax free as dividends from business? Has your business got retained profits? Has it been making money?

fruitbrewhaha · 22/10/2022 09:29

Why have you taken on a mortgage?

it sounds like it’s your MIL’s house but nothing to do with the business, is this correct? If there’s is no money coming in you need to sell this property and find somewhere else for your mil. Unless she is is earning? But I suspect not from what you’ve said.

sound like a lot to unravel

Wardrobemalfunction22 · 22/10/2022 13:35

Definitely meet with an accountant as soon as possible. If you're the sole director then I assume someone else still owns the shares? Is this MIL, or the estate of FIL?

You have different options for taking money depending on whether the company has cash reserves. Think of the company as a legal "person". As a director you can lend to or borrow from the company. You can be paid directors fees and will need to put these through payroll to pay PAYE and NI/pension at the relevant statutory limits. You don't own the company, so you'll have to repay any money you borrow via a loan.

Does the company own MIL house or is it just the registered address? It is easy to change the registered address. If the mortgage/house is being used as security for money previously loaned to the company then you'll need to repay the mortgage at some point, either by selling the house or getting funds from elsewhere.

To advise you properly I would want to review 3 years of past accounts and have full access to all the company's books. The company's current accountants should be more responsive and if they're not, they might jump a bit quicker if you tell them they're being replaced.

Don't wait until you're in more of a mess. Things like VAT returns and PAYE reports have to be done in real time now. There are lots of regulations you need to be aware of as a company director so better to have your eyes opened now.