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Currently in the process of buying a hotel apartment that we've decided it might be better to buy as a company rather than as individuals (easier with all the different names involved when it comes to VAT registration and all) but I have absolutely no idea where to start!

Is it quite a straightforward process or is it worth using one of these companies that seems to do it all for not a lot of money in the grand scheme of things?

Also does anyone know about business bank accounts and which ones are better than others? They seem to charge for everything which came as a bit of a shock compared to personal bank accounts..........

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If you want a Ltd. company you can buy one of the shelf as you have found, bank accounts for business can be a mine field it depends on number of tramsactions for most. I think there is a search engine and adive on moneysavingexpert. What I would advise unless ant of you have any accounting experience and have run a compnay before ( HMRC returns etc. ) then you go and speak to an accountant for advice first. £100 spent now might save it many times over. Also if it's going to be abroad maybe it might be better to have bank account over there?

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If you want a Ltd. company you can buy one of the shelf as you have found, bank accounts for business can be a mine field it depends on number of tramsactions for most. I think there is a search engine and adive on moneysavingexpert. What I would advise unless ant of you have any accounting experience and have run a compnay before ( HMRC returns etc. ) then you go and speak to an accountant for advice first. £100 spent now might save it many times over. Also if it's going to be abroad maybe it might be better to have bank account over there?

Cheers Steve, I'm actually a trainee ACA so know a bit about the accounting side of things but may go for the straight out the box option then to begin with, as it's not really a lot of money but removes a lot of the hassle and makes it easier to learn the ropes without taking on any risk myself in that area. It's all in the UK so at least that added complication isn't there for now :)

I'll have a look around moneysavingsexpert thanks, do you recommend any of those companies in particular or will most of them be adequate for this purpose?

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If you own a hotel room, holiday house etc as a LTD company then YOU the owners actually have to declare every time you visit and I believe that has tax issues that aren't in your favour.

We looked at this very issue a few years ago, should we buy them via our existing company or privately? after several meetings with the accountant we decided the most tax effective way was to buy and run them privately. We have one in Turkey and one in Paris.

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Thanks, the hotel's actually in london, so using it ourselves isn't really a concern but will have to bear that in mind if we look at doing this anywhere else. The main reason for the company idea is to try to simply things as we're buying between 5 different names.

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do you recommend any of those companies

I can't recommend any but i guess like anything else look at the websites and small print and try and determine price / what they give. Bear in mind there is something called "Articles of Association" ( thinks that what it is ) and these have to detail the functions / business area the company will work in, these can be changed after but will cost. Also you can change company name too if you want at a cost.

This is just what I remember when I set mine up my company many moons ago, I'm assuming the basics are still the same.

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I set up a Ltd a couple of years ago and was pleasantly surprised how easy it was. I used a 'company formation' company to make the process easy - they were called UK PLC which I'm sure you can find on Google easily enough. Whilst it's true you pay a little more (it wasn't that much, something like £50) it was done in a day or two and they sent me the proper paperwork in a few days. That was a Certificate of Incorporation, the Memorandum of Association (which has a really wide scope, I can do almost anything without needing to change them) and they also sent the initial share capitalisation stuff. You will need an original CoI in order to open a business bank account, so it's a false economy to not get one up front.

Once I had those I was able to register for VAT, which officially takes about 2 or 3 months, but in practice I had a VAT number in about 3 weeks. You can also use this time to go and talk to banks about setting up company accounts. Out of laziness, I went to Lloyds since I bank with them personally and to be honest they're not too bad. I know what you mean about the charges though - it's a completely different game compared to personal banking. I have a hard time hearing people whine about personal bank charges (which are almost always self-inflicted one way or another) when compared to the charging regime of business banking. That said, if you don't put many transactions through, and don't expect much in the way of interest, you can get the banking service very cheaply indeed - a few pounds per year maybe.

I know you're part-way through your accounting course, but you do need to keep on top of accounts at all times. Running a business has implications beyond what you might expect; full annual personal tax returns are mandatory for all company directors and people with large proportional holdings in companies. Also you will need to check your contract of employment where you work now, technically you might be forbidden from operating another business (though this is unlikely, in reality, to be much of a concern). The business itself needs to provide VAT returns either quarterly or monthly depending on size, you may or may not be eligible for flat-rate VAT, and you will also need to keep and file every scrap of paperwork and receipt. On an annual basis you will need to file business accounts and also provide a return to Companies House to provide up to date details of all company officers.

This all costs money, and it goes on costing each year - perhaps more than getting a solicitor to draw up some sort of contract between you and your associates? But it's fun being able to put 'company director' on your car insurance... ;-)

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I set up my company through http://www.oswalds.co.uk

Then used Bank of Scotland for the accounts. Managed to get the first year banking free from them i.e. no charges at all. Now into 2nd year & the cahrges are coming in but this is unavoidable, dont think any banks (please someone let me know if there is) do bussiness account charge free.

Good luck

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You don't have to register for VAT unless you are putting something like £60k through your books each year, but you can if you want to ( hardly worth it though as you then end up charging the consumer and if it's a private individual then it means you are charging them more as they can't claim it back ).

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Cheers Mike, a lot of very useful information there! Of course, most of this goes way over my head at the moment, so I wouldn't dream of taking on the accounts myself yet.........I'll be using a "proper" accountant for that (at least to begin with anyway) :)

I'm still in the process of researching it though, from a tax efficiency perspective it's definitely the best option but it does appear to require more work than buying as individuals or alternatively via a trust.

You don't have to register for VAT unless you are putting something like £60k through your books each year, but you can if you want to ( hardly worth it though as you then end up charging the consumer and if it's a private individual then it means you are charging them more as they can't claim it back ).

We will be registering for VAT (despite probably being under the normal limit) due to the fact it's a hotel and therefore has VAT on the purchase price and all its operations. However the VAT side of things will be handled by them so not something that will cause us any extra hassle.

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VAT doesn't really work like that mate. If you are VAT registered, you must charge VAT on your sales (unless, and only unless, the goods or services are VAT exempt). You don't have to register for VAT solely because hotel rooms are VATable sales. You only need to register for (and charge) VAT once your turnover hits about £60k a year. I'm not sure quite how it works with hotel rooms but I would imagine the hotel operating company would charge VAT on the rent of the room to the customer, and then pay you the agreed proportion of that, but not add VAT onto that price.

One other piece of advice - think carefullly before jumping into business with friends (and I'm assuming it is friends, you don't really say!) What will happen, for example, if one of you wants to keep using the room for himself and therefore making it unavailable for rent? That will hit the rest of you in the wallet too - and it will get annoying. What if one of you wants to leave? How will you handle it if some of you want to use the company for some other business? What if someone decides to ignore the law and start using company funds for his own purposes (eg extract 20% of it 'because I own a fifth of the company' to buy a car?

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I set up my company through http://www.oswalds.co.uk

Then used Bank of Scotland for the accounts. Managed to get the first year banking free from them i.e. no charges at all. Now into 2nd year & the cahrges are coming in but this is unavoidable, dont think any banks (please someone let me know if there is) do bussiness account charge free.

Good luck

Lloyds TSB gave me a free business account for 18 months but I don't know if this is only for start up businesses or if it is still available given the current financial climate.

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VAT registration works both ways

yes you have to charge it, but most companys, wholesalers, etc wont deal with unregistered companys anyway

and you can also claim VAT back against anything you purchase or pay out, for the business

it is also a good sign of a "proper" company

business account charges are pretty much the norm, theres always room to negotiate them though !!

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VAT doesn't really work like that mate. If you are VAT registered, you must charge VAT on your sales (unless, and only unless, the goods or services are VAT exempt). You don't have to register for VAT solely because hotel rooms are VATable sales. You only need to register for (and charge) VAT once your turnover hits about £60k a year. I'm not sure quite how it works with hotel rooms but I would imagine the hotel operating company would charge VAT on the rent of the room to the customer, and then pay you the agreed proportion of that, but not add VAT onto that price.

One other piece of advice - think carefullly before jumping into business with friends (and I'm assuming it is friends, you don't really say!) What will happen, for example, if one of you wants to keep using the room for himself and therefore making it unavailable for rent? That will hit the rest of you in the wallet too - and it will get annoying. What if one of you wants to leave? How will you handle it if some of you want to use the company for some other business? What if someone decides to ignore the law and start using company funds for his own purposes (eg extract 20% of it 'because I own a fifth of the company' to buy a car?

One of the things they've told us from the outset is that we have to register for VAT............partly because there's VAT on the purchase price as well (commercial building). The returns are a bit of an unknown quantity at the mo, for the first few years there's a guaranteed return, but beyond that it's all a bit new to know for sure.

Sorry wasn't clear, no it's not friends, it's family. Parents are the ones who are buying, but want to buy in all of our names (5 in total) - we're still looking into whether to buy as a trust or company, leaning towards company due to the tax efficiency advantages. You can't actually say you want to keep the room for yourself anyway though, operation is in the hands of the hotel so you can't use it personally more than a small allocation (which we've given up anyway as you get a higher return)

I've just seen that Abbey do a business account that has pretty much no charges on it, and may be easy as I already bank with them. Will have to pop into my branch and find out more about it.

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One of the things they've told us from the outset is that we have to register for VAT............

I'm getting a bit confused following this thread now. If this is the case, you can't buy as an individual anyway??

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One of the things they've told us from the outset is that we have to register for VAT............

I'm getting a bit confused following this thread now. If this is the case, you can't buy as an individual anyway??

No they've said it's fine, all 5 names would be on the VAT registration, but it would be linked to one bank account (obviously).

You could always register as a LLP, Limited Liability Partnership.

Problem with an LLP is that it doesn't really provide the tax advantages so wouldn't be as worthwhile, may as well just be a partnership as the limited liability in this case wouldn't really make much of a difference.

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I've read this thread and as far as I can see there is not enough information.

If I got this right?

You buy the room - are you charged VAT on the purchase?

If yes register for VAT.

Are there ongoing management costs - Agent for cleaning and bookings etc?

They will charge VAT that can be reclaimed if you register.

How do you get the revenue?

Do you invoice if you are registered you must charge VAT that the management company can reclaim.

Incorporation only works on the tax front if you pay yourselves through dividends, the gains are dependant on how much you earn through PAYE and on how much of the costs you can offset against profit.

Best bet is to get professional advice, then go Ltd company and only tell the accountant what you want him to hear!

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I've read this thread and as far as I can see there is not enough information.

You buy the room - are you charged VAT on the purchase?

If yes register for VAT.

Yes we are, that's one of the main reasons for the VAT registration I think, as well as ongoing business.

Are there ongoing management costs - Agent for cleaning and bookings etc?

They will charge VAT that can be reclaimed if you register.

How do you get the revenue?

Do you invoice if you are registered you must charge VAT that the management company can reclaim.

Both these questions should probably get answered together. It is at the end of the day a normal hotel, just in this case the rooms are owned by individual investors rather than one individual or company owning all the rooms. The hotel operator (Park Plaza) will use the hotel exactly as they would any normal hotel.........as owners we have no control over how it is run.

What Park Plaza will do is sort out all the expenses and everything, and simply pay us a profit share of whatever is left over. For the first few years it's simply a 6% guaranteed return, beyond that it will be an actual profit share.

This is the hotel: 1 Westminster Bridge

Incorporation only works on the tax front if you pay yourselves through dividends, the gains are dependant on how much you earn through PAYE and on how much of the costs you can offset against profit.

Exactly, dividends and also the potential to pay into pensions tax free are two of the reasons for going this route.

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Ah, I did wonder if it might be that building. I'm looking at it right now from the office window, and have been watching it slowly go up for the last 18 months... :)

Just to clarify one point from a couple of posts ago - you don't have any names on the VAT registration. Your Ltd company will be registered for VAT - there is no personal stuff on it at all because VAT is only applicable to the company's accounts and not yours personally.

MacRS200 - only telling the accountant what you want him to hear is poor advice... If the accountant advises you wrongly it is YOUR fault because you mislead him. Tax (or VAT) evasion carries a jail term. You won't even be able to give 'I took professional advice' as a defence because the paperwork will show you knew different at the time you spoke to him. That's why it would be classed as deliberate evasion and not a mistake - not a good move! If there's one set of government people you really want to avoid stirring up, it's the VATman. :o

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Just to clarify one point from a couple of posts ago - you don't have any names on the VAT registration. Your Ltd company will be registered for VAT - there is no personal stuff on it at all because VAT is only applicable to the company's accounts and not yours personally.

That is what was confusing me earlier in the thread. They could not purchase as Individuals (or a group of individuals) if they have to be VAT registered to make the purchase. Therefore there is no choice but to set up a company to make the purchase.

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Just to clarify one point from a couple of posts ago - you don't have any names on the VAT registration. Your Ltd company will be registered for VAT - there is no personal stuff on it at all because VAT is only applicable to the company's accounts and not yours personally.

That is what was confusing me earlier in the thread. They could not purchase as Individuals (or a group of individuals) if they have to be VAT registered to make the purchase. Therefore there is no choice but to set up a company to make the purchase.

When I spoke to the company handling all the VAT registrations, he said we could do it as individuals, it would still be one VAT registration but all names would be on it. However, having a "single entity" would simplify things, which is why we started looking down the company route. Essentially it would be the same as being a sole trader/partnership if we did it as individuals.

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Ah, I did wonder if it might be that building. I'm looking at it right now from the office window, and have been watching it slowly go up for the last 18 months... :)

How is it coming up? Haven't been round there in a while so haven't seen how far its got...........was supposed to complete this year originally, but now it's been pushed back to early 2010 and wouldn't be surprised if it goes back a bit further - although no bad thing for us as it means we don't need to pay anymore money but what we have paid is still earning interest :whistling:

You can register for VAT as an individual or individuals if you were to choose to go that way. I still think you need professional advice on what route best suits all participants requirements.

Cheers Steve, yep have had some advice but that was from an accountant, think I'm going to visit a few tax planners to get a further insight.

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Ah, I did wonder if it might be that building. I'm looking at it right now from the office window, and have been watching it slowly go up for the last 18 months... :)

How is it coming up? Haven't been round there in a while so haven't seen how far its got...........was supposed to complete this year originally, but now it's been pushed back to early 2010 and wouldn't be surprised if it goes back a bit further - although no bad thing for us as it means we don't need to pay anymore money but what we have paid is still earning interest :whistling:

It's coming on quite well now. I think it's now reached as high as it's going to, because they have stopped going upwards and are now building what appears to be a final roof support structure closer in towards the centre of the building. Most of it is now clad in the black glass with the funny long upright coloured pieces sticking out at 90 degrees. Of course, I can't tell what's going on inside, but there are lots of people doing stuff on each floor (must be about 10ish floors) all the time, so I guess the purpose of glazing the exterior is to let them work on the inside as well as the main structural stuff at the same time. There is a stripe on one side which isn't glazed at all, I think they are using that section to get larger items inside using the crane to any floor they want.

Actually - looking at the website, the unglazed section is the bit that will have clear glass, looking out over Westminster bridge towards parliament. Will be very smart when it opens!

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