using a company to bring down farm tax??

richie123

so heres my big idea (ill admit first off im not well up on accountancy!)
set up a company... my self and bro are directors
transfer machinery assets into,mainly plant and silage equipment(we do our own silage and digger work roughly 20 to 25 grand worth per year)

The idea is bill the farm for the work done by the company(that i own)..the advantage being that bill can be used by the farm better as its 100% tax dedutable plus the wages i pay myself an bro out of the company is 100%tax efficient(which is not the case as a sole trader)

lastly company tax rate is currently a fairer 12.5% of profits.

no dout theirs probably lots of problems with this idea any crititism of it is welcome.
Note ..no land stock or buildings involved with company.

brian_t

I would imagine some larger farms are already doing this.

I would also think that it would be no harm doing a part-time or night course in basic accountancy or business studies first before setting up a company.

Dunedin

brian_t wrote: »

I would imagine some larger farms are already doing this.

I would also think that it would be no harm doing a part-time or night course in basic accountancy or business studies first before setting up a company.

IFAC are pressing this big time.

I work off farm also and they are proposing to me to set up as Company.


on a secondary note, I don't think a basic accountancy course would be adequate. I have a decent accountancy head but would still be well short in terms of knowing enough to set up a company or even just to be able to have a enough education in terms of the pro's and con's.

................. I leave that to the accountant.:D:D

dar31

go talk to an accountant,
if you are with ifac, they have people who know this area inside out
this is when the differance between your €300/yr and €3000/yr accountant
show through one will do your tax returns, the other will save you multiple of their fee.
you need to consistently be having profits in the high tax band to be of any benifit

maxxuumman

Did something like this a number of years ago. Machinery was purchased under new company and did work for own farm. This company was VAT registered. Worked for a while, but in the end the accountant recommended that company be shut down and the assets be transferred to me. Accountant was never in favour of it from day one, he's a very progressive accountant , but wasn't mad about the setup. I did no contract work except for the farm and the VAT added the complication of monthly returns. Setups like this, although technically legal, only raise red flags for Revenue. More trouble than what it's worth. I was happier when the company for the machinery was got rid of, simpler accounts, cheaper accountancy bill.
Talk to a good accountant, the way to go now appears to be run the whole farm as a company, and take a salary from the company.

milkprofit

u want a tax consultant

richie123

maxxuumman wrote: »

Did something like this a number of years ago. Machinery was purchased under new company and did work for own farm. This company was VAT registered. Worked for a while, but in the end the accountant recommended that company be shut down and the assets be transferred to me. Accountant was never in favour of it from day one, he's a very progressive accountant , but wasn't mad about the setup. I did no contract work except for the farm and the VAT added the complication of monthly returns. Setups like this, although technically legal, only raise red flags for Revenue. More trouble than what it's worth. I was happier when the company for the machinery was got rid of, simpler accounts, cheaper accountancy bill.
Talk to a good accountant, the way to go now appears to be run the whole farm as a company, and take a salary from the company.

Thanks for your contribution..yes raising red flags with revenue would be my biggest fear but then again its technically legal so there should be no problem my biggest problem is this the more work you do yourself on the farm the more you save its nearly counter productive because you end up paying more tax.
we're at a stage where wed nearly be better off sell the machinery and get contractors in for everything from a tax point of view..hell even the wages we pay ourselves are very small because even wages are not tax efficient!!its a crazy situation as i love doing our own work ya no..

richie123

dar31 wrote: »

go talk to an accountant,
if you are with ifac, they have people who know this area inside out
this is when the differance between your €300/yr and €3000/yr accountant
show through one will do your tax returns, the other will save you multiple of their fee.
you need to consistently be having profits in the high tax band to be of any benifit

Very true alright..ifac aint cheap but ill tell ya their advice is priceless.