I did ask this on aweb a while ago but there was little response, most of which I take responsibility for as I didn't go back to the forum for a while so answered one of the questions a couple of weeks later. O appreciate this is an accountancy question more than a bookkeeping question, but I have heard on the grapevine that the mod is an accountant, and there are other accountants on here as well. I promise to respond quickly to any questions
Limited company set up. 2 shareholders 1 director. Director has majority shareholding.
I have just taken this Company on, a beauty salon. Both are renting chairs and I have expressed concern that, certainly in the Director's case, that it's highly unusual for them to subcontract to their own company. I have had a meeting with the minority shareholder who is concerned that she is putting in the majority of the hours and ensuring the business is running smoothly, but if paid by Company (as I suggested) she would not benefit as much. She currently declares her earnings as a sole trader.
I know HMRC frown on Directors of Limited Companies being paid as self employed, and the Director has said I can put her earnings from the chair rent through the Company if need be, but are there any such issues with the non director shareholder? For disclosure she is the Secretary of the Company.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
My understanding is that a Director is not considered to be self-employed in a company in which they hold an office of Director, but they can be both a Director and an employee for it. The Director can't really be a self-employed contractor for the company he/she is Director of and therefore can't really invoice the Ltd company for any services they provide, instead this has to be paid as salary. But it doesn't stop them being self employed for another business.
The other problem being, the end of the tax year has passed where these payments could have been put through via payroll.
The circumstances surrounding the Director have been addressed, as per my post. The question was in relation to the other shareholder, who isn't a Director. Is there anything that prevents her from renting a chair and operating as self employed?
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
and there are other accountants on here as well. I promise to respond quickly to any questions 
