Direcor's Salary vs Investment - Extension

[ddbbss19]

Hello All,

I have to show investment of 50k and need advice regarding the actual investment I have to make considering director's salary...
This is summary of my account for each year:

Year 1
Company revenue - 5k
Profit/loss - loss of 13k
Investment made - 19k (director's loan)
Director's salary - 7k
Director's dividend - 0

Year 2
Company revenue - 35k
Profit/loss - Profit of 17k (net 4k after deducting loss from previous year)
Investment made - 10k (share capital)
Director's salary - 7k
Director's dividend - 2k

Year 3
Company revenue - 55k
Profit/loss - profit 20k
Investment made - 21k (share capital)
Director's salary - 7k
Director's dividend - 15k

(I) Could someone confirm how much extra I have to invest to meet the condition of 50k Investment?

(ii) Also, could someone provide me director's loan agreement template? ( my accountant messed up company account in 1st year hence we have to show as director's loan instead of share capital, hope that will be okay.)

(iii) if I have to invest further money in company, will it be possible for me to transfer money from my wife's account to my personal account to company business account??

(iv) Currently I have 35k in my business account so will HO could challenge this??

Thank you and look forward to hearing your views soon.

[Mrchaany]

1 you need to transfer £38 more to your business account because you took director salaries and dividend.

2 accountant can put both director loan and share capital in your company financial account but UKVI requirement is either director loan or share capital investment.

3 your arrange fund from anyone but need to put under your names at your company business account

[ishfaqsangra]

Dividend is from profit I dont think it will be counted as remuneration.salary 21000 should be paid in.
Investment can be in anyform.both directors loan and share capital.
You can get funds to reinvest after investing 50000 from anyone but transfer from your account.

[lavildhillon]

HI,

I don't think you have to pay back your director salary renumeration for 2nd and 3rd year. Business have made profit in last both years and you director have taken salary from revenue and dividend from profit.


Hope this helps to you.

[ishfaqsangra]

@lavil your answer is very reasonable but there is a lot of ambiguity in what exactly includes in directors remunration under what circumstamces.
I 100 % agree with your explanation

[ishfaqsangra]

@lavil your answer is very reasonable but there is a lot of ambiguity in what exactly includes in directors remunration under what circumstamces.
I 100 % agree with your explanation

[ddbbss19]

Hi,
Thank you all for your reply.

Im really confused now from the answers as getting mixed replies.

Anyone esle have anything more to add?? Really appreciate your inputs

[legalkhan]

@ddbbss19
I have also heard that employee can't take salary in any way, but that looks a very unhealthy statement. If we don't take wages out of revenue then how we gonna survive??? how we gonna meet our immediate expenses??? Are we doing business for UKVI??? when we are not even allowed to work part time some where else then some one tell me how to survive? I really don't believe its even true. If we have to follow all the rules of HMRC or FSA in carry out of our businesses then how can be we treated here differently?? Business is business either carried out by UKVI "operated Entrepreneur" or British entrepreneur. If you are genuine entrepreneur you shouldn't be worried, if they don't have any mechanism to differentiate between salary taken from investment or from business operations then that's their problem and should allow us to work some where else to generate revenue for survival. UKVI understand we don't eat sand to live.

[Ams2013]

Agreed with legalkhan.

If business is generating revenue than director salary should not be considered to be taken from cash invested even with net loss position !

For example - In year 1 you invested cash 25K and if your revenue was 10K and your net losses was 20K including director salary of 7K.

Total cash received in Year 1 = 35K ( 10K revenue + 25K Investment )

Total cash Paid in Year 1 = 30K ( 7K director salary + 23K other business expenses )

in above example your investment has not been used to pay for director salary 7K as your revenue of 10K will be used to pay it.
Your investment 25K was used to pay other expenses of 23K in year 1.

Therefore you don't need to invest back against the director salary withdrawn !

Some People suggesting not to take director salary , if you're not going to withdraw salary then as a genuine entrepreneur how would you maintain your living in UK over 3 years with having permission to work only for your businesses and how would you prove that your 90 days maintenance funds are from your legitimate earning if you did not withdraw any salary at all !!!!

[ishfaqsangra]

Agreed with legalkhan.

If business is generating revenue than director salary should not be considered to be taken from cash invested even with net loss position !

For example - In year 1 you invested cash 25K and if your revenue was 10K and your net losses was 20K including director salary of 7K.

Total cash received in Year 1 = 35K ( 10K revenue + 25K Investment )

Total cash Paid in Year 1 = 30K ( 7K director salary + 23K other business expenses )

in above example your investment has not been used to pay for director salary 7K as your revenue of 10K will be used to pay it.
Your investment 25K was used to pay other expenses of 23K in year 1.

Therefore you don't need to invest back against the director salary withdrawn !

Some People suggesting not to take director salary , if you're not going to withdraw salary then as a genuine entrepreneur how would you maintain your living in UK over 3 years with having permission to work only for your businesses and how would you prove that your 90 days maintenance funds are from your legitimate earning if you did not withdraw any salary at all !!!!

Well explained