Limited company and domains/sites

**essdeekay** · 25-07-07

Hi.

If ! set up a limited company through which to trade what's the best way to deal with domains/existing sites?

If the sites are transferred into the business what are the implications of this?

Should I retain personal ownership of the domain names, thereby keeping asset and liabilities separate?

Can I then charge the limited company a rental fee for using the domains?

Cheers

Si (feeling rather entrepreneurial this evening!)

**hrbs** · 26-07-07

Hi Simon

You could sell the business to the Ltd Co at a value of assets (computer equipment) + goodwill. Goodwill could be at a figure just below the annual Capital Gains tax exemption and so would be tax free in your hands assuming no other capital gains. You would cease to be self employed at that stage, unless you have other separate businesses (in quite different sectors) that you wanted to continue as sole trader. However, this runs the risk of tax complexities and administrative hell (eg using the wrong cheque book to pay a bill).

You could also license the website to the limited company. The agreement could have a licence fee as a %age of commissions received for example. However, you may still be a higher rate tax payer and pay class 4 NIC, not a good idea if tax efficiency/minimisation is your aim.

The route would depend upon what you wanted to achieve.

I do not know your particular circumstances, but in general ... Selling the website to the Ltd company and paying yourself a small salary and dividend would achieve tax free capital gain on the goodwill, tax/NI saving on your profit extraction from the co. (under current rules) and should you wish to sell at a later stage (more than 2 years), you could sell the shares in the company and have an effective tax rate of 10% on the gain.

You would need to demonstrate to HMRC that the website has goodwill ie is quite profitable.

Hope this helps.

Regards
Keith
High Royd Business Services Limited
Small Business Specialists

Fixed Fee Accountants and Small Business Specialists - High Royd Business Services Limited - High Royd Business Services Limited
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