Limited company

[Michelle]

Hi,

I have just started doing bookkeeping for a small IT consultant who has two Limited companies.

He transfers cash from one Ltd company (A) to the other (B) to cover the payment of his staff.

His P&L has a massive loss due to the high salary costs but no sales.

Would this be classed as a loan in company (B)

Thanks

[deanshepherd]

You could classify it as a loan but it's not going to work very well from a tax point of view, unless they are group companies.

I would probably advise putting a management charge through so that the losses are not wasted.

[Michelle]

They are seperate entities.

I have advised my client to charge the other company for management time. However I've a inclin that he might not want to invoice the other company as company B is vat registered and company A isn't.