Trading/Investing as a "Company"

H

Huskeez

Has anyone here registered a holdings company (resistered with the tax department)in order to start under a cooperatively owned enterprise and legitimately began trading? (opened a company bank account etc)

And is it true if the company goes bankrupt you are free of any liability as the "Company" is seen separate (asset wise) than the individuals (Directors) who started the company?

Would love to hear from anyone who has done/tried this?
 
Quote from blah12345678:

Google "piercing corporate veil" and you'll have your answer...
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I see,

But if the "Company" is not operating with OTP, just directors cash and using ther company to claim back on expenses eg Brokerage,Internet connection, computers etc whilst also embracing the minor tax benefits, would "Piercing corporate veil" still apply?

My understanding is no , unless we get taken to court by investors/shareholders (other than our selves ... theres 3 of us who will be directors and the company will include investing among other things)
 
If you use the corporate funds as your own piggy bank, for any personal expenses, then anybody with an interest in your business - shareholders, creditors, tax authorities - will attempt to pierce the veil and prove that there is no difference between "you" the individual and "you" the company.

What happens after that is for the courts and/or government to decide...
 
Quote from blah12345678:

If you use the corporate funds as your own piggy bank, for any personal expenses, then anybody with an interest in your business - shareholders, creditors, tax authorities - will attempt to pierce the veil and prove that there is no difference between "you" the individual and "you" the company.

What happens after that is for the courts and/or government to decide...
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No we dont plan on that,

All 3 of us are working, we all have adequate savings which we will invest into the company to fund our ventures. The company bank account we intend to open is for company expenses and company business only.

We are hoping to use the company as an investment vehicle separate from ourselves , to avoid secondary income taxes, the ability to claim back expenses (through the company) and to lower our tax rates on profits. Here in NZ secondary tax is 33%, corporte tax is 28% (which we hope to get down at a later point)
 
Quote from Huskeez:

Has anyone here registered a holdings company (resistered with the tax department)in order to start under a cooperatively owned enterprise and legitimately began trading? (opened a company bank account etc)

And is it true if the company goes bankrupt you are free of any liability as the "Company" is seen separate (asset wise) than the individuals (Directors) who started the company?

Would love to hear from anyone who has done/tried this?
More...


Here's some facts to get you started:

Sole Proprietorship - Unlimited Liability
Limited Partner Ship - Unlimited Liability to all partners
LLC - Limited liability ONLY to limited partners, but UNLIMITED liability to general partner. LLCs must name at least 1 general partner.

S-Corp/C-Corp: Limited liability to all shareholders, unless of course the corporate veil is pierced as mentioned above.

I'd go with the S-Corp to avoid double taxation. But bear in mind you can't have more than 75 shareholders.
 
Quote from Huskeez:

No we dont plan on that,

All 3 of us are working, we all have adequate savings which we will invest into the company to fund our ventures. The company bank account we intend to open is for company expenses and company business only.

We are hoping to use the company as an investment vehicle separate from ourselves , to avoid secondary income taxes, the ability to claim back expenses (through the company) and to lower our tax rates on profits. Here in NZ secondary tax is 33%, corporate tax is 28% (which we hope to get down at a later point)
More...

Eyez - he's in New Zealand...

Huskeez - I don't know NZ's tax rules. I can only relate US tax strategies... Eyez pretty much nailed the liability issues for the US, but not the specifics of taxation from an active trader/investor or equities/futures standpoint..

One would hope NZ's taxes are simpler and less ludicrous than the US's.

Choose whatever legal strategy works best to lower your taxes. But don't fall for any of the off-shore B.S. In the long run, you'll pay more in time, energy, and possibly taxes, penalties, interest, and prison than by staying above board and taking the hit up front. And you won't have to keep looking over your shoulders.

My advice is to find a good tax lawyer/solicitor and a good accountant. Problem is, finding good ones is the toughest part of the project....
 
Quote from blah12345678:

Eyez - he's in New Zealand...

Huskeez - I don't know NZ's tax rules. I can only relate US tax strategies... Eyez pretty much nailed the liability issues for the US, but not the specifics of taxation from an active trader/investor or equities/futures standpoint..

One would hope NZ's taxes are simpler and less ludicrous than the US's.

Choose whatever legal strategy works best to lower your taxes. But don't fall for any of the off-shore B.S. In the long run, you'll pay more in time, energy, and possibly taxes, penalties, interest, and prison than by staying above board and taking the hit up front. And you won't have to keep looking over your shoulders.

My advice is to find a good tax lawyer/solicitor and a good accountant. Problem is, finding good ones is the toughest part of the project....
More...

Thanks guys for all the feed back,

Yeah it doesnt seem that NZ has all of the available options (S-Corp, C-Corp) , still seems LLC would be the way go over here.

But still hoping someone out there has done something (ateast somewhat similar to what we are intending on doing) and can chime in.

But an appointment with a tax lawyer will definitely be on my priorities this week , even if just too scan his brains :)
 
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