What is a close company?
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What is a close company?
A Close Company is often known as a family type business or a very small limited company. It generally described as a limited company controlled by:
- five or fewer participators or
- any number of participators who are also directors or
- where more than half the assets would be distributed to five or fewer participators, or to participators who are directors, in the event of the winding-up of the company.
A participator is seen as somebody who has a share or interest in the capital or income of a company, such as having share capital, voting rights or a right to capital on winding up of the company. This can be a shareholder, director or a loan creditor.
Family business
Most smaller sized limited companies will meet the description of a Close Company. It is very common for this to be a ‘family ran business’, typically a husband and wife set up.
Are the rules different for a close company?
Yes, there are some additional tax rules that apply to this type of business. One of the most fundamental rules for this stype of limited company is where a close company pays for personal expenses of a director, or makes a loan to one of its participators.
Questions
If you have any further questions on how this affects you and your business structure feel free to contact us on 01242 528412 or book a free discovery call.
Cheltenham Tax Accountants are leading Online Tax Accountants that can are experts in saving you and your business tax. We specialise in small family-run businesses. Our core values are around providing an honest, approachable and professional service. We can provide a full limited company accounting, bookkeeping and payroll service to cater for all of your needs.
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