Limited Company Query

[FND Property]

Hi All

Following the successful renovation of 6 properties (mortgages on all) I have now created a consortium with 2 friends to start our own limited company to buy properties for cash, renovate & sell them for a profit.

I've got a meeting with an accountant on Wed this week but have a few questions before then.

I have a couple of questions around the business set up / structure & bank account I was hoping that some of you may be able to assist with:

1. Although we are all friends it would be good to have a safety mechanism in place when withdrawing funds without the consent of the other 2 directors. How do I get around this, i.e. have a restriction on the bank account to ensure that all 3 directors are present in the event of any withdrawal?.
2. Do you recommend any particular bank account / current account / business account for this, i.e. one that offers some interest whilst the money is sitting in the account in between properties & also allows us to pay contractors invoices etc.
3. Does anyone have a property development template for a memorandum of association?.

Thanks in advance.

 

[Longterminvestor]

First of all, there are no friends in business. Just because you are freinds today does not mean you will be friends tomorrow - sorry to burst your bubble. Set-up the business like you would any other arms length business and the strongest safeguard would be to ensure that all directors sign withdrawals but is this really practical?

Persoanlly I would use a business current account with a connected money market or savings account but take legal advice sooner rather than later and listen to your accountant as there is a LOT to consider.

 

[FND Property]

Thanks for the reply. I know what you mean but we’ve worked on jobs together a few times as we’re all tradesman, but as you say things can change.

Ok, i’ll mention that account to my accountant too.

Thanks again

 

[realdeals]

What I have tended to find is that when the investments get larger and the profits potentially greater this ramps up the pressure and small niggles between friends/business partners can quickly get out of control. Best to set it up as your would a "normal" business then everyone knows where they stand.

 

[FND Property]

What do you mean as a "normal" business?