Buying an existing business rules

az1 · Post by **az1** » Sun Sep 16, 2018 10:06 am

Good morning peoples! hope you are well.

Excuse me for being a newbie on the site, I am sure this topic has been discussed a dozen times and I did go through the threads but unfortunately could not really find what I was looking for.

My scenario; I have just come to UK on the Tier 1 entrepreneur visa and now looking at what to invest in. Ideally I would like to buy a existing business with a partner of mine who is a British citizen.

Q1- There is a company with two shareholders, and I make a capital injection of 100k into their business account from my personal account. What sort of documentation will I need to show HO? I do not want to be a shareholder or have any part of the business.

Q2- I inject another 100k in my partners business, and this partner uses the funds to pay rent, create 2 new jobs, and use the money as working capital to run the business. is this allowed?

thanks

Post by **marcnath** » Sun Sep 16, 2018 12:07 pm

az1 wrote: ↑
Sun Sep 16, 2018 10:06 am
Good morning peoples! hope you are well.

Excuse me for being a newbie on the site, I am sure this topic has been discussed a dozen times and I did go through the threads but unfortunately could not really find what I was looking for.

My scenario; I have just come to UK on the Tier 1 entrepreneur visa and now looking at what to invest in. Ideally I would like to buy a existing business with a partner of mine who is a British citizen.

Q1- There is a company with two shareholders, and I make a capital injection of 100k into their business account from my personal account. What sort of documentation will I need to show HO? I do not want to be a shareholder or have any part of the business.

Q2- I inject another 100k in my partners business, and this partner uses the funds to pay rent, create 2 new jobs, and use the money as working capital to run the business. is this allowed?

thanks

1. If you are not a shareholder or part of the business, how are you investing the money ? Are you just a money lender ? Before figuring out the documents required, figure out the relationship ?
2. Yes, it is allowed. There are no restrictions on investing into a business in the UK. You don't even need a T1E visa to be able to do what you describe here.

az1 · Post by **az1** » Sun Sep 16, 2018 12:47 pm

thanks for your reply.

back to point 1 - the company is owned by a friend and so I can be whatever is required to make the relationship legit. I do not want to have any role in the running of the company and simply want to inject the capital for my tier 1 visa. would it work if me and one of the partners draw up an agreement or a % earnings of the profit? rather than me being a director or working partner.

back to point 2- I am already on the T1E visa, so would like to complete the process. What I was trying to say is what is the best way to go about buying an existing business with a British citizen.

Post by **marcnath** » Sun Sep 16, 2018 12:56 pm

az1 wrote: ↑
Sun Sep 16, 2018 12:47 pm
thanks for your reply.

back to point 1 - the company is owned by a friend and so I can be whatever is required to make the relationship legit. I do not want to have any role in the running of the company and simply want to inject the capital for my tier 1 visa. would it work if me and one of the partners draw up an agreement or a % earnings of the profit? rather than me being a director or working partner.

back to point 2- I am already on the T1E visa, so would like to complete the process. What I was trying to say is what is the best way to go about buying an existing business with a British citizen.

The scenarios you are describing seem to be more of an investment scenario rather than an entrepreneur one - so unlikely to qualify for your visa renewal

az1 · Post by **az1** » Sun Sep 16, 2018 1:24 pm

great thanks for you reply. guess my first strategy is a flop

Post by **CR001** » Sun Sep 16, 2018 5:49 pm

Surely to get your current Tier 1 Ent visa you would have had to show a business plan and what you intend to do. How is this different to the other 'strategies' you are looking at?

az1 · Post by **az1** » Sun Sep 16, 2018 9:00 pm

Yes I do have a business plan, but we had a disagreement on the rental side. currently still looking for viable places to rent and continue my business plan. Was just wondering as some have suggested that it is easier to buy an existing business and make the investment in that business than start start from scratch.

Post by **CR001** » Sun Sep 16, 2018 9:12 pm

You are free to buy a business and then invest your £200K into the business. Be careful though as any money you pay the previous owner when you buy the business is usually not counted towards investment.

az1 · Post by **az1** » Sun Sep 16, 2018 9:25 pm

yes thanks, I am aware of that. is there a particular link maybe at the gov.uk website that guides you on the points to consider while buying the business. from what I have read, you buy the business and then inject 200k into the company account.

senario: what happens if I buy the business and then inject 150k into the company account from my personal account, I become a director and hire the two people. the business goes on and lets say we make profits. once I receive the profits in my personal account can I then transfer 50k into the company account?
-during this time, am I allowed to receive shares from the profits?
-draw a salary?
- use the initial injection to pay for all the day to day running costs, such as salaries of existing workers, rent, working capital?

I apologize again for all the questions, thanks in advance.

Post by **CR001** » Sun Sep 16, 2018 9:28 pm

You cannot use recycled funds (profit) to meet the £200k total and initial investment.

Post by **marcnath** » Sun Sep 16, 2018 10:34 pm

az1 wrote: ↑
Sun Sep 16, 2018 9:25 pm
yes thanks, I am aware of that. is there a particular link maybe at the gov.uk website that guides you on the points to consider while buying the business. from what I have read, you buy the business and then inject 200k into the company account.

senario: what happens if I buy the business and then inject 150k into the company account from my personal account, I become a director and hire the two people. the business goes on and lets say we make profits. once I receive the profits in my personal account can I then transfer 50k into the company account?
-during this time, am I allowed to receive shares from the profits?
-draw a salary?
- use the initial injection to pay for all the day to day running costs, such as salaries of existing workers, rent, working capital?

I apologize again for all the questions, thanks in advance.

Any money paid to you from the company may be deducted from the investment.
Also remember, you need to maintain access to your 200K until it is invested in your business. So, of the 200K shown, you can't invest 150K and then use the 50K for other purposes (personal expenses, for example).

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