I have a company which was my first business that operates as a retail / wholesale sales business as well as doing services. It currently has over 1 million in assets (comprised of stock, debtors, creditors, cash, structural improvements, loans, shares, etc).
Over the years, using this company, I have created other businesses, which this company owns shares in, making this company more of an umbrella company owning shares in the other companies. However, it has still the company used for operating as a retail/wholesale and service business. I would like to offer equity to a key person in this business without providing ownership to my other operations, so I thought it might be worth setting up a new company wholly owned by the existing company and transferring all assets to it (excepting shares in the other businesses) so that my original company essentially becomes an umbrella to all of my other businesses.
What I want to know is the options in terms of separating it out.
-invoicing all the assets out to the new company and the new company owes the existing company a big debt (new company begins with 0 dollar balance sheet)
--leaving it as a debtor?
--converting that to an asset (shares in company)
-somehow transferring the assets out to the other company (if that is even possible) - i always wondered if it was possible to play with the equity section of the balance sheet with journals to move assets around without affecting the p&l
The existing company must remain the parent as it has over a million dollars in retained losses and a lot of franking credits so I want to make sure that I get the full advantage of this personally.
I would appreciate to find out all of the options available as well as pro's and con's against each option.
It is worth pointing out that I will be giving 10% ownership to someone once I split this part of the business into another company.
Skills & Expertise RequiredAccounting
Offer to work on this project closes in 98 days!Submit A Proposal
Share this project with your friends