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Lauren Silv
July 16, 2023
Question

Company buying itself

  • July 16, 2023
  • 1 reply
  • 0 views

So long story short...

 

We agreed to purchase a marketing business for £5k.

 

The owner let us run it and use any income made from the business to then purchase the business from her.

 

We made 2k (through the business) and paid it to her, we then put 3k of our own money into the business and paid her the remaining 3k.

 

How do I account for this? So the business 'paid for itself' and now is an asset? Or just a huge expense?

 

We aren't VAT registered if that makes any difference and sole traders.

 

Thank you!

1 reply

paul72
paul72
July 17, 2023

Hi @Lauren Silv 

 

This is not really the place for this question - it's something you need to be asking an accountant.

 

However, I don't think that a (non-limited) company can buy itself in the way you're describing.

You (as business A) can buy business B - or the assets/goodwill of business B - but there are probably different tax implications depending on how the whole thing is structured.

(buying an asset is usually taxed differently to buying an intangible like goodwill or a client base)

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