Running a business:
Ownership structure
As a sole proprietor it’s quite simple- you buy the property, you own it! But is it so simple? Well, you might consider buying it through your self invested pension scheme (SIPP) or a trust for the purpose, both of which have merit in the right circumstances.
A partnership (in England and Wales) is not a separate legal entity and so cannot own land or property itself and any property is owned jointly by individual partners. A partnership can come to whatever arrangement it likes about the ownership shares of each of the partners, the proportions do not need to follow the profit sharing arrangements.
You need to decide which of the partners buy it, in what proportion. The partnership should have a lease agreement with the property owning partners and make provision in the partnership agreement on how to deal with the property and any related loans when there is a partnership change.
 |  | Related literature: |
A company can be the legal owner of property, and so there are various decisions to be made if your business is in a company, for example:
- Does the company, or its shareholders or directors, buy the property? In a small family owned company it is often preferable for the property to be owned personally to avoid a 'double tax hit' when the property is sold.
- Does the company self-administered pension scheme or a shareholder's self invested pension plan buy the property? Is the pension scheme permitted to make the purchase?
- If the company buys the property, should it be owned by the trading company or by a holding company?
- If the company itself does not buy the property, on what terms will it rent it from the owner?
Who owns the property will have tax implications, both as regards capital gains tax if the property is sold and inheritance.
We recommend that you discuss these matters with us before you purchase the property.
|
Where next?
Within Your business premisesWithin Running a business
General…
