Some entrepreneurs have created a management limited company. They are using this company to invoice their management fee(s) to their operational company (or companies). Especially with several partners in the business, it is a very interesting construction, because everyone invoices their management fee and spends it as they wish through their management company. Even if they agree on the same management fee, some partners will spend more on cars, while others spend more on remuneration, art or literature, etc. It is also very handy if you want to sell one of your operational companies to investors or go public with it.
Why? All your “personal” preferences (and goodies like your car, phone, remuneration, pension fund, second car, real estate, …) are kept private to yourself (not part of the operational company). On top of that, you don’t have the hassle of changing everything when you actually decide to sell and investors start to ask difficult questions like why you are spending so much on your car, etc. You are free to do whatever you like with your management fee! If you haven’t setup your own management company yet, talk to your accountant about it. Annual cost of a management company starts at a very low price…
Now, when I created my own management company, I was thinking about how to make things even a little bit easier for myself. So, I decided to give my management company my name. This facilitates me in exercising my role as a director in companies I invest in (through my management company), because as a representative for my management company, I can sign just with my name, while other have to sign with their name AND the name of their management company. Technically, I have to do the same, but no one writes his name twice under his signature, right?
What else is very handy? If I have expenses that are part of a bigger group, like a training or a seminar with several people, it often is enough for our (Belgian) tax government if my name and my VAT number are on the bill (or invoice). Several friends had their bill rejected, because they operate under a different name (i.e. the name of their management company is different, so the government doesn’t accept it if only your name and not the company’s name is mentioned on the bill or invoice!).
Of course, I have a couple of extra tips, so contact me if you want to learn about them.
Enjoy every day,