Q: I am in the process of setting up a limited company. I am inclined to name my partner as the ‘other’ director and shareholder. She won’t be working in the business – she has worked full-time in the private sector for eight years now, and pays tax through the company payroll.
This seems like the simplest approach to take. However, I’m a bit concerned about what would happen if my wife were to lose her job, which is always a risk in the current climate. Will she lose any entitlement to social welfare payments?
A: No. If she is entitled to contribution-based social welfare payments (as she appears to be from your question), she’s entitled to them. Even if she is working part time in the business, she’ll be entitled to a payment; however, this will be limited depending on how many days she works in the business.
The way you’re proposing to set everything up is perfectly above board as well, though I would advise that she reads about her responsibilities as a director of the company. The Office of the Director of Corporate Enforcement’s website [link to www.odce.ie] is a good resource for her to educate herself. Even if she is not deriving any income from the business, I would still recommend that she fill in a Form 11 Tax Return. It won’t cost her anything (bar stamps!) and will let the Revenue know that she’s not taking money out of the business.
It goes without saying that naming a partner as a company director and/or shareholder is something one should be careful about. Of course, we’re accountants and business advisors rather than a relationship service. Still, don’t do this unless you’re confident either that the relationship will outlive the business, or that the person concerned will be happy to dissolve this legal connection if you split up.