Is transferring money from a company where you&#39;re a director to a company where you&#39;re an employee considered money laundering? Say you are a full-time employee of company A, and company A providing services to company B, where you are a director and a shareholder. Company B transfers money to company A. I've been told it can be viewed as potential money laundering, is it true?
Is transferring money from a company where you're a director to a company where you're an employee considered money laundering? No. The scenario you outline seems too broad and generic. There are many possible, lawful reasons why company B could transfer money to its supplier, company A. Some examples are payment for the services that company A provided, an indemnization/settlement, and a buyout. The mere fact that B's director/shareholder is A's employee does not render the transaction(s) money laundering. Also, the statutory elements of money laundering vary by jurisdiction.
You're not directly asking this, but I'm assuming what you're getting at is when do I owe the taxes upon receiving that pre-payment. This depends on your corporate structure as to how you can realize taxes. If you are DBA, LLC, or S-Corp you pay taxes based on your personal income at the end of the year as all earnings go to the owners because the business can't hold onto those. So if you receive those funds in Dec (assuming Dec is the end of your fiscal year), and you haven't delivered your service it doesn't matter you pay on the pre-payment funds which will really hurt you if you have to spend some of that pre-payment to deliver the service. If you are a C-Corp you can defer those taxes until you deliver the service as you can mark that revenue for the next year and several years as you deliver the service. What matters is how you declare your C-Corp's accounting practices for reporting your revenue to the IRS. What you want to do is be an accrual model. That will let you pay for things like salaries, COGS, etc before you know how much you made, and only pay taxes on the earnings at the tax rate of the corporation. Of course if you do this you would do this only if you want to keep that money in the corp to conduct business. You wouldn't want to pay corporate tax then pay personal income tax if you're the owner. So you'd want to pay out any earnings to yourself as a distribution (ie to all owners) or bonus (to individuals) to avoid the double taxation. Keep in mind I'm not an accountant, tax lawyer, but a guy who has been through exactly what you're asking. Consult professionals as needed because you'll be up your eye balls in contracts to build such a business and you'll need their help anyway.
In most cases, there is no direct legal recourse for such a withdrawal. Money in a joint account is co-owned, and any account holder may withdraw any of it for any lawful purpose. As the article &quot;What is a joint bank account?&quot; from Bankrate.com states: The money in joint accounts belongs to both owners. Either person can withdraw or spend the money at will — even if they weren’t the one to deposit the funds. The bank makes no distinction between money deposited by one person or the other, making a joint account useful for handling shared expenses. But a joint bank account should only be opened with someone whom you trust, since that person has equal control over the account’s funds. If the account holders have a contract or legal agreement that controls what money can be withdrawn and for what purposes, then a violation of such an agreement might be a cause for legal action. But merely opening a joint account does not create such an agreement nor imply it.
The real question isn't whether there is a law, but whether you want to keep your job. If you want to do something that you believe will affect your company negatively, and you ask whether it's legal or not, the question alone should show you it's a bad idea. And another question is whether you can be sued, and what it will cost you even if you can win a case, and the answers to that are "yes" and "a lot".
Likely not, unless A finds a jurisdiction with sufficiently lax accounting and taxation standards. As described in the question, A, B, and C are distinct legal entitites. For each entity, the tax office would want to know what the revenue, expenses, and net income are. By providing a service (use of the house) free of charge between two entites of the shell construct, profits are moved from C to A. This is usually illegal. The required paperwork might not have to look like a normal rental contract between a tenant and a landlord, since many questions are resolved by the ownership, but it would have to specify payments. The tax office should complain if they differ too much from the going market rate. Consider that C might be a LLC, and that C might be a civil judgement against C. Someone would look at the assets owned by C, and that includes the house D.
Contracts are transferrable The default rule is that the rights and obligations that one person holds under a contract (your original bank) can be transferred to any other person (your new bank). This is only not the case where the contract is one for personal services (e.g. an employment contract) or where the contract explicitly proscribes or otherwise limits it. For example, if I run a dog walking business and you contract with me to walk your dog on Mondays, Wednesdays and Fridays for 6 months then, at any time, I can transfer my obligation to walk the dog and my right to be paid by you for doing so to anyone else. I can do this by subcontracting (in which case the rights and obligations are still mine - I'm just using someone else to fulfil them), or by selling individual contracts (which is how debt collection businesses operate), or by selling the entire business. It would be completely normal that the contracts you agreed to when you opened your accounts would allow the bank to sell them. Check the terms and conditions.
Contributing cash to a company is not tax deductible It’s either a capital contribution or a loan; either way it’s not an expense deductible to the individual (nor income to the company).
Yes Companies can own companies - that’s what subsidiaries are. On a practical level, you know this is true because you actually have an example. Companies House would not have allowed its registration (barring error) if it was illegal. Why can’t it open a bank account? Banks (or any other business) can choose who they will and won’t do business with. Unless it’s discrimination on the basis of a protected characteristic, it’s not illegal. Since juridical persons don’t have protected characteristics (apart from nationality) it’s virtually impossible to illegally discriminate against them.