Is there a special process to render personal belongings for company use?

Question

First of all, I am interested in both European and U.S. jurisdictions. I understand this is very broad but I would just like to get a good idea about whether there might be any underlying procedure that has to be followed.

So, is there any special procedure in place if a company owner wishes to use their personal belongings for the purposes of the company? Take, as a simple example, a personal computer, or a printer, or even a chair (as in "does it matter what the material is?"). Is there a specific legal procedure to "convert" an item for company use or is it just a matter of practicality?

Answer 1

You are not special to your company

Apart from the fact that you own shares in it, you are no more special to your company than I am.

So if I were going to let your company (or you) use my stuff, I have a number of options:

• Give - it would then belong to the company
• Sell - once the company paid me the agreed price it would belong to the company
• Lend - the company can use it free of charge until I say it can't; it still belongs to me
• Rent - the company can use it so long as they pay the agreed rent; it still belongs to me
• Other - we can get truly esoteric about these things if we want, however, its probably not worth looking at these for the type of items you are thinking about.

Each of these will have different tax outcomes for the company and me. For example, if I give the company something of value then the value of that item may be assessable income in the hands of the company and it may be a loss in my hands. Similarly rent would normally be deductable for the company and assessable for me.

However you decide to do it, you should clearly document who owns what in case of liquidation of a company - the liquidator will be entitled to assume that everything on company premises belongs to the company unless there is clear evidence that it doesn't.

Answer 2

Nope. You just go through the transaction as you would any other.

Given the relationship between the parties, though, tax authorities may have questions about the transaction, assuming at least one side is acquiring something of significant value. It would therefore be wise to document exactly what's happening, but again, that would probably not require any more paperwork than any other transaction.

One exception would be if you are selling something to your company at a particularly high or low price. In that case, it would be wise for both parties to document the reasons for the variance from market price, for reasons of corporate governance, tax liability, etc.