Nimbus

Hi,

Does any one know where I can find some info on what's legaly requiered to start my own business?

Also, I assume there's no problem to continue to work in my old job while I have my own business at the same time?

Thanks

devils_ad69

Your contract T+C's might have something in them about setting up a company while you are still an employee of your existing co.

It'll probably cost you 50 quid or so if you want to incorporate a Limited Company.

Nimbus

Mmmm, didn't think of that. I'll have a look and se what it says. Thanks

Josh L

I know a few people, in the model trade, who have a business which they run after work. None of them run them as limited companies (too much agro and expense), and unless there is a legal requirement for you to do so, ie sub-contracting, I wouldn't recommend it.

Providing it doesn't confict with your day job, and you don't put yourself in a position where it can be suggested that you run it at the expense of your day job, then I can't forsee any problems.

In fact my Wife does something similar, in that she is a mainframe contractor but also helps to run and promote our Battery Powered Mobile Phone charger business.

Josh

carl

There is a good reason to run as a limited company -- it limits your liability (hence the name). For example, if you do something untoward (wittingly or unwittingly) that causes someone to sue you, even if you don't have any professional indemnity insurance the worst that can happen is you wind up the limited company. Working as a sole trader you will be personally liable. It's cheap to set up limited companies, places will do it for about 200 quid all in including VAT registration should you need it. 100 quid without VAT registration. You'll need a bank account too -- RBS do one with no charges for the first 12 months.

devils_ad69

Flemings is the dogs danglies for free business banking.
VAT registration is dead simple.
Anyone paying more than 50quid for a Ltd. Co is throwing money away.

[Edited by devils_ad69 - 1/29/2002 11:24:16 AM]

devils_ad69

Carl,

I suspect it is not as easy as simply winding up a company when things go wrong. Directors are personally liable for their actions/decisions, especially when things go wrong.

(I've been a Co.Dir for 13 years)

andrew6321

Directors may be personally liable to the inland revenue if a business fails (especially if the IR can prove that the business was knowingly trading insolvently), but generally speaking the whole point of a ltd company is to limit personal liability in all other respects...

Rule of thumb? - just don't f**k it up......

Andrew

DavidRB

My understanding was that as long as the Co. Directors of a ltd. company don't break the law, they are not liable for anything (debts or otherwise) if the company folds. Only the company's assets can be liquidated.

If the company isn't set up as ltd., then all your personal assets (house, car, etc.) can be taken to pay off debts if the company folds.

See what these people have to say:
http://www.inlandrevenue.gov.uk/startingup/
http://www.startinbusiness.co.uk/
http://www.bizzadvice.com/

RussP

Best advice is this.

For every £1.00 you bank, put £1.25 aside for income tax, VAT, employers and employees NI, business rates, etc etc.

Russ (pi55ed off with the amount of tax this poxy government extort from him each year!)

carl

True, but you can buy assets for your limited company using untaxed money (e.g. a £1000 PC will require you to earn £1000+10%NI+22%tax+17.5%VAT to buy personally, which is nearly £1600, but will only cost the company £1000). If you wind up the company before the assets have been depreciated, then you will need to auction them off, but there's nothing to stop the directors attending the auction.

Dunk

iTrader: (1)

Due the nature of a Company limiting your liability, most banks will get you to sign a directors guarantee and will also secure loans via a charge on your property. Also consider that a ltd Co will require an annual audit, (if the accounts are to be credible) which will cost a min of £1,000.

devils_ad69

Dunks,

Audits are only required (IIRC) if the turnover exceeds a certain figure (£1m+ ?). I've never had to have my accounts audited and have never had any probs with the Inland Robinue.

Nimbus

Thanks for the comments so far guys. I'll need to do a lot more research before I go ahead with it. I've checked my work T+Cs and there is a pontenial problem, which my HR dept is looking into. Plans may be scuppered before I've begun

Anyway, lots to look at and do before I get to the point of "trading", so hopfull have time to sort that out.

Cheers

NeilT

Nimbus - I'm in exactly the same sitaution as you - all be it a little further along the line. Have just set up a partnership (Scoobyworld) and have registered for Tax. The biggest expense is the accountant and advertising

Dunk

iTrader: (1)

devils_ad69

Agreed there are exemptions, but if they are to be used / relied upon by third parties (credit ratings, co search, proof of earnings etc.)an audit would vastly improve credibility.

NeilT

ooops - pressed RETURN key by mistake anyway as I was saying, the most expensive bit was the accountant and advertising followed by equipment and stationary etc.

Mail me if you want to discuss it further - I may be able to make a few suggestions having just gone through it myself.

cheers

Neil
www.scoobyworld.co.uk (ps - and yes, I will be placing a banner ad with Simon over the next week!)

devils_ad69

Dunk,

I can only speak from experience. Not having my accounts audited has never caused my company or any of my clients any problems at all.

Timbo33

As a general rule, Limited companies have very few advantages over sole proprietorships (self employed) these days and unless you are working in a particular line of business such as IT consultancy or Contract draughting where a Ltd co. is mandatory, or in a line of work where you are likely to cause damage or kill people (not a hitman silly...) it will probably be a lot simpler to set yourself up self employed initially anyway.

Sole proprietor is also likely to be more tax efficient until you are well over the high rate tax bracket too, due to the NI contributions due on director's earnings and benefits in kind. This will be particularly so if you are in the IT/drafting industries hit by IR35 where most of your earnings will have to be treated as salary

Check out your local Business Link as they will give you a free initial consulation. If you decide to go limited, make sure you get a good accountant as IME the cooking one's don't know much about tax breaks for directors. (flameproof suit on in anticipation of responses from cooking accountant scooby owners...)

melpaul2002

May be a silly question but is there any way of finding out what a company director earns per year as a salary only.

carl

Yes, this information is filed as part of the company accounts and will be available from Companies House. You can get basic info from www.companieshouse.gov.uk but to find stuff like directors' salaries you have to pay for the info.

Not sure if it would be broken out into individual directors though, or just a lump of money called 'Directors Salaries'. [Makes note to dig out last years report...]

Josh L

I believe that most figures are available through companies house, with whom each company's yearly accounts are lodged.

Carl,

I'm afraid that I see both sides of the fence on a daily basis, companies really aren't the best way to go in the main, unless you either have to, or your profits become excessive. Sod the limited liability. The tiny amount spent on public liability insurance, is vastly offset by the savings on accountants fees alone. You are also heavily restricted as to how you take money out, and how much. Also the allowable deductions are have to be more heavily adhered to, as your accounts must be certified or audited, depending on turnover.

I do speak with a degree of experience, as I am a sole trader, as well as being a director my Wife's limited company. The differences are enormous.

However, limited companies can be a wonderful shield for the less than scrupulous business person, or those who need to borrow a large amount of capital. Although in most cases directors have to sign guarantees, assuming liability for the company debts anyway.

Josh

Nimbus

I'm looking into starting an e-comerce business that will sell nothing other than a service. I don't think it would be worth making it a Ltd Co. The only employees would be myself (and maybe my wife).

Dream Weaver

Best of luck Nimbus - I have just taken the plunge recently and am enjoying it thoroughly, though it is a bit stressful at first, and money is tight for now.

And if you need a website give me a ring. Unless this is the service you are setting up.

Good luck

DW

Nimbus

DW,

Don't worry, I won't be competing with you . E-mail me with your rates .