Starting a Business Q's
23-10-2007, 02:41 PM
#1
Starting a Business Q's
I have decided to start a web based company that I can start of small with the hopeful potential of eventually running full-time, I intend to stay at my place of work until that time.
Can anyone advise on the following details as im unsure on these?
1_ How does it work when claiming 2 x pay.
2. Do I become a sole trader or a limited company – for and againsts?
Has anyone found themselves in a similar situation advice would be gratefully received.
I am opting to go VAT registered.
Can anyone advise on the following details as im unsure on these?
1_ How does it work when claiming 2 x pay.
2. Do I become a sole trader or a limited company – for and againsts?
Has anyone found themselves in a similar situation advice would be gratefully received.
I am opting to go VAT registered.
23-10-2007, 03:24 PM
#3
Originally Posted by R4N S S
go for ltd company so you are not liable if it all goes tits up.
you will not be earning a lot in your business to get charged lots of tax
you will not be earning a lot in your business to get charged lots of tax
Anyone else have any experience in the matter
23-10-2007, 06:47 PM
#4
PassionFord Post Whore!!
If you set up a Limited company, which is easy, they can be bought off the shelf for around £100, you can then be a shareholder and a director of that company without being employed by the said company.
That way you can take a share dividend from the profit of that company, which if you arent already earning enough to put you in the 40% tax bracket, will only be subject to corporation tax that will be paid by the limited company.
I would suggest you talk to an accountant before you go any further, they will be able to explain the pros and cons of running this business in the background while working elsewhere and how you can get money out of the business in the most tax efficient manner
Going VAT registered from Day 1 is easier because you dont have to worry about crossing the threshold later on down the line and you can reclaim VAT on the goods you are purchasing from day 1.
That way you can take a share dividend from the profit of that company, which if you arent already earning enough to put you in the 40% tax bracket, will only be subject to corporation tax that will be paid by the limited company.
I would suggest you talk to an accountant before you go any further, they will be able to explain the pros and cons of running this business in the background while working elsewhere and how you can get money out of the business in the most tax efficient manner
Going VAT registered from Day 1 is easier because you dont have to worry about crossing the threshold later on down the line and you can reclaim VAT on the goods you are purchasing from day 1.
23-10-2007, 07:03 PM
#6
PassionFord Post Whore!!
Originally Posted by Maxiboy
depending on what you are doing selling a sole trader has loads of benefits that a limited company doesn,t share in.
23-10-2007, 07:40 PM
#7
Originally Posted by neilm
If you set up a Limited company, which is easy, they can be bought off the shelf for around £100, you can then be a shareholder and a director of that company without being employed by the said company.
That way you can take a share dividend from the profit of that company, which if you arent already earning enough to put you in the 40% tax bracket, will only be subject to corporation tax that will be paid by the limited company.
I would suggest you talk to an accountant before you go any further, they will be able to explain the pros and cons of running this business in the background while working elsewhere and how you can get money out of the business in the most tax efficient manner
Going VAT registered from Day 1 is easier because you dont have to worry about crossing the threshold later on down the line and you can reclaim VAT on the goods you are purchasing from day 1.
That way you can take a share dividend from the profit of that company, which if you arent already earning enough to put you in the 40% tax bracket, will only be subject to corporation tax that will be paid by the limited company.
I would suggest you talk to an accountant before you go any further, they will be able to explain the pros and cons of running this business in the background while working elsewhere and how you can get money out of the business in the most tax efficient manner
Going VAT registered from Day 1 is easier because you dont have to worry about crossing the threshold later on down the line and you can reclaim VAT on the goods you are purchasing from day 1.
Neil good avice there and i am definatly going to seek some advice from an accountant on the matter.
Just to hear the pros and cons and the ways in which one could be beneficial over the other.
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23-10-2007, 09:35 PM
#8
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No knowledge of sole trader but I had a limited company years ago and I ran it like neilm says above.
I was a director and paid myself a wage each week. At reporting periods i.e year end I just paid myself a dividend as a shareholder and ensured that my profits were kept to a minimum, therefore reducing the tax bill.
I also paid myself travelling expenses weekly (tax free). I was VAT registered which is a bit scary when you have to fill out a return but it worked out for me.
Rob
I was a director and paid myself a wage each week. At reporting periods i.e year end I just paid myself a dividend as a shareholder and ensured that my profits were kept to a minimum, therefore reducing the tax bill.
I also paid myself travelling expenses weekly (tax free). I was VAT registered which is a bit scary when you have to fill out a return but it worked out for me.
Rob
24-10-2007, 09:01 AM
#13
Originally Posted by MD Cos
i'm looking to do the same sort of thing... this starting a business thing seems strange and scary to me! 
I shall seek some advice from the accountants today hopefully, and report back.
Im still contnuing at my current job so will be running this on the side, so need to see how I stand from a tax/NI poin of view.
The vat registration is recomended as you can claim this back from suppliers and put through vatable items. Just make sure you keep VAT seperate in ya books and DONT SPEND IT.
24-10-2007, 09:09 AM
#14
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Ltd makes you sound a lot more important too when speaking to potential clients.
I would opt for this, making yourself director, paying yourself a directors wage, which I am sure is £90 per week staying below the tax paying bracket on your wages, then making the rest of your wages up via the dividands payouts as a shareholder. Dividands payouts to Directors are tax free which is good.
Speak to an accountant who will point you in the right direction.
I would apply for your VAT number straight away so ou can charge the VAT, that way you dont come unstuck when the vat man wants your monies further down the line.
Good luck.
I would opt for this, making yourself director, paying yourself a directors wage, which I am sure is £90 per week staying below the tax paying bracket on your wages, then making the rest of your wages up via the dividands payouts as a shareholder. Dividands payouts to Directors are tax free which is good.
Speak to an accountant who will point you in the right direction.
I would apply for your VAT number straight away so ou can charge the VAT, that way you dont come unstuck when the vat man wants your monies further down the line.
Good luck.
24-10-2007, 11:15 AM
#17
I've found that life I needed.. It's HERE!!
have a look at you local business link too
http://www.businesslink.gov.uk
they offer lots of very good free advice also about how to get grants and tax isuues etc.
Hope this helps, also a very good friend of mine is an accountant specialising in small business startups.
http://www.businesslink.gov.uk
they offer lots of very good free advice also about how to get grants and tax isuues etc.
Hope this helps, also a very good friend of mine is an accountant specialising in small business startups.
24-10-2007, 12:28 PM
#18
PassionFord Post Whore!!
Originally Posted by 900ss
neilm
What job do "you" do?
What job do "you" do?
I also have an internet business (105Speed) I set up when IT work was quiet a few years ago supplying tuning parts for classic fords, mainly Anglias.
24-10-2007, 12:36 PM
#19
Originally Posted by neilm
Originally Posted by 900ss
neilm
What job do "you" do?
What job do "you" do?
I also have an internet business (105Speed) I set up when IT work was quiet a few years ago supplying tuning parts for classic fords, mainly Anglias.
24-10-2007, 01:46 PM
#20
If your able to keep working and run the firm in the evening, great!!
However, you may find you need to be speaking to clients etc during the day, this can cause problems unless you schedule phone meetings in for lunch hours.
We found we could only get so far part time, we needed someone around in the day to take calls etc.
6 years on now and we love it.
My adivce would be build up cash and then this will give you a lump sum to treat/use as wages when you finally leave the day job and go full time.
This also helps releave some pressure as it will take a bit of time to go from busy part-time to busy full-time.
However, you may find you need to be speaking to clients etc during the day, this can cause problems unless you schedule phone meetings in for lunch hours.
We found we could only get so far part time, we needed someone around in the day to take calls etc.
6 years on now and we love it.
My adivce would be build up cash and then this will give you a lump sum to treat/use as wages when you finally leave the day job and go full time.
This also helps releave some pressure as it will take a bit of time to go from busy part-time to busy full-time.
24-10-2007, 02:21 PM
#21
Im fairly lucky in the job i do currently, in that im able to be flexible with my hours, so phonecalls and emails etc can be done during working hours too.
I would look at eventually running it full-time as its the ideal situation for me, im in no rush to do this as it will help having a full time wage to fall upon.
Glad to hear your business is going well its more promising for us New kids to hear your details/experiences
I would look at eventually running it full-time as its the ideal situation for me, im in no rush to do this as it will help having a full time wage to fall upon.
Glad to hear your business is going well its more promising for us New kids to hear your details/experiences
24-10-2007, 02:29 PM
#22
No worries mate, there is a huge surge of organisations helping people set u bussiness.
The chamber
Business Link
The princes Trust
Make your Mark
to name a few, personally never gone into the coffee mornings type set up, but joing such places can be a great aid if you work hard to make them work for you.
There are also grants etc that can be obtained with help with purchasing equipment etc.
Also, we joined the FSB (federation for small businesses), we get free legal advice and lots more, used it a few times and has helped us out.
Just be willing to grow with the business, but make sure you keep it healthy and don't take too much out too soon. I have seen plenty of firms go bump because they ran it on a knife edge, flash cars, lavish expenses etc, then they have a quiet period and crumble.
Do speak to an accountant though, they will show you what is best for you, and make sure your doing things right from the start.
The chamber
Business Link
The princes Trust
Make your Mark
to name a few, personally never gone into the coffee mornings type set up, but joing such places can be a great aid if you work hard to make them work for you.
There are also grants etc that can be obtained with help with purchasing equipment etc.
Also, we joined the FSB (federation for small businesses), we get free legal advice and lots more, used it a few times and has helped us out.
Just be willing to grow with the business, but make sure you keep it healthy and don't take too much out too soon. I have seen plenty of firms go bump because they ran it on a knife edge, flash cars, lavish expenses etc, then they have a quiet period and crumble.
Do speak to an accountant though, they will show you what is best for you, and make sure your doing things right from the start.
24-10-2007, 02:39 PM
#23
PassionFord Post Whore!!
Ltd all the way mate, no personal liabilities etc... I have a limited company on the side next to my full time job and am vat registered. Only downfall to it is the accountancy fee's are generally a little dearer than a sole trader. Apart from that cant think of any other negatives.... I dont pay myself an official salary from my ltd company but pay mum £90 a week (no tax / NI on this amount) and also purchase a lot of bits through it.... (fuel etc etc!).
Chris
Chris
24-10-2007, 02:45 PM
#24
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if going limited then remember you are putting yourself in a position where you need to keep and submit accounts, have board meetings with minuted meetings, etc. etc. etc. If you do for it a month or two and think this is actually not working out there's an awful lot more to do with regards winding it all up which will cost you money???
Going Limited DOES NOT mean you don't pay tax LOL!! you will pay tax one way or other, when paying yourself by dividend you MUST make a profit which will be difficult enough in your first years!
Also if you register for VAT you will have to charge VAT to your customers so it all depends on what your selling and who you are selling to, if your selling to business its probably neither here nor there however selling to Joe public means that you are 17.5% down before you start. Plus you will have to submit your VAT return every quarter.
As Neil said I would speak to an accountant and get some good advice, but if your starting something up on the side, I would seriously consider just doing it, give it a couple of months and then see where things are at it might save you a whole load of trouble
good luck in your venture
Going Limited DOES NOT mean you don't pay tax LOL!! you will pay tax one way or other, when paying yourself by dividend you MUST make a profit which will be difficult enough in your first years!
Also if you register for VAT you will have to charge VAT to your customers so it all depends on what your selling and who you are selling to, if your selling to business its probably neither here nor there however selling to Joe public means that you are 17.5% down before you start. Plus you will have to submit your VAT return every quarter.
As Neil said I would speak to an accountant and get some good advice, but if your starting something up on the side, I would seriously consider just doing it, give it a couple of months and then see where things are at it might save you a whole load of trouble
good luck in your venture
25-10-2007, 12:05 AM
#25
PassionFord Post Whore!!
I forgot to give you the other two tips I always give people when they ask about starting their own business.
VAT is NOT your money.... Its never was your money and its never going to be your money.... so dont count it as your money and spend it.
and DONT fcuk with the tax man...
And just in case we missed it the 1st time.......
That was DO NOT FCUK WITH THE TAX MAN....
Dont try and be clever.. no matter how clever you think you are... the tax office have people twice as clever as you....
Play with a straight bat.... wherever possible.....
Do as much of the paperwork for your company as possible as this will keep your accountants bill down.
KISS - Keep It Simple Stupid....
VAT is NOT your money.... Its never was your money and its never going to be your money.... so dont count it as your money and spend it.
and DONT fcuk with the tax man...
And just in case we missed it the 1st time.......
That was DO NOT FCUK WITH THE TAX MAN....
Dont try and be clever.. no matter how clever you think you are... the tax office have people twice as clever as you....
Play with a straight bat.... wherever possible.....
Do as much of the paperwork for your company as possible as this will keep your accountants bill down.
KISS - Keep It Simple Stupid....
25-10-2007, 08:33 AM
#26
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m fairly lucky in the job i do currently, in that im able to be flexible with my hours, so phonecalls and emails etc can be done during working hours too
wheres my camera
25-10-2007, 10:28 AM
#27
Originally Posted by sm
m fairly lucky in the job i do currently, in that im able to be flexible with my hours, so phonecalls and emails etc can be done during working hours too
wheres my camera
PF is my daily chill time.. and a good palce for advice and backlash if your words are misread
Cheers for all your help to date everyone, interseting views from all.
25-10-2007, 11:26 AM
#31
Originally Posted by sm
not the ferrari racer 
i know there called road bikes but it winds people up callin em racers
seat like a razor blade
i know there called road bikes but it winds people up callin em racers
seat like a razor blade
I call it whatever the customer chooses because at £8g a sale there the boss
Im on my 4th sale this month too
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