Forming a company

[hamster]

Can anyone offer any advice re forming a company for a complete novice?

 

Can it be done on a shoestring and what are the minimum requirements please?

 

This will most likely come to nothing but I am particularly interested in whether one can simply start with a company name and begin trading when the first payment is received.

 

NB

I have previously let a property a sa 'landlord' but would not want to be quite so 'creative' with the accounts. I have also chatted with a colleague who showed an interest but I would assume that a partner may not be that good an idea when I'd anticipate it growing at a relatively slow pace.

 

In advance, cheers.

[hamster]

/\

replies in layman's terms please, idiot-speak will not cause offence.

[buctootim]

Very easy and very cheap. Can do it yourself but lots of places will do it for you - eg http://www.thecompanywarehouse.co.uk/off-the-shelf-company.asp

 

Depends what you want a company for. It may not be necessary. You can just get an account in a business name - ie Mr Hamster trading as Rachman Landlords. Ironically its more complicated to have a partnership - other people have the opportunity to **** you up, so you need proper contracts and agreements.

[hamster]

Cheers buctoo.

 

When one hears of people who start with nothing is that actually the case ie set up a seperate bank account and offer a service then simply keep accurate accounts?

 

Could i for instance tidy someone's garden and take it from there and could I keep my main job and also be self-employed?

[hamster]

What are the differences between 'Ltd' and 'Plc' etc please?

[buctootim]

Cheers buctoo.

 

When one hears of people who start with nothing is that actually the case ie set up a seperate bank account and offer a service then simply keep accurate accounts?

 

Could i for instance tidy someone's garden and take it from there and could I keep my main job and also be self-employed?

 

Yes you could. Its what I do. I have a main job 3 days a week (on PAYE etc) and work as a self employed consultant for somebody else the rest of the time. I just file a tax return at the end of the year, no company, no formal status, not even a separate bank account.

[Colinjb]

What are the differences between 'Ltd' and 'Plc' etc please?

 

By my understanding a 'Limited' company is owned by one single body and runs purely for their interest. (Saints under the Leibherr family.)

 

A 'Public Limited Company' is one that can be owned through share agreements. Therefore being available for public ownership. (Saints pre Admin.)

[Boris Karloff]

What are the differences between 'Ltd' and 'Plc' etc please?

 

You don't really need to know at this stage. Basically a plc is a public limited company that is is listed on the stock exchange. The main choice you will probably have to make at this stage is whether to form a limited company or be a sole trader.

 

This will require you doing a certain amount of research as it is important you make the right choice. The main differences are VAT-based, but the decision you will make will be based mainly on your product, service, projected turnover and whether you are likely to employ staff.

[buctootim]

What are the differences between 'Ltd' and 'Plc' etc please?

 

A PLC is a 'Public Limited Company' which means that they are (usually) a large company whose shares are publicly traded - ie that you or I can go and buy shares in them. A limited company can be just a one man band. The advantages of running your business as a limited company depend on the kind of business you intend to run. If you are just doing low risk, low expense stuff (ie you dont need to borrow lots of money to buy stock or equipment) like window cleaning or gardening it might not be worth going to the trouble of setting one up. If you start doing things like importing goods from China using borrowed money, it makes sense to become a ltd company because if the business were to fail your personal assets like house and savings would be protected from creditors.

[Johnny Bognor]

What are the differences between 'Ltd' and 'Plc' etc please?

 

In layman's speak

A Private Ltd company means "Limited Liability" (where the owners / directors are not personally responsible for the company's debts). In return for this, you have to publish accounts at Companies House. The reality of a start up is that it is more difficult to get credit as if you go pop, you can walk away. If you take out loans, the bank are likely to want directors guarantees.

 

A PLC is a company where the shares are listed on the stock exchange and the shares can be publicly owned. It is a good way for larger businesses to raise finance (i.e from floatation)

 

That is it in a nutshell.

 

It really depends on what you are looking to do. If you are going to start slowly, a Ltd Co requires statutary accounts and more paperwork (and you would need an accountant to help you, hence more cost). It is probably not worth it until you are established.

 

With regards to VAT, it also requires more effort. You essentially become an unpaid tax collector who doesn't even get a thank you (or an xmas card), but when you get it worng, they'll kick you in the ********. Being VAT registered enables you to claim back VAT on purchases, but you have to charge it on. If your customers are other businesses, it is less of an issue, because they'll caim it back. If you are servicing consumers, it makes your charges more expensive, so if you are small and if you are charging for labour, not registering helps you to keep your price down or make more profit. I can't remember the threshold off the top of my head, but as you are starting slowly, I really wouldn't bother.

 

Anyway what is the big plan?

Edited 25 October, 2010 by Johnny Bognor

[Verbal]

The threshold is £45,000 I think. But you don't have to stay above it - just achieve it in the year of registration. VAT registration has some real advantages, but don't underestimate the paperwork, nor the inflexible attitude of the taxman if you're a day or so late or your quarterly return goes AWOL in the post.

[hamster]

Anyway what is the big plan?

 

Thanks (TO ALL) for the info so far.

 

The 'big idea' has actually been spawned from some of the changes being introduced by those dastardly politicians and partly from my recent reading material; Road to Wigan Pier - Orwell and Priestley (naff, i know). Starting to think how I might be able to do some of my current work better and more cost effectively than under the current system. I know that it is 'do-able' just not sure that I could be the person to do it though.

 

There will be lots of opportunities for people and companies to in effect 'steal' customers from LG's and in spite of my dislike of profiteering I am not the sort of person to take advantage of others less fortunate than I. I am not one to blow my own trumpet but one thing I have learnt in recent years is that I, and many of my colleagues, know our jobs and ergo our clients needs, far better than those who are self-proclaimed experts.

 

I heard an item on R4 last week that said (and this was direct from a council officer) that for every £3, £1 is spent on deciding how the other £2 is spent! Now that is waste in anyone's book surely.

 

As some may be aware I have been working on some pilot projects recently and the biggest stumbling blocks have been the levals of beurocracy currently in place. I'd say that I am 'known' to certain people within LG and perhaps seen as a trouble maker, I like to aks awkward questions and would go as far to say that I think that when i do it is 100% with good intent. I am though starting to realise that bucking the trend is often futile as most big decisions re changes have been made before any consultation process even reaches those that will be affected.

 

--------------------------------

 

I would like o provide a service to people with disabilities, supporting them to access community and leisure activities, things that many take for granted but when you can't access them it can be quite literally debilitating.

 

I accept that as an individual providing a service I would be very limited but would like to p;ay a decent hourly rate to others in my field who I know are good, honest and dedicated through working with them personally. It would not be like an agency and I would expect those who I 'employ' to declare any earnings themselves.

 

Any concerns from people about the not-for profit group that I recently set up on much the same basis, can be allayed by the fact that I plan to keep that running in a voluntary capacity. It is proceding very well actually, slower than I thought it would but I put that down to experience, valuable experience at that.

 

Long post, sorry.

[Dr Who?]

I would just carry on as a sole trader. depending on what you are doing of course.

[Special K]

Other posters have already given answers on company set up. If you are considering employing people, then the best advice is to employ the services of an employment lawyer as employment law can be a minefield.

[stevegrant]

VAT threshold is £70k, I think.

[hamster]

I have taken the first big step and ordered 250 business cards.

 

This time next year Rodney........

 

 

I'm assuming that doing work as a 'sole trader' is akin to running an e-bay shop; money in - money out, deduct fees, postage etc. Just on a bigger scale and don't forget to keeep good records and declare earnings which I would expect can be done with an online tax return?

 

Cheers people. I have to have a long chat with mrs h and do a bit more research. Quite scary just thinking about now it tbh.

[Andy_Porter]

It's a piece of **** setting up and running a company as a sole trader. Just make sure you keep copies of everything you do, every quote, invoice, recipt etc, anything I print I have saved on my PC, on an external hard drive and a paper copy.

 

You have to let the HMRC know, but really that's about it. I have got a freind doing all my accounts / tax returns etc all for me. Just give him all my invoices and recipts and he sorts everything for me, he only wants £100 a year as well so happy days.

 

I had to shell out for public liability insurance since I'm in the building trade and anyone can make mistakes... other than that I didn't pay anything when I started off.

 

If I can do it, anyone can.

[Kingsland Red]

I would stay as a sole trader as you will save a lot of money including the cost of submitting annual accounts to Companies House.

I have been a sole trader or partner for 20 years, am VAT registered and employ up to 10 people.

Be careful, if you are a limited company then the company will own your property and you will not be able to get it back as an individual.

[hamster]

Be careful, if you are a limited company

 

 

Bugger! My first c_ock up then, the business cards I ordered have "blah blah blah Ltd." (*)on them.

 

* don't know why I put that, it just sounded right.

 

 

I'm already £2.99 down!

[Berkhamsted Saint]

I run my own company and the best piece of advice I can give you is before you do anything go and see an accountant. It could save you thousands over time.

 

Have seen so many people try and do things on the cheap which ends up costing them a lot of money in the long run.

A decent accountant will always pay for themselves.

[CB Saint]

You could try this lot - they will give you free candid advice warts and all

 

South Hampshire Enterprise Agency

Solent Business Centre

343 Millbrook Road West

Southampton

Hampshire SO15 0HW

Telephone:

02380 788088

Fax:

02380 7040

[Special K]

Business Link is also very good for advice. http://www.businesslink.gov.uk/bdotg/action/home

[Minty]

Business Link is also very good for advice. http://www.businesslink.gov.uk/bdotg/action/home

 

This. Invest some quality time in just reading through the information on Business Link. It's comprehensive, but broken down into manageable chunks, and has been invaluable for me over the years.

 

Hammy, give me a shout if you want to talk through anything, as I've had businesses, am currently setting up a new one, and even looked into something very similar to what you describe above.

[Big John]

Would people agreee that one of the biggest things that one can risk in starting a business is when one turns a hobby into an income stream? It sounds as though hamster enjoys what he currently does for a salary but the added pressure of having to make it 'pay' should be considered ?

[hamster]

Thanks thus far fellas, in particular the link from Special K, only just finished trawling it. Some great stuff on there, in particular (for me at least) was the discussing with nearset and derest advice.

 

I'm having a slight prob with my projested outgoings in that as I plan to hire an accesible minibus as and whe, but will effectively be using it for businesss purposes, I can't seem to get any strainght answers from insurers. I was literally on the phone for an hour to a broker last night and ended up politely putting the phone down, it was that frustrating.

 

Anyone have any advice on 'as and when' insurance please? I could of course just add a hire vehicle on a short term basis to my own private car policy but I'm guessing that would be asking for trouble should I be involved in and accident and it transpires hat my passengers have paid effectively for the 'service'.

 

On a positive note, I have been putting the feelers out and getting really positive responses, definitely a gap in the market, albeit not big profit-wise, but enough to make me feel that I might just be able to make a go of it.

[Whitey Grandad]

I would stay as a sole trader as you will save a lot of money including the cost of submitting annual accounts to Companies House.

I have been a sole trader or partner for 20 years, am VAT registered and employ up to 10 people.

Be careful, if you are a limited company then the company will own your property and you will not be able to get it back as an individual.

Me too. Your accountant will gave to do more work - and charge more - for a limited company. As a sole trader / partnership you will have more flexibility on expences which will not need to be 'necessary' for the business. If your customers are VAT registered then it makes sense for you to register too. You will, of course, be unlimited liability so watch your insurance. VAT threshold used to be £50k but you can voluntarily register if lower than that. No sickness, unemployment benefits either.

Good luck.

[aintforever]

I have a question, if anyne is kind enough to help.

 

If you have a day job but do a bit of work on the side, at what point to you have to tell the tax man and file returns and all that stuff?

 

I started doing the odd job as a favour and it's sort of ballooned, my mate says it's fine and you only have to declare it at a certain amount. I don't really trust him though, he's done lots of drugs.

[Whitey Grandad]

I have a question, if anyne is kind enough to help.

 

If you have a day job but do a bit of work on the side, at what point to you have to tell the tax man and file returns and all that stuff?

 

I started doing the odd job as a favour and it's sort of ballooned, my mate says it's fine and you only have to declare it at a certain amount. I don't really trust him though, he's done lots of drugs.

All extra income should be declared to HMRC, there is no threshold. The trigger point is whether or not you get found out. You might decide to risk it but I cannot possibly condone or advise that. If you are doing extra work 'on the side' for any organisation that has dealings with HMRC then bear in mind that they could be investigated at any time.

[aintforever]

All extra income should be declared to HMRC, there is no threshold. The trigger point is whether or not you get found out. You might decide to risk it but I cannot possibly condone or advise that. If you are doing extra work 'on the side' for any organisation that has dealings with HMRC then bear in mind that they could be investigated at any time.

 

Damn, all my recent work has been for Ltd companies with proper invoices and stuff. Guess I'm going to have to only work for cash from now on.

 

But surely me selling my services is no different to me selling something on ebay?

Edited 6 November, 2010 by aintforever

[ottery st mary]

http://www.business-opportunities.net

 

Start your own business on ebay...many packages out there re starting your own business on ebay.

 

Buy and sell books.

Buy and sell clothes.

 

Find your own niche and off you go...

 

I can see you buying the Saints in a few years....

 

Good luck.

[Whitey Grandad]

Damn, all my recent work has been for Ltd companies with proper invoices and stuff. Guess I'm going to have to only work for cash from now on.

 

But surely me selling my services is no different to me selling something on ebay?

 

Selling on eBay would be capital gains if you made a profit. Selling your labour is subject to income tax, unless by 'selling your services' you mean prostitution which is not illegal but stll taxable anyway.