Registering a company

PC_Dave

I’m after a bit of advice from you knowledgable chaps. I’m going to be starting a venture in the new year, presupposing I pass a couple of exams beforehand, and I’ll need to register as a company. Are there any pitfalls or things I need to know about before doing so? I have the domain name and website ready to go, so is it a simple case of just registering with Companies House?

Much obliged in advance.

Fretwired

All you need to know is here:

https://www.gov.uk/limited-company-formation/register-your-company

You can get someone to register a company for you and set it up. Just Google create a company. I assume you're looking at a Limited company.

I would advise some professional advice regarding formation, articles and registering for Corporation Tax and PAYE.

PC_Dave

Fretwired said:

All you need to know is here:

https://www.gov.uk/limited-company-formation/register-your-company

You can get someone to register a company for you and set it up. Just Google create a company. I assume you're looking at a Limited company.

I would advise some professional advice regarding formation, articles and registering for Corporation Tax and PAYE.

Yup, it’s just going to be me to begin with, so ltd it is.

It all just seems too easy....

Grunfeld

You can buy a company already set up, off the peg.  Super easy; I've had four.  I think you can change the name later, but to be honest I've never been bothered.

dbphoto

It’s unbelievably quick, easy and cheap to set up a Ltd company.

If it’s just going to be yourself involved to begin with then there really is no need to seek advice.

And there is definitely no need to pay anyone to set it up for you.

I would suggest that unless you really need to form a Ltd company then these days being a sole trader makes a lot of sense as the financial advantages to running a small Ltd company are not what they were.

Snags

As @dbphoto says, if it's just you and there's no other pressing reason to do it as a Ltd Co, simply running as self-employed is easier and potentially less hassle.

The two big selling points for Ltd Co (limited liability and more tax efficient) are generally much less true for "Close Companies" (small ones where the directors are the only shareholders etc.) than they used to be.  Anyone you're into for serious money will want a personal guarantee, so your limited liability is up in smoke, and there are a lot of situations now where directors become personally liable anyway. And whilst you can be a bit more tax efficient, unless you're absolutely raking it in the difference probably isn't worth the aggro of all the additional returns and formal accounts you need to submit.

I ran as a sole trader for years, no hassle. Only went Ltd when I merged businesses with a friend to protect us from each other as much as anything. Then the bastard got killed in a car crash, and frankly if it wasn't for inertia I'd dissolve it all and go ST again.

dbphoto

Snags said:

frankly if it wasn't for inertia I'd dissolve it all and go ST again.

Aye, agreed.

Especially as on top of everything else we now have to submit a self assessment tax return and pay dividend tax.

Hattigol

Don't pay anyone to do it for you or buy a pre-formed one. It is an absolute piece of cake and takes about 5 minutes on the very user-friendly Companies House website. Happy to assist if you get stuck but you are unlikely to.

PC_Dave

Thanks all for the replies. I’m totally blank with it all as ive never had to do something like this before. What’s the difference between Ltd and Sole Trader? Is it essentially tax and the like?

dbphoto

Have a read here:

https://www.rossmartin.co.uk/starting-in-business-77750/140-sole-trader-v-limited-company-key-tax-a-legal-differences

TLDR?

Don't go Ltd unless you really have to!

PC_Dave

dbphoto said:

Have a read here:

https://www.rossmartin.co.uk/starting-in-business-77750/140-sole-trader-v-limited-company-key-tax-a-legal-differences

TLDR?

Don't go Ltd unless you really have to!

Interesting. Having read it, and thinking about the venture and insurance and the need for employing others and the like, I think it will make sense to go Ltd.

I’ll keep reading up though.

dbphoto

FWIW it is much easier to start as a sole trader then open a Ltd company later if required, than dissolving a Ltd company and simply becoming self employed.

Grunfeld

PC_Dave said:

Thanks all for the replies. I’m totally blank with it all as ive never had to do something like this before. What’s the difference between Ltd and Sole Trader? Is it essentially tax and the like?

Which is why I bought my Ltd companies off the peg.  I know @Hattigol has said it's a piece of cake but my brain just doesn't do that kind of stuff well and I ballsed up my first attempt to do it myself, and it was way easier for me to get one ready to go. 

And I'd agree with the comments that ST is easier (and cheaper) from an accounts pov, and not to go Ltd unless you have to.

DB1

There are for's and against's - take an accountants advice, then make your mind up. In essence, limited liability is the key these days for establishing a limited company. There's a tax-free dividend that you can take, but IIRC, it's down to £5000 now, and, of course, corporation tax needs to be paid first, so if it's just you, then in real terms, it's not a massive benefit. That's just me rambling though, so do take professional advice.

If you're going to set up a limited company, I've used a company called Rapid Formations (no affiliation) twice now and found them to be very good, particularly with follow-up correspondence and reminders - company statement, accounts due, etc. 

I'm pretty rubbish at doing these things myself, and would recommend them. I'd certainly use them again, no question.

Fretwired

dbphoto said:

Have a read here:

https://www.rossmartin.co.uk/starting-in-business-77750/140-sole-trader-v-limited-company-key-tax-a-legal-differences

TLDR?

Don't go Ltd unless you really have to!

Bad advice. A limited company is its own legal identity, so as a shareholder your liability is limited (hence the name 'limited by shares'). As a sole trader, there is little distinction between you and the business. Any business debts become your debts and your personal assets - including your house - are not protected. I'd always go for a limited company.

dbphoto

Bad advice?

No, it’s really not.

But without more information on the business being created the ‘correct’ advice can’t be given.

Fretwired

dbphoto said:

Bad advice?

No, it’s really not.

But without more information on the business being created the ‘correct’ advice can’t be given.

I agreed to a point that it depends on the business. I run two business networking groups and I can bore for the UK on sole traders who have got into financial trouble that left them in debt. A limited company limits the liability. You won't lose your house.

dbphoto

It’s entirely possible to run a business without any debt, as I have been doing with my current Ltd Co business for the last 4 years, so for me actually just being a sole trader would now be preferable.

If however loans, over drafts, leasing etc is required then the safety of a Ltd company is of course advisable.

DB1

One thing to note is that, often, loans, overdrafts, etc (particularly for new businesses) require a personal guarantee even if it's the business that's owed money.

It really IS horses for courses - if you're a consultancy, with little or no goods or equipment bought in, a sole tradership is pretty low-risk, apart from making sure that HMRC are satisfied, of course! One thing to consider is the perception of the business as well - is it in an industry where a limited company is seen as more 'stable'? 

If you're new to it, I really would recommend seeing an accountant, and preferably one with expertise in 'startups', who can  give you the right advice. 

PC_Dave

Well, this is all terribly confusing

The venture will be run separate to my day job, and hopefully take over as my day job if it all goes well. I think, given that there will be insurances required, and possibly employees required in the future, a separation from my personal situation might be preferable. 

Fretwired

PC_Dave said:

Well, this is all terribly confusing

The venture will be run separate to my day job, and hopefully take over as my day job if it all goes well. I think, given that there will be insurances required, and possibly employees required in the future, a separation from my personal situation might be preferable. 

If you are planning to have employees then I'd go for a limited company. It's quick and cheap to setup. You can use a company like this:

https://www.yourcompanyformations.co.uk/packages/compare-packages/?gclid=EAIaIQobChMIp7HUm7353gIVhpPtCh0FDglJEAAYASAAEgIbN_D_BwE