I know that it’s OT and apologize for that, but maybe someone will be able to help me.
Me and my partner are thinking about starting our own company.
Nothing big, small to begin with, with possible expansion later.
It would provide services, no sales.
After some research online I’ve found out that we have two options: a partnership or a limited company
Could someone tell me all the pros and cons for both of them in our situation? We want to be equal owners - 50:50
Is it possible to change the type of the company later?
I know that I could go to the solicitor and find it all out, but would rather save some money where possible.
Maybe someone knows any good websites to read about it?
All help very appreciated!!
I have a services company administrated by my accountant. He does all my admin (PAYE, VAT, corp tax, etc) for £150 per month. He really know his stuff and would probably be happy to advise you foc. PM me if you want to talk to him.
Set up as limited and get yourselves VAT registered so you can charge vat and claim back the VAT you spend on things for the company. If you set up as limited and things went wrong for whatever reason, the company will be held liable not you and your partner and you wont be in a position to lose your personal assets. If you are a partnership and things go wrong, the courts could remove your home, car etc etc to pay for things.
Have a look on Companies House website - there’s loads of info there.
I run as a plc, I’d suggest getting a good accountant that works in your favour.
Try John Symonds of Chase Bureau in Southend. He is a top guy ans sorts out absolutely everything for you and will steer you in the right direction.
Tell him Micky at Ki Ink & Steel Tattooing in Dagenham refered you.
He’s not the cheapest but he is really bloody good!!! He will set up the company, bank accounts paye - everything.
Pro’s and cons even for this SW. VAT registration is only necessary if your turnover reaches a certain level, and even then, only if you make VAT attributable supplies (even if zero rated - cash flow beneficial).
Pro’s and cons of whether you incorporate or not. You are only protected by the veil of incorporation provided you are not doing anything illegal, then it makes no difference, you would still be peronally liable.
Depending on who your customers are, it may not be worth while registering for VAT if you are a services business (as long as you are under the required turnover threshold) e.g. if you are babysitting/dog walking/etc, you don’t want to inflate your prices with VAT where your customers won’t be able to claim it back and you don’t have input expenses to offset it against. On the other hand if you provide catering services for corporate events you probably do want to register.
You can also register for a special rate where you charge your customers 17,5% but only pay over 12% to HMRC in the first year and 13% thereafter (I may be slightly off on the %'s) - but then you can’t claim any input VAT. This is ideal for pure services business where you have no/low input expenses.
I agree that an accountant is the way to go, but if you want some basic info yourself, have a look here: http://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073858805&r.s=tl
It’s the DTI’s Business Link website for company startps and has loads of info on it.
actually it is not dependant pn turnover, you have 2 ways of going about this.
1, you become Vat registered and get your vat back or
2, you pay vat on everything as you would normally and it is counter wieghted i.e you pay vat on petrol so £20 instead of £15 + 5 vat you just say £20 on petrol (if that makes sense)
I was going to be a small business once and was told go limited so I would go with that…
you dont have to vat register you just have to register the company so you dont get screwed by the tax man
VAT can be dependant on T/O. If you make vatable supplies and reach a certain level of T/O (think it’s about £62k on any rolling 12 month period) you have to register for VAT, but that is only if you make VAT’able supplies. You can register below this limit, but unless you are claiming back more than you pay, it’s not worth it.
If you turnover is VAT exempt, you can not register for VAT to then be able to reclaim it, for that you have to make zero rated supplies.
VAT is boring.
We are not vat registered here on purpose, extra paperwork = extra expense, time is money etc.
For our business why register if there is no need to?
Our customers are happy not to have to pay VAT on our prices
Grahams Dad was overjoyed when he dropped his turnover enough to opt back out of it.
Obviously only commenting on our trade
If you don’t mind me asking, what business do you guys run?
Nice! Do you guys do any ally fabrication? I’ve been thinking of designing my own trailer.
That’s what I said.
Being VAT registered is beneficial to company’s below the limit if their supplies are Zero rated, they can then claim back their VAT, and not pay any… makes sense for cash flow.
Oh in answer to a question which was originally asked, you can incorporate your business whether it be sole trader or partnership at any time. By incorporate, I mean, create a separate legal entity which is a Limited company and you are the shareholder / director. Whilst shewolf is correct in saying if things go tits up the shareholders are only liable to the value of their unpaid shares, if the company or the directors were acting outside of the legal framework, then the veil of incorporation (separate legal entity) is invalid. Many statute cases where this has occured.
Can be tax beneficial provided that you are not in contravention of IR35.
I rebuilt and refurbished (as my mum puts it!) my 1968 hard top Triumph Herald convertible (in fire engine red!) and then totalled it weeks later. Life is so cruel Woulda saved me a lotta bother if I’d known you two back then!