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piersmorgan
31st August 2004, 04:14
Hi,

I am setting up an industry-specific web portal. I want to come across as professional as possible so don't want companies to make cheques out to 'Piers Morgan (not my real name BTW - I'd have to change it if it was!!!)', but rather a biz name. I also want to keep the men in suits happy!

I haven't registered the company yet as I am unsure whether to register as a sole trader or ltd company. I'm only going to do this portal as a sideline whilst I remain in full time employment so I don't really want to spend a lot of money to set up as a ltd company. I realise that as a sole trader you are personally responsible for debts etc and can risk losing personal assets, but the only debts I will have initially are cost of website, hosting and some recruitment software.

As far as I understand it, by becoming a sole trader I will:

1) register myself as self-employed with the Inland Revenue
2) start paying basic National Insurance Contributions of £2 a week (unless earning under 4200)
3) Hold simple revenue/expenses accounts suffice
4) Annual self-assessed tax

I take it, this is the cheapest route?

What are other net-only entrepreneurs doing?

Thanks,

'Piers'

4Contractors
31st August 2004, 09:19
Most of us already have limited companies, so any associated business activity can usually be put through our companies.

To create the professionalism you desire will require a business bank account and as you say the choice is between sole trader and limited. The problem with limited is not the setup costs but the ongoing cost of the mandatory returns that most people need to hire an accountant to perform. Sole trader accounts are much more straightforward and could probably be looked after without an accountant.

If your venture has any medium term potential it may be worth using the more professional limited route. Accountancy costs for ordinary small businesses can be as low as £300 a year, if you do most of the day to day bookkeeping and pass the accountant summary figures.

antell
31st August 2004, 09:19
The best form for a new business depends on your own circumstances and what you intend to do with the portal so don’t take anything which follows as advice, but with regard to some of the general issues raised:

A shareholder in a company limited by shares (the normal form of limited company) is (unlike a sole trader) not generally liable for the debts of the company so in general he stands to lose only the money he has paid for his shares. However if the shareholder is active in the company as a director or employee then in some circumstances he can be liable for wrongs committed by the company.

For example, purely as an illustration, if the company orders goods by sending an order on its headed notepaper signed by a director then the company and not the director himself is liable to pay for the goods. However if the company website contains something defamatory then both the company and the individual within the company who is responsible for the website will be liable. So whilst using a limited liability company provides some protection against personal liability it is not complete protection.

The are alternatives to sole-traderships and limited companies. A Limited Liability Partnership is a kind on hybrid. It has similarities to a limited company in terms of limited liability but each member of the LLP is taxed (and liable for Class 2/4 NIC) in the same way that a sole trader would be on his share of the partnership profits.

With regard to trading names, both sole traders and limited companies (and LLP’s) can (subject to certain formalities) use a trading name, so it is not necessary to set up a limited company purely in order to be able to trade under a catchy name. Providing proof of trading under the business name is provided to the business’s bank there should be no problem in paying in cheques made out to the business name.


John Antell

barrister

www.john.antell.name (http://www.john.antell.name)

4Contractors
31st August 2004, 09:47
I like your style Antell :)

piersmorgan
1st September 2004, 00:57
Thanks people, that clears it up a bit. Will probably go for the sole trader route as I have nothing to lose should the venture go under (website, hosting, some advertising fees which I would repay etc).

I'm actually living in Oz now (emigrated in Jan) and have am a sole trader here which complicates things!

I'll have a word with the tax people here.

I still have active bank accounts in the UK, so that would be no problem and I can see myself returning to the UK every year anyway, although I wouldn't mind keeping the money in the UK so I would only get taxed there and then get taxed in Oz for what I do here... I don't think I would want the hassle of charging clients in dollars....losing out on exchange rates, commission etc...

But from a client perspective I would have to think twice to deal with a company on the other side of the world. But then I guess if I keep all communication down to email, how would they not know....could even use Paypal - but then what companys would use that?? Obviously I don't want it to come across as scam (which it's not!), so maybe I should just say that I am based in Oz, that I am happy for them to pay into my UK biz account and provide full Oz contact details...:\

Piers