Starting our own business - things I need to do?

[doctor Bob]

Good luck with the business, partnerships are very risky but can work, I have a business partner and most of the time it's a great laugh. When it's not working he's a c............................

 

[petermillard]

I can see many ppl are split between Ltd and not

It depends on your circumstances whether a Ltd company is right for you or not; everybody's circumstances will be different, hence the split in opinions, and it's fair to say that there are pros and cons either way.

As has been said further up the thread, you need to seek professional advice, ideally from someone independent; there is plenty of government information available online too e.g. https://www.gov.uk/business.

FWIW I use insuredrisks.co.uk for public liability insurance; easy to get an online quote from them, then shop around.

HTH Pete

 

[Graham Orm]

The thing is this. You can go Limited any time you like. If it's a new venture, especially a new partnership, and it doesn't work a sole trader/partnership is easier to dissolve. As I said, you can become Limited any time you like and once you get a feel for running a business and learn a little about it.

 

[Ed209]

The biggest problem I think you will have is your partner even the best of friendship comes under-strain when money is involved.
I have 2 million public liability with 80/20 split so I can do occasional work in shops, guest houses etc

 

[Ed209]

As stated earlier what do you do if one of you is ill/injured the other partner would have to carry that, I no of others in these start of friendly partnerships that end in all out war

 

[doctor Bob]

As stated earlier what do you do if one of you is ill/injured the other partner would have to carry that, I no of others in these start of friendly partnerships that end in all out war

You have insurance in place to cover death or serious injury.
Just to balance the argument, when a partnership works they can be great, someone to bounce ideas off, someone in charge whilst you are on holiday, splitting the leadership workload with each doing what they are best at.

 

[Drudgeon]

Regarding the Ltd/Not Ltd issue,

When I first went out on my own, I had a good chat with an accountant, he advised me to start off for a year or two as a sole trader and see how it goes, as a rough guide he said to me that if I were to make clear profit of above 25K it would be more beneficial going Ltd, yes the admin costs would be more, but you would save more back in tax to cover that and plenty more beyond.

After my First year trading I was well over that (just as well really or my family would have been rather cold and hungry!) so he advised me to go Ltd, I have finished my trading year as a Ltd co so I can't compare tax bills etc.

My opinion would be that if you do go registered, you need a good accountant to ensure you reap the benefits of being Ltd, if you try to scrimp on accountants costs and think you can do most of it yourself, you will probably miss out on a bunch of tax you could have saved.

 

[Graham Orm]

Regarding the Ltd/Not Ltd issue,

When I first went out on my own, I had a good chat with an accountant, he advised me to start off for a year or two as a sole trader and see how it goes, as a rough guide he said to me that if I were to make clear profit of above 25K it would be more beneficial going Ltd, yes the admin costs would be more, but you would save more back in tax to cover that and plenty more beyond.

After my First year trading I was well over that (just as well really or my family would have been rather cold and hungry!) so he advised me to go Ltd, I have finished my trading year as a Ltd co so I can't compare tax bills etc.

My opinion would be that if you do go registered, you need a good accountant to ensure you reap the benefits of being Ltd, if you try to scrimp on accountants costs and think you can do most of it yourself, you will probably miss out on a bunch of tax you could have saved.

You cleared £25k profit in your first year of trading as a 1 man band?! What are you doing?

 

[devonwoody]

Try and have a landline telephone number in addition to any mobiles numbers.

Households can be wary of only a mobile number.

 

[Sheptonphil]

The biggest problem I think you will have is your partner even the best of friendship comes under-strain when money is involved.
I have 2 million public liability with 80/20 split so I can do occasional work in shops, guest houses etc

My previous business was a partnership, and a very good one that lasted 17 years, but I had 51% when business decisions were made. It is very difficult working on a strictly 50/50 basis when decisions are to be made an there are two different view points. All profits though were shared 50/50

The last decision I made was to sell the company!! (partner had first option on it). After 20 years of working together, 17 of them on our own, he didn't speak to me for three years afterwards, even though it enabled both of us to pay off our mortgages.

The company folded two and a half years later. We met after a further six months and the words he uttered were "best decision WE ever made was to sell"

Friendships are certainly strained at times.

Phil

 

[Drudgeon]

Regarding the Ltd/Not Ltd issue,

When I first went out on my own, I had a good chat with an accountant, he advised me to start off for a year or two as a sole trader and see how it goes, as a rough guide he said to me that if I were to make clear profit of above 25K it would be more beneficial going Ltd, yes the admin costs would be more, but you would save more back in tax to cover that and plenty more beyond.

After my First year trading I was well over that (just as well really or my family would have been rather cold and hungry!) so he advised me to go Ltd, I have finished my trading year as a Ltd co so I can't compare tax bills etc.

My opinion would be that if you do go registered, you need a good accountant to ensure you reap the benefits of being Ltd, if you try to scrimp on accountants costs and think you can do most of it yourself, you will probably miss out on a bunch of tax you could have saved.

You cleared £25k profit in your first year of trading as a 1 man band?! What are you doing?

I'm doing various things TBH, I was a site manager for 8yrs, so I made a lot of contacts before I jacked it in to work for myself, I spent half my first year making bedrooms and shop fittings, bedrooms mainly for private clients, shop fittings for a couple of different main contractors, I spent a bit of time out on site fitting for a couple of large joinery firms I know, and I also did a little site management on short term contracts for a shop fitting outfit. A lot of the work I was getting wasn't very high spec, but it paid the bills, I'm slowly but surely starting to get better quality clients, which is allowing me to produce better quality work, but it's been a real hard slog, to be fair, making money was the easy part, making money doing what I really want to be doing is what is really hard. I'm sorry if that sounds arrogant, I don't mean it like that, but I am London based and have been in the game my whole life, and have made a lot of contacts over the years, I was a site manager for a very high spec refurb outfit for quite a long time, and in London, people are screaming out for site managers with experience in that area, but I just wanted to get out of it, get a good quality of life for me and my family, (not nessasarily in financial terms, but in terms of flexible working hours and how much time I can spend with them), going back on the tools in the workshop was really hard, I felt like an apprentice all over again, and not having any real decent machinery was such hard work, but now I've invested in some and am slowly building myself up, hopefully one day I'll get where I'd like to be.

 

[Graham Orm]

Regarding the Ltd/Not Ltd issue,

When I first went out on my own, I had a good chat with an accountant, he advised me to start off for a year or two as a sole trader and see how it goes, as a rough guide he said to me that if I were to make clear profit of above 25K it would be more beneficial going Ltd, yes the admin costs would be more, but you would save more back in tax to cover that and plenty more beyond.

After my First year trading I was well over that (just as well really or my family would have been rather cold and hungry!) so he advised me to go Ltd, I have finished my trading year as a Ltd co so I can't compare tax bills etc.

My opinion would be that if you do go registered, you need a good accountant to ensure you reap the benefits of being Ltd, if you try to scrimp on accountants costs and think you can do most of it yourself, you will probably miss out on a bunch of tax you could have saved.

You cleared £25k profit in your first year of trading as a 1 man band?! What are you doing?

I'm doing various things TBH, I was a site manager for 8yrs, so I made a lot of contacts before I jacked it in to work for myself, I spent half my first year making bedrooms and shop fittings, bedrooms mainly for private clients, shop fittings for a couple of different main contractors, I spent a bit of time out on site fitting for a couple of large joinery firms I know, and I also did a little site management on short term contracts for a shop fitting outfit. A lot of the work I was getting wasn't very high spec, but it paid the bills, I'm slowly but surely starting to get better quality clients, which is allowing me to produce better quality work, but it's been a real hard slog, to be fair, making money was the easy part, making money doing what I really want to be doing is what is really hard. I'm sorry if that sounds arrogant, I don't mean it like that, but I am London based and have been in the game my whole life, and have made a lot of contacts over the years, I was a site manager for a very high spec refurb outfit for quite a long time, and in London, people are screaming out for site managers with experience in that area, but I just wanted to get out of it, get a good quality of life for me and my family, (not nessasarily in financial terms, but in terms of flexible working hours and how much time I can spend with them), going back on the tools in the workshop was really hard, I felt like an apprentice all over again, and not having any real decent machinery was such hard work, but now I've invested in some and am slowly building myself up, hopefully one day I'll get where I'd like to be.

That's different, I imagined you'd just started up as a self employed joiner. I also imagine £25k is a different amount than it is here in Manchester. Good luck with it, sounds like you have it sorted.

 

[Drudgeon]

Yeah there's no way I could have got by purely on joinery, I'm getting to the point now where I am doing 85-90% joinery, but as I said, a lot of it is production-pump it out quick stuff which is not very enjoyable, but it pays the bills, annoyingly, there seems to be more money to be made doing that than there is doing really nice work.

And from what I can gather, there is a big difference in what people tend to earn from North-South, but the cost of living down here is such that you are most certainly no better off for earning maybe double what someone may earn 250 miles further north.

Anyway, apologies to the OP for taking the thread off track.

 

[byyt]

Im sorry if any of what I say has been covered before.

1. Unless you have a large body of completed work that you can show customers,a recognised trade affiliation on qualification is probably a wise commercial decision.

2. On top of public liability, I would seriously look at professional indemnity. This covers you just in case advice you give a customer is proven to be wrong. 20 mins on google will find a whole list of insurers. I always google any business I may do business with with the word scam in the search, just to see if they have any bad form.

3. Assuming at the beginning, cash-flow will be tight, you don't want one of you to be an employee as the company will have to pay employee national insurance and maybe an accountant to do your payroll. Forming a partnership is easy and a decent partnership agreement can be downloaded. I would say, no matter if you are friends or not a formal partnership agreement is advisable for a number of reasons.

On the subject of VAT, I can't see any sense in not registering straight away. The VAT returns are straightforward to do and in the early days a VAT rebate is not a bad supplement to cash-flow.

Hope this is useful.
.

 

[Scouse]

So what, roughly, do accountants charge for a small ltd company, lets say a one man band former sole trader with a relatively modest turnover?

 

[byyt]

Scouse. Depends on the size of the accountancy firm and what state your paperwork is in when you give it to them. If it is in a mess, they will charge you to sort it into the right order. In my experience, varies from £500-£2,500 for turnovers up to £500K assuming organised paperwork.

 

[petermillard]

On the subject of VAT, I can't see any sense in not registering straight away...

1/. It increases your prices by 20%, and 2/. it's 20% that you don't get to keep! Remember too, that you can register for VAT at any time and claim the VAT back on equipment purchased up to (I think) 4 years prior to registering. Personally, I'd put off VAT registration until you're either required to do so, or you can make a proper business case for being registered.

Pete

 

[Willshine]

Thanks guys for all your help. I will definitely take most of the advice!! I might have few more questions soon but that's for later as the decision on opening the business is going slow as we are a bit scared etc. but its coming soon I think so yeah once again Thx

 

[billybuntus]

On the subject of VAT, I can't see any sense in not registering straight away...

1/. It increases your prices by 20%, and 2/. it's 20% that you don't get to keep! Remember too, that you can register for VAT at any time and claim the VAT back on equipment purchased up to (I think) 4 years prior to registering. Personally, I'd put off VAT registration until you're either required to do so, or you can make a proper business case for being registered.

Pete

Registering for VAT is fairly straight forward in my mind. It just depends on your customer base. If you dealing with mainly businesses then it will work with you but if your competing for work with private customers then your always going to have a 20% markup against the competition. Unless of course you deal in cash for that side for the most part (shock horror).

But if your aiming for high end work then your customers decision to take you on is not generally going to be swayed massively by price and more on your abilities and past work.

 

[Graham Orm]

VAT:
A 20% turnover tax on companies that exceed £81,000 turnover. You hit £81k, you hand over 20% of it to the VAT man. He then allows you to deduct from the 20% any VAT that you have paid out....you give him the difference.

Why would you volunteer for this if you didn't need to? You can't stand to hand over 20% of your turnover so you pass it on to your customer-YOU charge VAT. For your efforts you have just put your prices up by 20%....good luck with that.