Advice on new business start up - finance/costs

Three ways, AFAIK:

1) buy stuff using your personal cash/credit in preceding three (?) months before starting they company, and it can be claimed as expenses.

2) loan the company some cash from your personal savings for bills that must be paid using a company cheque.

3) once the company has been started, buy stuff using your personal cash/credit and charge back to the company as expenses.

As a director, your accountant will probably set up a 'Directors Loan Account' which will build up with your expenses. When the company begins to get an income, you can have the company start paying you back.

Quite often "free". 15GBP each year to stay on the register.

Included in many ADSL service offerings. For .com, I use (about 8GBP a year).

If you're getting broadband anyway, why the extra phone line? Just get BT's 'Callsign' service (4.50GBP per quarter) and you'll get a seperate number and a different ring to go with it. I'd recommend using 141 to withhold your number to businesses you call, or use your old number for business and the new one for personal calls (otherwise you may get someone using Caller ID and calling the old number, which you then answer as a personal call...)

Lots are free/reduced installation, and acceptable routers can be had for

30-40GBP. I suppose 80GBP's not a bad estimate.

Depending on what you're doing with your web hosting, it may be included free with your broadband service. I recommend Eclipse's ADSL 500lite + the

4GBP supplement for SMTP mail delivery, DNS hosting, domain name, and basic web hosting. [snip]

One way or another, yes. The bills need to be paid. Either you loan cash to your company so it can pay them, or you pay them yourself.

[snip]

Eventually, if all goes well, the company will be able to repay your loan to it, tax-free.

[snip]

HTH, Alex.

"Alex Butcher" wrote

Won't there be a potential issue if the "person" is *not* VAT-registered but the "company" *is* VAT-registered?

Eg :- (1) "person" buys goods for 1,000+VAT = 1,175. "Person" cannot reclaim VAT, as "person" is not VAT-registered.

(2) "Person" sells on goods to "company", charging 1,175 - but with no VAT charged [cannot charge VAT when not VAT-registered].

(3) "Company" cannot reclaim the VAT initially paid by "person" because (i) the "company" didn't pay the initial VAT; & (ii) the "company" wasn't charged VAT by the "person".

(4) End result: "company" has paid 1,175 but cannot reclaim the 175 VAT....

That's never been an issue with the way my accountant did things, as long as I provided a purchase recipt with a VAT number included. I suspect that this isn't regarded as you 'selling' goods onto your company.

Best Regards, Alex.

Hi again, thanks for the responses so far, especially to Alex - very helpful. I am taking note of everything said and I would really appreciate as much feedback and comments as possible as this is a big step for me! Thanks!!

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Hi, I'd really appreciate some advice and pointers as I'm going through a doubting period after doing some sums and looking at start up costs.

Without going into great detail, I plan to start a new business as a distributor/agent and possibly retailer. This will probably be online retail at first but I have other costs before I can think about purchasing stock! For the added status and tax breaks it gives I think a Ltd Co is the best structure for me. I understand the process pretty well apart from a couple of things - start up capital and assets. How do you inject this into a start up? Is it part of the initial company registration? Can it wait until the first accounts in a year from start up?

I am trying very hard to keep costs down but it is quite scary when looking at outgoings and purchases before I've even established a presence or sold a thing! And this is an inital home start up! This is a rough list so far: I've probably forgotten a few things and would be grateful if anyone could point them out or comment on possible mistakes or costing errors on my list.

Company registration 40-120 Domain registration/website 40-200 Logo design etc 50+ PC Upgrade/New PC 400-600 Software upgrades 100+? Quality printer for promotional activity/company stationary 180 Photocopier/Scanner/Fax 200 Additional telephone line 75 Broadband equipment and installation 80 Stationary costs 150

(Extra monthly outgoings) Broadband rental 27pm

2nd telephone line 20pm+ Mobile tariff 25 pm web hosting etc 15-30

This is about it so far but there are other costs like travelling and advertising/marketing to be taken into consideration. Also, other fees such as ecommerce structures and accountants bump up these costs to rather frightening proportions. (Thank heavens that at least banking will be free for a while!) Is it normal to be fighting these costs for ages until profits hopefully start to flow?

So say if this lot costs me 2000 in the first month, does that mean I have put 2000 into the assets of the company? Or does it mean that the company is making a loss?! Is there a better way to organise my start up finances?

Also, if I'm then given some regular financial support by family to get the business up and running, in what form does this money go? Capital? Income? It will really be to keep me going as I won't be making any money for a bit. As this is already taxed money is it taxable at all? Can I keep it separate from the business account and pay it in as capital?

Sorry if I sound daft but one piece of advice I've been given is to ask questions!!!

Thanks a lot - your help will be genuinely appreciated. John

John

I saw Alex's advice which was sound. But remember you will save yourself a lot of hassle if you keep your money and the Ltd.co. money entirely separate. As you and your Ltd.co. are legally separate entities you could lend it cash and, if you wish, set up a company (or a separate personal) credit card. As any other loan (eg family or bank) could be directly to the Ltd.co. (rather than to you personally and then you to the Ltd.co.). The bank would certainly require some form of security - if not the family!

You could also introduce cash into the Ltd.co. by issuing shares.

Remember that profitable businesses are wound up because of lack of cash.

I don't know your background but, if you wish, I can give you administration pointers on operating your Ltd. co. and your business generally.