Setting up a first time business

Hi Chris,

I run a company formation agent

I regularly speak to people who are starting new businesses and there are generally two routes you can take:

1. Setup a sole tradership. This means that you will be trading as a business under your own name, you can call the business what you like but you are the person legally responsible to pay the debts and if for any reason you get into financial difficulty then it will be your assets at risk. There is no formal process in the UK to setup as a sole trader you just need to inform the Revenue within 3 months of commencing business. You will also need to submit accounts to the revenue at the end of each financial year and complete a self assesment tax return to pay any tax liabilities you have accrued over the year.

1. The second, and I have to say more sensible option would be to form a limited company. A limited company is a seperate legal entity to you and it is the company that is legally responsible to pay any debts and collect any money. If the company gets into financial difficulty then your personal assets are protected. As a shareholder you would own the company and hence it's NET worth but your liability is limited to usually just £1.00. The tax works a little different with a limited company, usually you will setup a PAYE scheme and pay yourself weekly/monthly, the tax is paid at source, this is the way most people are paid in the UK. A company can also payout dividends on the profits it generates, the tax is a little more complicated to describe here but a balance of PAYE and dividends is usually thought to be the most tax effecient method. A limited company is registered with Companies House and must submit a basic return and set of accounts to Companies House and the Revenue once a year.

I hope this helps you... It's quite a lengthy subject to discuss in a couple of paragraphs but please have a look on

as there are heaps of online guides and FAQs here.

Rgds Glenn Drake

Chris wrote:

Chris,

Been there, done that, bought the the T-shirt ;-) Even have a certificate from local small business gateway to prove it. See site

should you want free of charge advice with setting up your business. I have retired from active business due to medical reasons, but still do mentoring for new starts as I still have keep eye on global economy. Choice is yours. Cheers...pappa

If you are self employed you want to start here.

Unfortunately, it looks like you are an employee so it is your employers responsibility to deduct tax and NI.

If you want to form a limited company you would need an accountant to prepare statutory accounts and run your payroll to pay you wages. They will also help with tax and other advice.

Your can get a lot of good information about business and companies at

Chris wrote:

Stop your spamming.

or

1. Use an "Umbrella Company", usually run by an accountant. If you don't care about building your own brand (e.g. for future marketing efforts), just about doing work and getting paid with the minimum amount of hassle, this could well be a better option than forming and administering your own limited company.

Just make sure you use a trustworthy umbrella company... recommendations, anyone?

Best Regards, Alex.

"Peter Saxton" wrote

- If you want to drive a car with a flat tyre you would need a mechanic to change the wheel... - If you want to keep a nice garden you would need a gardener to cut the grass ... - If you want to use an electrical item when the fuse has gone you would need an electrician...

Fortunately, none of the above four are true - you don't need any qualifications to do any of them!

I'm not talking about qualifications. I'm talking about ability.

"Peter Saxton" wrote

You don't need to be an accountant to have the

*ability* to do the tasks you mentioned either...

Why do you think that *only* accountants have the "ability" to prepare accounts, pay wages & run payroll?

Why would a non-accountant take the time to spend the time getting the knowledge and ability to prepare statutory accounts when they could be more usefully spend time running their business?

Don't answer that! I know you like to argue for the sake of it!

- If you want to drive a car with a flat tyre you would need a mechanic to change the wheel...

...

"Peter Saxton" wrote

You are assuming that they don't already have any of that knowledge & ability!

I also note that you don't mention the wages & payroll now. Do you really think that all "non-accountants" don't possess the ability to pay themselves a wage and fill in a few payroll forms?

"Peter Saxton" wrote

Too late!

"Peter Saxton" wrote

That's just plain wrong...

"Troy Steadman" wrote

Peter thinks that only someone who does something for a living could possibly do the job at all. Hence, no-one but a mechanic can possibly change a wheel....

I didn't. Mr ILoveArguing did.

Filling in a few payroll forms may be possible. What happens if you employ a student to work for you a few hours a week?

Looks like filing in a few forms is easy enough to talk about but actually knowing more than that is beyond him.

Talk is easy; action is harder.

You are right Peter.... People don't setup up businesses to manage accounts, file forms and do other such tedious bureaucratic activities. People go into business because they have a passion and flair for a particular subject.

I think anyone starting out in business has a duty to grasp a basic understanding of book keeping, filing accounts, tax returns etc... but once you have acquired this, pay someone else to do it and get on with what you are good at!

.

I don't know either, but there are plenty who do.

tim (the other one)

"Peter Saxton" wrote

Beyond who? You are replying to yourself!