Starting up a business. Basic Q's :p Forums

ActiveCampers

Hi

Just playing with ideas, so this may or may never happen, may be years, and things may change blah blah, but rattling ideas at the moment and needs some collective MHF experience to get ideas moving.

Of course, there would be MHF discount!

The business would be based on providing our skills and services, rather than stock and sales; and would be based on value/quality rather than outright profit making. Skills would be multiple skills to multiple parties rather than 12 month jobs with one company. I have (all) the websites bought ready Smile

/obviously Wink

I assume choice would be
a) sole trader (as a couple)
b) limited company

I assume I'd be better of as (a) - as this would be a private company; no intention of expanding and making millions; and as no stock etc, the probablilty of making a huge loss is next to nill - so why limit it?

Then comes public liability insurance. I assume I need this? Is it cheap? does it cover "everything"? e.g. If we screw something up and get sued Smile

If so, what are teh limits as one would assume you have to be skilled in your area to get covered. Who would then define if you are skilled?

IF we do this; we may be doing private work; as well as using our key skills with companies. e.g. IT Consultancy/Support; Nurse Locum etc.; and I'd assume we could accept all payments into the company. I would assume we need insurance etc if we were offering services direct rather than via an agency etc?

THen as we would only be working for a few months a year, we should be able to avoid Wink

loads of tax! But assume I need to pay us both; expenses etc....

I have a book from The Times on small company tax for the next time I have a spare day or two.

Any suggestions/comments/book recommendations*/learning points/tax avoidance techniques then please let me know

Cheers

*Books on what I need to know - don't need books on ideas/strategy/marketing etc - just the law/tax/and running a UK based business.

devonidiot

If you "screwup" and it is proved to be your negligence on your part then Public Liability insurance may not cover the costs, therefore you may be personally held to be responsible for any and all costs.

If you are serious then talk to a solicitor with business startup experience.

theoldtrout

There is an excellent maxim to remember when starting a new business that goes something like: If you fail to prepare, you're prepared to fail.

You'll work harder than you ever did when employed!

Get yourself a good Accountant, they can save you a lot of money and take the pain out of VAT, Corporation Tax and personal tax.

I started [ran and then sold] a Limited Company mainly because the liability is limited to the company and my personal assets were more or less safe if the Company got into difficulties. Also because you can pay yourself a Dividend which is more tax efficient than income tax. You do have to pay Corporation Tax though. Brown & co have messed around with the tax system so the tax advantages are not as good as they were.

Angela

ActiveCampers

Thanks so far.

"planning and preparation" are one of my skiils! So this aspect I'm absolultey happy with.

To clarify scale, we're not talking about setting up a buisiness to make huge amounts of money (though due to specialist skills it would be easy to). We're talking about just covering living costs so we can enjoy life without cashing in investments.

As for solicitors/accountants - just for the pure challenge I like DIYing - getting ideas from others; research + more research; then make a call. Clearly at the time I may need one for specialist specific advice, but for now looking for ideas to go into the planning pot.

As for working hard - absolutely! Neither of us are scared of hard work; and I know it'd be more work for a LOT less money Sad

But working when we want for as long as we want means life will be better!

Does corporation tax still work if you simply take cash and pay yourself and declare on tax return? Again - the scale of this idea is small - maybe 10-20k tops (limited by us rather than possible income). I would have thought, PAYE on this, split between 2, minus realistic direct expenses, tax is virtually avoidable anyway Smile

Apart from the public liability, I'm not worried if we had 100% loss. But if, say, we upgrade a company email system and it fails and is down for 1 week and they sue, then I'd want insurance against this. (*note: highly unlikely example Wink

9 server upgrades during my last email upgrade, with 0 downtime blah blah - all due to planning, prep, test etc). However, the possibility exists and needs negating though insurance or being limited.

(I've not looked in any limited company books - so if this is considered *mandatory* if PL insurance doesn't cover my risks - then recommendations on light reading welcome!)

Shark

There's a couple of basics I can think of. I've been a sole trader for 19 years. I registered for VAT straightaway on the basis that all my clients were themselves VAT registered, so they could claim back the VAT I had to charge. The reason for me registering was the regular investment in business purchases which I anticipated - mainly computers these days. So, I do a bit of VAT paperwork but get all the VAT back on the gear I buy. Also, dealing with the customers I do, not being VAT registered would have made my business lacking in credibility, due to the market I'm in.

VAT aside, accountants have come and gone and I do most of the prepatory work for them to essentially give a degree of authenticity to my figures. This has been essential, not so much for tax purposes, but for obtaining mortgage finance. Accountants vary dramatically in what they charge and what they do.

Bank borrowing was a waste of time. The banks were greedy, wanting arrangement fees and lots of futile figures pulled out of the air each year. I told them to stuff it, and over the years, have managed all borrowings by just using credit cards with no questions asked.

I have no insurance whatsoever and never have had. As I work from home, I have to keep my business gear separate to the domestic stuff, so that the residential insurance isn't affected. I suppose that there's a chance of being sued for something or other, but I take the view that you could insure yourself against each and every adverse eventuality, if you're that way inclined. I'm not.

I've been near to bankruptcy and near to being rich. Most of the time, I'm somewhere between the two.

Shaun

Superk

You haven't told us what the business venture is. The failure rate amongst small businesses is horrific yet everyone of those that failed thought they had a bullet-proof idea that was sure to succeed in abig way. You only have to watch Dragon's Den to get the picture.
Focussing on the preparation of the company structure, tax and all that stuff is advisable and fascinating but it means nothing if you're idea is poor from the outset.
How have you tested your idea or is it just a success in your head? Why will it succeed? How will you make money? When will you make money? What money will you need at the outset to start your business? Who else is in the market? Are they making money? Why will your product or service be preferred. How will people hear about you - Yellow Pages is not the answer.You need to test things out - do market research that is meaningful not just amongst family and friends. Ask lots of disinterested people whether they are in the market for what you are offering - what would it take for them to buy it from you?
You will find that it's hard to get people to part with their money. People enter business with rose-tinted specs those that have done their product or service research and testing are far better placed.
Good luck
Keith

bandaid

I would seriously suggest that you pose these questions on a forum called

Uk business Forums.

Its a great forum, as informed on business as this is about motorhomes, and will ineveitably be able to give you proper, informed, accurate and correct information.

EJB

Quote:- "value/quality rather than outright profit making"

"no intention of expanding and making millions"

From these two comments I presume that you want a part time job that doesn't pay very well?

I wish you well but the bottom line is the only one that matters and it totally dictates the quality and value of your services Wink

ActiveCampers

Thanks again all - loving the ideas.

@Shark: Interesting re VAT. Business would be 50/50 private and business and so was hoping to avoid VAT. However, point of giving business credibility is interesting.... Don't need to worry about loan/mortgage etc - so that side isn't a problem

@Superk: Business is providing our current skills to people who need them; and gain credibility through trust and being genuine. So using exsting IT, nursing, maintenance skills. Nothing clever. No major plan to make 1,000,000s. But should be enough to hit targets - we know there is a shortage in what we're thinking of. Basically, there are existing people doing what we're planning that charge loads as they want to get rich. We're both good at what we do (sorry to sound blunt) - and would do it with better/same quality at less cost. Tested idea? Yes - the business side is done deal; the missus could locum tomorrow with ease (massive skill shortage); I could consult/stand in with ease. The home side - well the amount of people we help who either offer cash or say they would have paid and called us if they knew we could help, is enough to get going. Then rely on reputation (do or be damned! lol!) Other points are superb and need to be ticked - thanks.
Edit#2: As an example of the sort of thing... Imagine a plumber. People hate them (sorry!) - and pay £85ph for them, and we know they waste time and maximise their income and bodge (or is it just me with this expereince. once. never again Wink

). However, there are a lot of people who have no choice as they have no skills or knowledge and get ripped off. If they knew someone who would give them an honest report, and, say, do simple jobs (e.g. changing washer/inards/whole tap) for £25ph + parts at cost - and they were recommended as being polite; honest etc....

bandaid: Thanks - will google and bookmark later! Edit:

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- looks superb resource base! Nice thread there with book recommendations already

@EJB: LOL! Thats one interpretation! But yes. Probably part time work; working damn hard when working; but doing it for love; fun; and pocket money. (finances are very much in order, so want to do this sort of of thing for the fun and challenge.

Interesting reading - and all responses so far make sense. So thanks everyone.