Hi akwoody2,
I went straight for limited company, but I did get advice from a couple of accountants before I finalised that decision.
The key drivers for limited were the separation of your business and personal financial affairs and the very obvious tax benefits. I was also advised (by the accountants, some potential customers and friends who run their own businesses) that a limited company has an improved image amongst customers simply because it's a traceable financial entity.
If you're looking to do commercial/industrial, you may also find that some companies won't deal with you if you're a sole trader. This is not based on my experience, it was advice I received from people in business (various forms).
There is additional baggage with a limited company in that you are required to submit accounts etc. every year, but a good accountant should handle that for you (at least that's why I'm paying an accountant because if all I had to do was keep track of money, I can do that easily enough myself with Excel). The forming of the company is easy enough, there are loads of company formation places on the internet and they all offer the same sorts of deals. Just be aware of things like registered address. To try and keep my home address off the public register (as much as possible) I use the formation company's registered office service, the problem with that is, my NAPIT assessor nearly ended up at the registered address in London (and when I first got it, TrustMark stated I was in London) as they specifically ask for the Registered Office Address. Total cost was about £150 for setting up the company (yes, you can get it cheaper, but I went for the full package with all the mail redirecting etc. because I wasn't sure about how it all worked). There is a potential hiccup in using the registered office of your formation company... the company registers are supposed to be available for inspection at the registered office. Companies house provides a means of specifying a different inspection address.
Oh and don't be surprised if you get asked to record specific things in your company registers. I had to have a board meeting with myself to approve my decision to use a particular bank (their application process specifically required me to record this decision - with specific wording - in the board meeting minutes and vote on it... was great until the end when to my surprise there was one vote for and one vote against
). Other things that have to go in the registers are things like share holding changes. So if you make your other half a director (obviously keeping the controlling majority yourself), then this has to be recorded and I think there is a financial transaction that has to take place. This is where it gets really murky and an accountant is required to advise on this sort of thing.
One of the downsides comes when you start getting setup with credit accounts with suppliers. Your newly formed business won't have any credit history where as you would as a sole trader because it's you (this is my understanding of it, anyone who knows better, feel free to correct it). This could be a problem although thus far it's not proven so for me. The only ones who were a bit picky were TradeUK who insisted on a direct debit payment approach rather than the usual invoice and pay.
Once the business is setup, you'll need to get a tax reference for it (and you'll end up making your accountant an agent for you so they can talk to HMRC on your behalf) and as you'll be employing yourself as a director, you need to register as an employer if memory serves. Don't worry about being an 'employer'. There is a lot of legislation around being an employer but because it's only you, you don't have to have all the H&S processes and such like in place and you don't have to worry about employers liability insurance (you can hardly sue yourself for negligence). You will also receive a personal tax reference if you haven't already got one (sounds like you may have) as once you are a director of a business, that's it, tax return hell time. So I setup in 2016, my first tax return will be due at the end of January I think, 2018. You may not be aware as well (I wasn't and I was shocked when I heard this given how often you hear about people and companies running up massive tax bills), that based on your tax return for a particular year (I think this is for the company tax only, but I could be wrong), HMRC will send you a bill and expect you to pre-pay an amount towards your next years tax bill.
It's highly likely you'll have been spending your own cash buying tools and equipment etc. before the business started trading. I've been advised that you can claim this back from the business as expenses, so keep full records. Same goes for training and travel. If you're using a vehicle you own, keep a full record of your business related journeys (mileage, to/from/date - again, this can include setup related activities before the business is trading) and then you can claim for your fuel, I think it's about 40p/mile for the first 10K (you can find details of the HMRC website).
And definitely, talk to more than one accountant. I talked to a firm and a local chap (who is fully registered). I received slightly differing advice from both and whilst he is slightly more expensive, he's going to be doing more for me (as all they would do was provide telephone help and take a bunch of spreadsheets from me at the year end and churn those to produce my books - which is no good if you cock it up early on and then have to try and figure out what actually went on 12 months down the line).
Sorry if you know this stuff, just figured I'd post all I can remember of starting up the business in case it's useful for others, but the overriding advice has to be talk to an accountant.
I went straight for limited company, but I did get advice from a couple of accountants before I finalised that decision.
The key drivers for limited were the separation of your business and personal financial affairs and the very obvious tax benefits. I was also advised (by the accountants, some potential customers and friends who run their own businesses) that a limited company has an improved image amongst customers simply because it's a traceable financial entity.
If you're looking to do commercial/industrial, you may also find that some companies won't deal with you if you're a sole trader. This is not based on my experience, it was advice I received from people in business (various forms).
There is additional baggage with a limited company in that you are required to submit accounts etc. every year, but a good accountant should handle that for you (at least that's why I'm paying an accountant because if all I had to do was keep track of money, I can do that easily enough myself with Excel). The forming of the company is easy enough, there are loads of company formation places on the internet and they all offer the same sorts of deals. Just be aware of things like registered address. To try and keep my home address off the public register (as much as possible) I use the formation company's registered office service, the problem with that is, my NAPIT assessor nearly ended up at the registered address in London (and when I first got it, TrustMark stated I was in London) as they specifically ask for the Registered Office Address. Total cost was about £150 for setting up the company (yes, you can get it cheaper, but I went for the full package with all the mail redirecting etc. because I wasn't sure about how it all worked). There is a potential hiccup in using the registered office of your formation company... the company registers are supposed to be available for inspection at the registered office. Companies house provides a means of specifying a different inspection address.
Oh and don't be surprised if you get asked to record specific things in your company registers. I had to have a board meeting with myself to approve my decision to use a particular bank (their application process specifically required me to record this decision - with specific wording - in the board meeting minutes and vote on it... was great until the end when to my surprise there was one vote for and one vote against
). Other things that have to go in the registers are things like share holding changes. So if you make your other half a director (obviously keeping the controlling majority yourself), then this has to be recorded and I think there is a financial transaction that has to take place. This is where it gets really murky and an accountant is required to advise on this sort of thing.One of the downsides comes when you start getting setup with credit accounts with suppliers. Your newly formed business won't have any credit history where as you would as a sole trader because it's you (this is my understanding of it, anyone who knows better, feel free to correct it). This could be a problem although thus far it's not proven so for me. The only ones who were a bit picky were TradeUK who insisted on a direct debit payment approach rather than the usual invoice and pay.
Once the business is setup, you'll need to get a tax reference for it (and you'll end up making your accountant an agent for you so they can talk to HMRC on your behalf) and as you'll be employing yourself as a director, you need to register as an employer if memory serves. Don't worry about being an 'employer'. There is a lot of legislation around being an employer but because it's only you, you don't have to have all the H&S processes and such like in place and you don't have to worry about employers liability insurance (you can hardly sue yourself for negligence). You will also receive a personal tax reference if you haven't already got one (sounds like you may have) as once you are a director of a business, that's it, tax return hell time. So I setup in 2016, my first tax return will be due at the end of January I think, 2018. You may not be aware as well (I wasn't and I was shocked when I heard this given how often you hear about people and companies running up massive tax bills), that based on your tax return for a particular year (I think this is for the company tax only, but I could be wrong), HMRC will send you a bill and expect you to pre-pay an amount towards your next years tax bill.
It's highly likely you'll have been spending your own cash buying tools and equipment etc. before the business started trading. I've been advised that you can claim this back from the business as expenses, so keep full records. Same goes for training and travel. If you're using a vehicle you own, keep a full record of your business related journeys (mileage, to/from/date - again, this can include setup related activities before the business is trading) and then you can claim for your fuel, I think it's about 40p/mile for the first 10K (you can find details of the HMRC website).
And definitely, talk to more than one accountant. I talked to a firm and a local chap (who is fully registered). I received slightly differing advice from both and whilst he is slightly more expensive, he's going to be doing more for me (as all they would do was provide telephone help and take a bunch of spreadsheets from me at the year end and churn those to produce my books - which is no good if you cock it up early on and then have to try and figure out what actually went on 12 months down the line).
Sorry if you know this stuff, just figured I'd post all I can remember of starting up the business in case it's useful for others, but the overriding advice has to be talk to an accountant.
