Start a 2nd business or expand the first?

[gazzamikes]

Evening everyone, I'm in the process of starting on the solar PV side of things. My question is would it be better to expand the existing electrical contracting side or start up one for PV and combine the both. The reason I ask is that I would be a lot more competitive if I didn't need to charge vat on my contracting work whereas if I included PV within the business then the vat threshold would be broken.

Just wondering if you guys have any thoughts or have done this yourselves.

Thanks

 

[topquark]

For the PV side of the new business you'll prob be over the VAT threashold on it's own eventually, I'd certainly be considering what you've suggested and would start a separate company for the PV side of things (registering for VAT when you reach the threashold, in case it doesn't take off as you expect). You may have to jump through a few hoops with respect to charges for use of shared tools, vechicles/fuel usage etc between the two companies though.

I guess it would also depend on how far off the VAT threashold the contracting side is on it's own and likely expansion plans for that side of the business.

Time for a business plan and forecast for each side of the business and see if it's worth the extra overheads of running the two companies.

 

[Octopus]

I'm not that HMRC will look too favourably on a person running 2 businesses if they percieve that your motivation is to avoid the VAT threshold.

IMHO you need to speak to an accountant.

 

[fuzzydunlop]

HMRC are surprisingly lenient with this just set up company 2 as samename PV

Though as Topquark says you'll hit your limit pretty quickly

But as a whole I'd split the two then you can sub one to the other etc...

 

[gazzamikes]

Thanks to you both, I would press the thanks button but doesn't work on iPad for some reason. This is what I thought, I didn't know if hrmc would see it as a tax evasion method. As you said with the PV if would reach the vat threshold very quickly if all goes to plan, the thing is if I run it as one business I would lose customers, as good percentage of my customers ask about vat as to be honest money isn't brilliant in this part of britain

 

[topquark]

You should be OK as the two business are distinct specialities. Although as I mentioned you'll have to watch your record keeping. You'll be able to go back as far as six months from date of VAT registration to claim any VAT back that you've spent on company owned tools etc, so I wouldn't rush into registering, until you've seen how it takes off. But given the price of installs you'll be hitting that quickly if it takes off. Good luck

 

[gazzamikes]

Thanks fuzzydunlop, it sounded a good idea in my head but to be honest I try to avoid getting deep into the hmrc legalities I leave it to my wife.

I didn't want to undertake the PV and trying to earn the money while in the process possibly wrecking my existing company

 

[gazzamikes]

Thanks topquark hopefully it'll work out. Another reason I thought of running the two was incase the PV doesn't take as well as I hoped I could always wind it up (obviously I really wish it doesn't come to it)

 

[Mark_Burgess]

Thanks to you both, I would press the thanks button but doesn't work on iPad for some reason.

Press and hold on the like and when the pop up pops up click on open, that does it

 

[gazzamikes]

Brilliant thanks, been trying to work that out for months