Setting up as a limited company?
Discussion
My other half is registered as self employed, she's working as a branch of a bigger company of which there are many branches.
She has been a part of it from 2013.
It is not a franchise, but she does pay a small fee each month to trade as part of the company and use their name/logo etc.
She has now been told that she has to set up as a limited company under the name of [Their company name] - [??? Branch].
What would the implications of this be?
Can she or should she set up as [Her company] - Trading as [Their company name] - [??? Branch]?
Her and myself know nothing about the subject, so any help/info would be greatly welcomed, thanks
She has been a part of it from 2013.
It is not a franchise, but she does pay a small fee each month to trade as part of the company and use their name/logo etc.
She has now been told that she has to set up as a limited company under the name of [Their company name] - [??? Branch].
What would the implications of this be?
Can she or should she set up as [Her company] - Trading as [Their company name] - [??? Branch]?
Her and myself know nothing about the subject, so any help/info would be greatly welcomed, thanks
IR35 for a start.
How many "customers" does your girlfriend have as a sole trader?
Can she employ staff of her own?
Does she have her own place of business?
Does she use her own tools and equipment?
Is she insured to cover employees and third parties?
Does she have any sort of indemnity insurance?
Does she carry the cost of having to correct errors she might make?
I am very angry with the way "employers" are forcing individuals to set up limited companies just so the "employer" does not have to comply with the regulations they should be complying with - either from a tax and NI point of view or from an employment regulations point of view.
How many "customers" does your girlfriend have as a sole trader?
Can she employ staff of her own?
Does she have her own place of business?
Does she use her own tools and equipment?
Is she insured to cover employees and third parties?
Does she have any sort of indemnity insurance?
Does she carry the cost of having to correct errors she might make?
I am very angry with the way "employers" are forcing individuals to set up limited companies just so the "employer" does not have to comply with the regulations they should be complying with - either from a tax and NI point of view or from an employment regulations point of view.
Thanks for the reply
IR35 for a start.
Sorry, that doesn't mean a thing, will google it!
How many "customers" does your girlfriend have as a sole trader?
All of them, approx 30-40
Can she employ staff of her own?
She can but isn't registered as an employer but could if she needed to and has the choice to.
Does she have her own place of business?
Works from home
Does she use her own tools and equipment?
Yes, all bought and paid for by herself
Is she insured to cover employees and third parties?
Yes, she has special cover relating to animals with Cliverton
Does she have any sort of indemnity insurance?
Not sure, but will check. She does have public liability cover
Does she carry the cost of having to correct errors she might make?
Not sure but think so. She says it would be covered with the Cliverton insurance
I am very angry with the way "employers" are forcing individuals to set up limited companies just so the "employer" does not have to comply with the regulations they should be complying with - either from a tax and NI point of view or from an employment regulations point of view.
The company isn't classed as her employer, as above, she is self employed and pays her own tax, NI and self assessment tax return.
She has been doing that since before starting as a branch with them.
Basically, the only connection with the company is the fee to use their name, logo and be a part of their company as a branch.
That fee is based on earning for the month which is capped
IR35 for a start.
Sorry, that doesn't mean a thing, will google it!
How many "customers" does your girlfriend have as a sole trader?
All of them, approx 30-40
Can she employ staff of her own?
She can but isn't registered as an employer but could if she needed to and has the choice to.
Does she have her own place of business?
Works from home
Does she use her own tools and equipment?
Yes, all bought and paid for by herself
Is she insured to cover employees and third parties?
Yes, she has special cover relating to animals with Cliverton
Does she have any sort of indemnity insurance?
Not sure, but will check. She does have public liability cover
Does she carry the cost of having to correct errors she might make?
Not sure but think so. She says it would be covered with the Cliverton insurance
I am very angry with the way "employers" are forcing individuals to set up limited companies just so the "employer" does not have to comply with the regulations they should be complying with - either from a tax and NI point of view or from an employment regulations point of view.
The company isn't classed as her employer, as above, she is self employed and pays her own tax, NI and self assessment tax return.
She has been doing that since before starting as a branch with them.
Basically, the only connection with the company is the fee to use their name, logo and be a part of their company as a branch.
That fee is based on earning for the month which is capped
EricMc said:
I am very angry with the way "employers" are forcing individuals to set up limited companies just so the "employer" does not have to comply with the regulations they should be complying with - either from a tax and NI point of view or from an employment regulations point of view.
Well this has just happened to me. It isn't the end of the world. I have an accountant and there will be some costs associated with it. But, there again, I'd like to the work I've been offered.A little background info:
The person (Sam) running the company she is a branch of is always appearing to try and find more/different ways to "control" or have a say in how the branch should be run.
When in reality, all he can control is what is in the contract regarding use of the company name/logo/business practices.
Being as sceptical as I am, is this just another way of him trying to gain more of his favourite C word... Control?
Edit:
I must add, overall the relationship between branches and Sam is a good one and in general he does let people do things as they wish as long as they fit in with the business and how it is portrayed properly
The person (Sam) running the company she is a branch of is always appearing to try and find more/different ways to "control" or have a say in how the branch should be run.
When in reality, all he can control is what is in the contract regarding use of the company name/logo/business practices.
Being as sceptical as I am, is this just another way of him trying to gain more of his favourite C word... Control?
Edit:
I must add, overall the relationship between branches and Sam is a good one and in general he does let people do things as they wish as long as they fit in with the business and how it is portrayed properly
Edited by djdestiny on Thursday 15th January 18:27
To be fair, the arrangement does seem to indicate that she is properly "trading in her own right" so I don't think there would be any real problem in her converting to a limited company.
I wonder why the "franchise holder" seems to want the "Franchisees" to operate through limited companies though. What are they concerned about?
I wonder why the "franchise holder" seems to want the "Franchisees" to operate through limited companies though. What are they concerned about?
I have no idea personally, but I know there is history of branches trying to pull a fast one, e.g., one tried to overcharge and only declare the proper amounts and cream the rest off the top, and another was not declaring all work to try and keep the monthly fee low.
So if she was to set up as a limited company he wouldn't actually get any more control or authority over what he has now?
Would there be any implications for her?
Thankyou for your help, it is very much appreciated
So if she was to set up as a limited company he wouldn't actually get any more control or authority over what he has now?
Would there be any implications for her?
Thankyou for your help, it is very much appreciated
Eric Mc said:
To be fair, the arrangement does seem to indicate that she is properly "trading in her own right" so I don't think there would be any real problem in her converting to a limited company.
I wonder why the "franchise holder" seems to want the "Franchisees" to operate through limited companies though. What are they concerned about?
The so called "2 year rule??" If a sole trader only works with a company and doesnt trade with anyone else, then after 2 years they are meant to be employed as fhem, so they get benefits etc as an employer wouldI wonder why the "franchise holder" seems to want the "Franchisees" to operate through limited companies though. What are they concerned about?
A change to a limited company means this does not apply, and the agreement (such as it is) can continue.
We see this all the time: sole traders moving to limited companies. Most lorry drivers, a fair fee Nurses etc are now dong this.
Just remember the latter must have a business bank account. And does annual returns, etc etc
Bingo! That makes perfect sense now then.
The company she worked for before (self employed) tried to do exactly that, tie her into working for them exclusively with a contract but self employed.
Thankfully we saw through it and realised they were trying to do exactly what you have said, to basically have an employee without having the responsibility and costs involved.
So by them wanting her to become LTD it basically means she wouldn't be able to approach them and say now Ive been doing work just for you for 2 years I should become an employee.
Do you think she would be better off registering as her own company then trading as theirs+branch name? Then if she decided to split from them she could carry on under her own name
The company she worked for before (self employed) tried to do exactly that, tie her into working for them exclusively with a contract but self employed.
Thankfully we saw through it and realised they were trying to do exactly what you have said, to basically have an employee without having the responsibility and costs involved.
So by them wanting her to become LTD it basically means she wouldn't be able to approach them and say now Ive been doing work just for you for 2 years I should become an employee.
Do you think she would be better off registering as her own company then trading as theirs+branch name? Then if she decided to split from them she could carry on under her own name
djdestiny said:
Bingo! That makes perfect sense now then.
The company she worked for before (self employed) tried to do exactly that, tie her into working for them exclusively with a contract but self employed.
Thankfully we saw through it and realised they were trying to do exactly what you have said, to basically have an employee without having the responsibility and costs involved.
So by them wanting her to become LTD it basically means she wouldn't be able to approach them and say now Ive been doing work just for you for 2 years I should become an employee.
Do you think she would be better off registering as her own company then trading as theirs+branch name? Then if she decided to split from them she could carry on under her own name
Last question needs to be answered by an accountant. If nobody on here, most will give some free consultation in the hope you'll use them in the future!!The company she worked for before (self employed) tried to do exactly that, tie her into working for them exclusively with a contract but self employed.
Thankfully we saw through it and realised they were trying to do exactly what you have said, to basically have an employee without having the responsibility and costs involved.
So by them wanting her to become LTD it basically means she wouldn't be able to approach them and say now Ive been doing work just for you for 2 years I should become an employee.
Do you think she would be better off registering as her own company then trading as theirs+branch name? Then if she decided to split from them she could carry on under her own name
djdestiny said:
Bingo! That makes perfect sense now then.
The company she worked for before (self employed) tried to do exactly that, tie her into working for them exclusively with a contract but self employed.
Thankfully we saw through it and realised they were trying to do exactly what you have said, to basically have an employee without having the responsibility and costs involved.
So by them wanting her to become LTD it basically means she wouldn't be able to approach them and say now Ive been doing work just for you for 2 years I should become an employee.
Do you think she would be better off registering as her own company then trading as theirs+branch name? Then if she decided to split from them she could carry on under her own name
That ties in with what I said originally - they are forcing a potential employee to form a limited company in order to protect the potential employer from its legal obligations.The company she worked for before (self employed) tried to do exactly that, tie her into working for them exclusively with a contract but self employed.
Thankfully we saw through it and realised they were trying to do exactly what you have said, to basically have an employee without having the responsibility and costs involved.
So by them wanting her to become LTD it basically means she wouldn't be able to approach them and say now Ive been doing work just for you for 2 years I should become an employee.
Do you think she would be better off registering as her own company then trading as theirs+branch name? Then if she decided to split from them she could carry on under her own name
At the end of the day, she will probably have to comply if she wants to keep her "job" - which I think is a very unfair situation.
The best that can be done is to turn the situation to her own advantage - and there can be advantages gained from operating through a limited company.
However, I would strongly advise that if she goes down the company route, she finds an accountant at the earliest possible opportunity as limited companies have many legal and tax obligations of their own which she will assume full responsibility for from day one.
The best that can be done is to turn the situation to her own advantage - and there can be advantages gained from operating through a limited company.
However, I would strongly advise that if she goes down the company route, she finds an accountant at the earliest possible opportunity as limited companies have many legal and tax obligations of their own which she will assume full responsibility for from day one.
The standard advantage is the fact that the proprietor of a limited company can withdraw money from the company in a number of different ways which can be mixed and matched to generate tax and NI advantages.
The individual who sets up a company acts in two capacity - shareholder (owner) and director(manager).
As shareholder, money can be withdrawn in the form of dividends.
As a director, money can be withdrawn as salary.
It's the ability to mix and match these two options that generates tax saving potential.
However, there are also responsibilities that come with running a company and they create a great onus on the director to ensure that these obligations are met. That's where an accountant should help keep everything in order.
The individual who sets up a company acts in two capacity - shareholder (owner) and director(manager).
As shareholder, money can be withdrawn in the form of dividends.
As a director, money can be withdrawn as salary.
It's the ability to mix and match these two options that generates tax saving potential.
However, there are also responsibilities that come with running a company and they create a great onus on the director to ensure that these obligations are met. That's where an accountant should help keep everything in order.
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