How should I get my business started?

[Alex@POD]

I have been working on starting a limited company (call it business A) for a while now, but because I hav a pretty involving full time job at the moment, I'm not getting anywhere fast... I have decided now to take the plunge and get a part-time job (to have some secure money for rent and such), and to do some work for myself on the side (call it B), effectively starting a business as a sole trader. This would give me the chance to get a bit of experience and to raise some cash for setting up the company A, and also to finish market research and such matters.

The two "businesses" would be in the same field, and will not be running at the same time. I would like to register my company name (A) as soon as possible, and I would like to run B as a proper business.

Can I register as a sole trader and then change my status to a limited company? Can I obtain all the financial things (bank account, insurance, VAT, etc) and carry them through when I start company A?

I'm getting a bit confused reading myself, but I feel I have to say as much as I can so I can get somewhere... Please feel free to ask for clearing up before any advice!

[V8 EOL]

Is business A and company A a different thing? Reading your post it is quite confising.

This site covers the basic structure in a simple to understand way: businesslink.gov.uk

For what it is worth, if you start on your own and grow, keep it the same business, with the same books, bank, reputation ect. There is no point throwing that hard work away and starting with nothing again. If you have to take out a loan, sell, raise funds or anything like that, the more history you can show the better (assuming its good of course!)

Also if the current company you are working for is in the same market as either of your new ventures then check out any restricted covenant you may have.

[Alex@POD]

A is A yes. I did state it would be confusing

The company I work for now has nothing to do with it, let's not worry about that.

There is no big secret or patent here, so here is clarification: Company A will build custom sports cars (as stated in my profile), B is to keep me busy tinkering with cars until A is fully set up. B plus a part time job will free up enough time for me to finish setting A up, while still bringing home enough money. However it is very unpredictable as far as cashflow is concerned, which is why I won't allow myself to do only that. I want to run it properly, but there will be no loans/credits involved, so this is just to know where I stand...

[Alex@POD]

Just to clarify again, I was wondering if I can get all the legal stuff started with B, for the sake of making it easy, then transfer it all to A.

I'm so much better at explaining things face to face

[Smartie]

why?

Just start with either a ltd co or as a sole trader and get cracking? Both are motor related and very similar so names etc shouldn't be a problem?

Maybe go see an accountant?

[Alex@POD]

I was under the impression that B needs a sole trader status to keep it simple (it doesn't need to be a business in a way), and A will be a Ltd company as I intend for it to grow quite a bit and I will have to employ people from the start...

Am I just trying to make my life harder, shall I just forget about B as a business?

[rico]

Just have one company with one bank account. Call the company something generic. You can always say Company B (Part of Company A Group) or similar. You've then only got one year end, one set of accounts, one set of fees for the accountant/companies house etc.

I've learnt that simplicity is always the best policy.

[V8 EOL]

Alex@POD said:

get all the legal stuff started with B, for the sake of making it easy, then transfer it all to A.

Sounds like the complicated way to me! Just get your wife to be the company secretary, bobs your uncle and you have a limited company.

Good luck.

[Smartie]

though a sole trader basis will be easier and cheaper, particularly if profits are low (say <£30K) and you don't need the protection of a company?

[Alex@POD]

Smartie said:

though a sole trader basis will be easier and cheaper, particularly if profits are low (say <£30K) and you don't need the protection of a company?

My trail of thought.

What I care most about is Company A. I will need a bank account for that, etc.

I'll make things simpler to understand:

I want to buy cars at auctions with minor damage, to fix and sell again. To run that smoothly, I want accounts separate from my personnal ones, and also do anything that I can legally do that will help me financially, ie getting VAT registered, trade insurance, etc.

[Smartie]

I would leave VAT alone until you hit the turnover limit in that particular business.

Why not open another "personal" account for the business, nothing illegal but bank may get a bit sniffy if/when they figure out you're running a business through it. (that said, I've been doing exactly that for 8 years now with no problems!)

Failing that, just go see a bank and open a business account; you will possibly get free banking for 12 months etc - Abbey are pretty good if you can run in credit and don't miss payments etc! Or go see your own bank and be up front about what you're doing?

You must register with HMRC within 3 months of starting the business or you will get an automatic £100 penalty.

[Smartie]

also why the need to split the businesses? They are both very similar and could be run within the same business?

[Alex@POD]

Thanks, that's good advice.

The VAT thing was just in the back of my mind, I thought of it but hadn't really looked into it yet.

I bank with Abbey and they told me they don't do business accounts? What's up with that?

[Alex@POD]

Smartie said:

also why the need to split the businesses? They are both very similar and could be run within the same business?

I don't know really, I thought they would be better off separated as one of them is a long term project, the other one just to keep me busy, if you like.

[Smartie]

Abbey definantly do business banking, but I think its a postal service rather than through their branches.

Re splitting the business, I still think you're making a meal of this, just run it all together and if when aspect of the business stops then so be it!

[MissPHit]

Alex@POD said:

Thanks, that's good advice.

I bank with Abbey and they told me they don't do business accounts? What's up with that?

Who on earth were you speaking to? Last time I checked they did. www.anbusiness.com

They don't just offer a postal service either, you can bank online and go in branch....

[Leftie]

Smartie said:

why?

Just start with either a ltd co or as a sole trader and get cracking? Both are motor related and very similar so names etc shouldn't be a problem?

Maybe go see an accountant?

I think the VAT man will have something to say about running 2 businesses with a similar trade if you hope to stay under the registration limit with them both, so they may get treated as one business anyway (am I reading this right?).

The switch from sole trader to Ltd Company is pretty painless and unseen by clients if you ned to do that later, just involves a bit of extra expense and larger accountancy bills, but provides personal security if the wheel comes off (excuse the pun).

I had a full time paid job when I started my business part time. Then switched to part time with the paid job and full time with the business, then dropped the old job and ran the business full time + some. Moved to Limited company 2 years later for tax and NI purposes.