Some questions about starting up. Help needed.
Discussion
I am expecting a huge flaming here or being told I am thick or other detrimental answers (such is Pistonheads) but anyhow perhaps someone can help me here:
As a small business unit close to me has become vacant thoughts have been whizzing round my mind.
Small background: I know a company that have quite a bit of stock that they move quite quickly and do not have any time to sort/catagorise slower moving equipment so plan was/is to take this stuff, clean it up and then sell it on BUT splitting the cost between myself and them I also a very large amount of "stock" here (electronic/computer equipment) that I have gained over quite a period of time and have the ability to gain other stock at a low cost.
Now I would like to sell this lot BUT cannot sell it from home so I was thinking of renting a small unit (£25 a week) to sell from.
Initial startup costs are not a problem as I do have a few thousand floating about, ie a year rent upfront or telephone/broadband etc.
Now, do I pay for rent out of my own money and then claw it back trough the company or can I just rent the unit and start selling as a sole-trader (Ie a sort-of one man band) and then IF it all works out then register as a company?
I suppose the first think I need to do is immediately open a business account?
Not being big headed but I know I can do the day to day technical running side its just the business side of things that leave me very cold and basically quite frightened (if thats the word).
Reason I am sort of panicking is that I don't want to lose the unit as its in a good location with a small shop style front - even if in a light commercial area.
Sorry if written badly but typing as I think.
As a small business unit close to me has become vacant thoughts have been whizzing round my mind.
Small background: I know a company that have quite a bit of stock that they move quite quickly and do not have any time to sort/catagorise slower moving equipment so plan was/is to take this stuff, clean it up and then sell it on BUT splitting the cost between myself and them I also a very large amount of "stock" here (electronic/computer equipment) that I have gained over quite a period of time and have the ability to gain other stock at a low cost.
Now I would like to sell this lot BUT cannot sell it from home so I was thinking of renting a small unit (£25 a week) to sell from.
Initial startup costs are not a problem as I do have a few thousand floating about, ie a year rent upfront or telephone/broadband etc.
Now, do I pay for rent out of my own money and then claw it back trough the company or can I just rent the unit and start selling as a sole-trader (Ie a sort-of one man band) and then IF it all works out then register as a company?
I suppose the first think I need to do is immediately open a business account?
Not being big headed but I know I can do the day to day technical running side its just the business side of things that leave me very cold and basically quite frightened (if thats the word).
Reason I am sort of panicking is that I don't want to lose the unit as its in a good location with a small shop style front - even if in a light commercial area.
Sorry if written badly but typing as I think.
Edited by Morningside on Sunday 2nd November 12:09
You don't HAVE to operate a business through a limited company. You could operate as a sole-trader. If that i the case, it doesn't really matter how you pay the bsuiness bills - as long as they are properly identified as business costs and the underlying paperwork retained. You are not even obliged to open a specific business bank account.
Obviously, if you are commencing a "trade" or business, you need to contact HM Revenue and Customs to let them know what you have commenced.
Obviously, if you are commencing a "trade" or business, you need to contact HM Revenue and Customs to let them know what you have commenced.
Of course limited liability does provide you with protection from personal liability - but it is not the be all and end all of everything, especially when the business is small with minimum risks involved.
Another factor youy might want to consider is, what would I do with any trading losses I incur in the early periods of trade? Which is not unusual with start-up businesses.
If a limited company makes a loss, all it can do is carry the loss forward for offset against future profits.
If a sole trader makes a loss, he can throw the loss sideways against other personal income in the same tax year. There is therefore the potential to reclaim some tax refund on say, PAYE earnings.
If the business takes off, then perhaps limited company status might be worth looking at.
Another factor youy might want to consider is, what would I do with any trading losses I incur in the early periods of trade? Which is not unusual with start-up businesses.
If a limited company makes a loss, all it can do is carry the loss forward for offset against future profits.
If a sole trader makes a loss, he can throw the loss sideways against other personal income in the same tax year. There is therefore the potential to reclaim some tax refund on say, PAYE earnings.
If the business takes off, then perhaps limited company status might be worth looking at.
Thanks all. I think the best line is to do sole trading first and see how it goes. As the items will be of low value <£1000 I cannot see where I could have a massive liability unlike building a house or such thing and presume if (pessimistically) it blows up in their face insurance would cover me, wont it?
Where should be my next port of call? Silly question but are banks really that good at helping business get off the ground?
Edited by Morningside on Sunday 2nd November 15:23
Eric Mc said:
If a sole trader makes a loss, he can throw the loss sideways against other personal income in the same tax year. There is therefore the potential to reclaim some tax refund on say, PAYE earnings.
With regards to this point Eric, I assume a BTL landlord counts as a sole trader? Can losses from this 'trading activity' be offset against dividend income?Seany88 said:
Eric Mc said:
If a sole trader makes a loss, he can throw the loss sideways against other personal income in the same tax year. There is therefore the potential to reclaim some tax refund on say, PAYE earnings.
With regards to this point Eric, I assume a BTL landlord counts as a sole trader? Can losses from this 'trading activity' be offset against dividend income?
Income from rental properties is NOT trading income. It is investment income. Therefore it has a different set of rules governing what can or cannot be done with any losses arising. Essentially, all you can do with rental losses is carry them forward against future rental profits FROM THE SAME PROPRTY.
There is one exception. Holiday Lets ARE looked on as a trading ctivity so losses incurred from letting a holiday cottage or apartment CAN be offset against other income in the same tax year.
Eric Mc said:
Seany88 said:
Eric Mc said:
If a sole trader makes a loss, he can throw the loss sideways against other personal income in the same tax year. There is therefore the potential to reclaim some tax refund on say, PAYE earnings.
With regards to this point Eric, I assume a BTL landlord counts as a sole trader? Can losses from this 'trading activity' be offset against dividend income?Income from rental properties is NOT trading income. It is investment income. Therefore it has a different set of rules governing what can or cannot be done with any losses arising. Essentially, all you can do with rental losses is carry them forward against future rental profits FROM THE SAME PROPRTY.
There is one exception. Holiday Lets ARE looked on as a trading ctivity so losses incurred from letting a holiday cottage or apartment CAN be offset against other income in the same tax year.
Morningside said:
Well folks. The unit I was after has gone 
Still, never mind. I am going make a plunge - I am meeting a Business Adviser from Norfolk and Waveney Enterprise Services next week.
Any blindingly obvious questions I should be asking him?
Questions more for you, than them - why are you meeting them? what do you want out of the meeting and what do they want/offer?Still, never mind. I am going make a plunge - I am meeting a Business Adviser from Norfolk and Waveney Enterprise Services next week.
Any blindingly obvious questions I should be asking him?
Well, I hope that I will understand the business side of things better. The day to day technical stuff I can do, its just the money/tax side things I have no clue.
Also hopefully they can point towards what stage to start at and how to begin from scratch.
Any further pointers. ie how to approach the Bank, grants (if needed), best way to rent a unit. Registering a company name, project costing etc. etc.
I just dont want to balls up the financial side.
Also hopefully they can point towards what stage to start at and how to begin from scratch.
Any further pointers. ie how to approach the Bank, grants (if needed), best way to rent a unit. Registering a company name, project costing etc. etc.
I just dont want to balls up the financial side.
For a start, you do not "registrer" a company name (there are no provisions in UK law for registering business names - apart from the usual trade marks and patent rules).
You "register" an actual company - not the NAME of the company. The company is registered at Companies House and once that is done, you are obliged to file accounts and returns with Companies House until the company is wound up or struck of the register.
You "register" an actual company - not the NAME of the company. The company is registered at Companies House and once that is done, you are obliged to file accounts and returns with Companies House until the company is wound up or struck of the register.
Have to started to write a Business Plan? - there are many templates available on the web or some high street banks offer them - if really stuck Pm me and I'll send you something - the point being that a BP can lead you through the majority of questions you seem to want answered and would probably give you a warm comfortable feeling that you were on the right track. Would also be useful when applying to banks etc for loans.
Even if you don't want any loans, you should still write one. The discpline of writing one can be very revelling about the viability of the business.
Even if you don't want any loans, you should still write one. The discpline of writing one can be very revelling about the viability of the business.
Do ALL the maths before you start. A full 1 year business plan, P&L forecast, and cashflow forecast will prepare you to know if it will actually be worth doing.
Do not expect anyone actually to do what they say they are going to do, so in the early days, solve everything yourself; you are the only person you can trust to do it properly.
Most of all, be honest with yourself. And make yourself have some good luck (heres some from me: "good luck").
Do not expect anyone actually to do what they say they are going to do, so in the early days, solve everything yourself; you are the only person you can trust to do it properly.
Most of all, be honest with yourself. And make yourself have some good luck (heres some from me: "good luck").
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