Starting your own company

[Cyclizine]

5 hours ago, Cardinal Richelieu said:

I don't have a business bank account - I understand there are usually fees involved. I'll get one if I need to, but only if it's necessary. 

My colleague uses Starling Bank's business account for her sideline and seems impressed, it's all app based, I don't think she pays any fees. I use them for personal banking and don't have any complants. They've been good from the customer service side as well.

Edited March 22, 2021 by Cyclizine

[Sweet Pete]

Buy an Ltd online. It's £12.50 and takes 10 minutes. Register online as self employed. Open  a Starling business account, takes 10 minutes. Job done. Liability insurance isn't especially expensive for single entities either, if you just want it to cover the basics.

[Fullerene]

On 21/03/2021 at 21:11, Cardinal Richelieu said:

I recently quit my job and started freelancing (doing semi-geeky shit). The company that is currently using my services made it clear they'd prefer dealing with a company rather than an individual. So I guess I need to set up a company. But what is the best way of doing it? I'm not really a company - just an individual. So I don't think I need to set up a limited company or anything, but I'm a bit clueless about what I should do. Obviously I could Google it, but I prefer my search results to be peppered with sardonic advice on keeping my heaters on / windows down. Anyone got any advice?

And what should I call it? Simply my name? I quite like the sound of The Richie Group, but that's a bit of a grandiose name for a no-mark like me. 
Have any other P+Bers set up their own company etc? Is there even a difference between a company and a business?

I have been running my own company for twenty years.  Best job I ever had.  I am the manager director, chairman, ceo and the boss.  I am also the office tea boy but there you go.

I am not self employed.  I work for a limited company and currently I am the sole employee.  The company and me are separate entities.  To my customers I am a supplier not an employee.  In many ways to them it is the same as doing business with a company that employs more people.

If my company is paid £80,000 in one year but only £10,000 in the next then the company pays tax on that money but I only pay tax on the income I take from the company.

IIRC, as a sole trader, the example above would mean I was a high earner in one year but struggling the next. 

Regarding the name, think of one that people will actually accept and use.  Rich Solutions might work.

[Cardinal Richelieu]

9 minutes ago, Fullerene said:

I have been running my own company for twenty years.  Best job I ever had.  I am the manager director, chairman, ceo and the boss.  I am also the office tea boy but there you go.

I am not self employed.  I work for a limited company and currently I am the sole employee.  The company and me are separate entities.  To my customers I am a supplier not an employee.  In many ways to them it is the same as doing business with a company that employs more people.

If my company is paid £80,000 in one year but only £10,000 in the next then the company pays tax on that money but I only pay tax on the income I take from the company.

IIRC, as a sole trader, the example above would mean I was a high earner in one year but struggling the next. 

Regarding the name, think of one that people will actually accept and use.  Rich Solutions might work.

Cheers Fullerene, and indeed everyone else. I really am clueless about all this sort of thing so it's good to draw on your collective knowledge and experience. 

I'm now leaning towards the limited company route, not least because if I'm ever in a position to scale up operations (maybe even employ other people), then I'll have the company ready. I guess it also looks a bit more "professional". 

But going back to your example Fullerene. Surely if your company pays tax on its earnings, then you take a wage and get taxed on that, then you're effectively getting taxed twice? I'm guessing this is where I'd need an accountant's help. 

Re: the name. There's a few of them already. I was thinking of using an acronym or something (e.g. Telta), which would at least be unique. Or even just make up a word. It seemed to work for Spotify!

[alta-pete]

I’m a carbon copy of @Fullerene  ‘s set up. It was 20 years ago that I set up as a Ltd Co as the sole director/employee. 

I draw a modest salary from the company (£15k pa) so I am on the HMRC radar for PAYE/NIC/State Pension, etc and the rest in dividends. From a personal money point of view you’ll pay much less tax vs Sole Trader status (I think).  

Also consider VAT Registration. It makes no difference to your client(s) but you’ll have a window to claim back VAT on a whole swathe of costs denied to you if you don’t.   

The only real downside I’ve found is that if a global pandemic hits, you are somehow invisible to, and ineligible for, any support packages. I think I can continue with that risk. 

Sunak has been making noises about levelling the apparently unfair playing field of self employed taxation, IR35, etc. I think a Ltd Co gives you best protection against that. 

[alta-pete]

15 minutes ago, Cardinal Richelieu said:

 

Re: the name. There's a few of them already. I was thinking of using an acronym or something (e.g. Telta), which would at least be unique. Or even just make up a word. It seemed to work for Spotify!

I quite like just ‘Telt’.

[Fullerene]

1 hour ago, Cardinal Richelieu said:

But going back to your example Fullerene. Surely if your company pays tax on its earnings, then you take a wage and get taxed on that, then you're effectively getting taxed twice? I'm guessing this is where I'd need an accountant's help. 

Oops.  My company pays tax on the profit it makes, i.e. income minus costs.  My income is a cost to the company.

Another downside is that customers pay you when they pay you.  Some might take a year to do so.  Even if you say 30 days, they might ignore that.  It is useful if you can force their hand when necessary and not have to beg and plead.  Also, some never pay.

It would also be useful if you enrol on a one-week course on how to start up a company.  I did that with Inverness, Nairn Enterprise.  I am sure there is some business support group in your area for this.  A local accountant should be able to help you there.

[Fullerene]

1 hour ago, alta-pete said:

Also consider VAT Registration. It makes no difference to your client(s) but you’ll have a window to claim back VAT on a whole swathe of costs denied to you if you don’t.   

To clarify.

VAT Registration makes no difference to customers that are also VAT registered - they can claim it back.  If they are not VAT registered or they are individuals then it means 20% more on the price.  Then again, if your company turnover exceeds a certain amount, then you must register for VAT.

I will assume you already know this - even if others do not.

[alta-pete]

Yeah, he said his client was a big company, hence VAT comment. Obviously if he branches out into doing homers for individuals it becomes cash jobs!

[The Moonster]

Ecumenical Matters Ltd.

[Hedgecutter]

I set up a Ltd company ~3 years ago, but only because I liked the idea that I wouldn't lose my house if I happened to f*** up royally (company takes the hit rather than its director / sole employee).  Pain in the arse compared to being a sole trader, although I pay an accountant a handsome fee to take care of most of the sh*te.  As somebody else mentioned earlier, there are some places that won't touch me unless I'm part of a Ltd company.

Personally, I prefer to be frugal and keep company earnings in the company account so that if business happens to dry up for whatever reason, I can take a low salary off the company and get my NI contributions without having to deal with the sh*tshow that is the job centre.  That or have backup in case the IR35 man comes calling and decides he wants several thousands of pounds off of me with X days notice.

Edited March 24, 2021 by Hedgecutter

[Melanius Mullarkey]

^^^another prozzie imo