Business Startup and taxation

colmm007

Hi all
I'm new to boards so forgive if I'm missing some netiquette. I was recently laid off my job of 15 years and am thinking about setting up my own business, I'm looking into setting up a limited company and earning an income for myself.

My question is, Can I start trading before my company is registered and I'm registered for tax or do I have to wait?

dbran

Hi

A quick answer....

You are better off setting yourself up as a sole trader as a limited company can be more expensive to run and control.

Before you go ahead take some time to think through what you are planning to do. Is it viable? How much money do you need to set yourself up? etc.

If you have been made redundant and are currently signing on, then you may be eligable to go for the short term enterpirse allowance. Do not register for taxes until you have checked this out as it allows you to keep your benefits for a year while you set up your business. Go to the local enterprise board or employment partnership for further details.

Most of all good luck

Regards

dbran

colmm007

Hi Dbran,
What's the difference between a Sole Trader and a Limited company, I thought a company was better as you have less exposure if the company fails??

Thanks you your reply

TaxingTimes

I would suggest you go on a "Start your own business" course.
Try your local Enterprise Board or local college for evening classes.

You really need to make informed decisions before setting up a business.

dbran

colmm007 wrote: »

Hi Dbran,
What's the difference between a Sole Trader and a Limited company, I thought a company was better as you have less exposure if the company fails??

Thanks you your reply

It will depend on the type of business you are in. You are correct in that a limited company allows you a degree of protection from creditors. They can also have some very good tax advantages if you come to be earning a lot of money in the future.

However most banks now insist on a personal guarantee for loans and overdrafts. Also they can be a bit if a burden as there is a lot of red tape, beurocracy and legal requirement involved with a company. This can lead to significant additional accountancy costs over an equivalent sole trader business. Also they can be very difficult and expensive to shut down when they are no longer required.

Bottom line is unless you feel that you will definately need the protection of limited liability from the get go, or you have a specific need to incorporate, I would start off with a sole trader. You can always incorporate at a later date if required.

Hope this helps

dbran

dbran

colmm007 wrote: »

Hi all
My question is, Can I start trading before my company is registered and I'm registered for tax or do I have to wait?

A company cannot trade before it is registered because it does not exist as a legal entity before then. Once it is formed it can assume certain pre-incorporporation expenses or liabilities previously incurred.

You should register for taxes as soon as you are going into business (and not before you have registered on the shortterm enterprise allowance). If you are registering as a sole trader you can do this straight away. if a company you must wait until the company is registered.

Kind regards


dbran

Mr. Incognito

There are some resources in the stickies at the top of the forum on taxation and starting a business.

colmm007

Hi all,
Having spoken to the Revenue and some friends that have thread this path before me, I have decided to go down the sole trader route for now, If things take off in the coming months I can look at taking things further then.

From small seeds mighty oaks.....;)

Thanks for all your comments and suggestions