Can a single business operate in, or expand into, multiple different industries?

Ga1way

Say you started a small business, either as a ST or LTD, e.g. a work-from-home software developer. Suppose this business is profitable. Could you one day use some profits to expand your business into a completely unrelated industry, e.g. opening a cafe?

When setting up as a ST or LTD, you’re required to describe the business, so wouldn’t this information now be inaccurate? Can it be updated? Would it even be possible to have a business registered as a software developer/cafe? Can a ST even register more than one business?

Can a business expand outside of its original field and grow to cover multiple industries? If it's not possible, what would be the best, most tax efficient way of using the profits from existing Business A to start additional Business B?

Sorry for all the questions. Any information would be appreciated. Thanks for reading.

pedroeibar1

A sole trader is a person with a business activity, not a business. That business activity has no “legal personality” i.e. it cannot sue/be sued – instead it is the person who sues / who is sued. A sole trader can have as many business activities as s/he wants.

Since the 1st June last, when the new Companies’ Act commenced LTD companies are no longer required to have an ‘objects clause’ so there is no legal impediment to a Ltd company having diverse activities. The position is different for a DAC (Designated Activity Company).
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SeanSouth

I'm not sure how pedroebear can say say that a sole trader "is not a business" that it is a person with business activity. This is incorrect.

A business carried out as a sole trader is as much a business as a business carried out by a limited company. The main difference is that one has limited liability and a separate legal identity from its owners and the other does not.

Like a limited company a soletrader business can employ a 1000 people if he wishes to do so. Make no mistake both ARE businesses.Different legal entities but both businesses nonetheless.

A soletrader business can be sued in its own name but that name is synonomous with its owner who is liable.

pedronomix

A sole trade is a person and a single legal identity, unlike a company, limited or unlimited or indeed a partnership. Pedro is correct. The business activity may be the same for any, but the it is the legal identities that differ.

SeanSouth

Maybe were splitting hairs. What he said above is that a sole trader is NOT a business which is incorrect

pedronomix

A sole trader is not a business nor is a director a business.

SeanSouth

Thats complete rubbish im afraid.

A business can trade as a sole trader, as a partnership or as a limited or unlimited company.

A Director is an officer of a limited company and has nothing at all to do with a Sole trader. Unfortunately you're mixing up your apples and pears

pedronomix

It is pears! And you have it wrong. The person, the sole trader carries on a trade or business, not as you suggest.

SeanSouth

Here is a direct quotation from a well know firm of chartered accountants in ireland

A sole trader is the simplest form of business in Ireland. As the name implies, it refers to one individual who owns and operates a business. A sole trader can have employees to assist with the running of the business, but it is the sole trader who owns the business, taking all the risks and rewards.

pedronomix

SeanSouth wrote: »

Here is a direct quotation from a well know firm of chartered accountants in ireland

A sole trader is the simplest form of business in Ireland. As the name implies, it refers to one individual who owns and operates a business. A sole trader can have employees to assist with the running of the business, but it is the sole trader who owns the business, taking all the risks and rewards.

So read it again because they agree with me! The sole trader owns the business. Not IS the business. A hair split too far by you!

SeanSouth

"A sole trader IS the simplest form of business"

Lets leave it there. You're confusing the sole trader as the person who owns the business and a sole-trader business.

A Sole trader "owns" the business in the same way as a limited company "owns" the business. Neither of them are the business.

When hair is getting less and I less I suppose people like to split it whenever they can!

I think its a bad idea to run different business types through the same company or individual trader. Unless there is very small money going through you need to be able to protect yourself from problems, and one business from the other business.
You can't be having some side business crippling your main source of income because of a lawsuit, and don't even want it vice versa either.

The only upside of such an arrangement is doing one set of books as a sole trader and something similar I guess with a Limited company. This benefit is not nearly enough to warrant taking the risk that one business could end up bringing down the other.

pedroeibar1

SeanSouth wrote: »

A business carried out as a sole trader is as much a business as a business carried out by a limited company. The main difference is that one has limited liability and a separate legal identity from its owners and the other does not.

Wrong. Go look up what is the legal definition of a business and then read my (and Pedronomix’s) posts again. A Ltd company has a distinct legal personality: it can sue or be sued. The business activity of a sole trader does not have any legal identity – the legal entity is the sole trader - and it is s/he who issues proceedings or receives them. S/he is the person carrying out a business activity, which in itself has no legal standing
Suggesting that

SeanSouth wrote: »

A soletrader business can be sued in its own name but that name is synonomous with its owner who is liable.

Is wrong and has no basis in law. Issue proceedings against Sean South Toys and the case will be thrown out of court, as the defendant should be Sean South T/A Sean South Toys. (It’s synonymous BTW)

SeanSouth wrote: »

Like a limited company a soletrader business can employ a 1000 people if he wishes to do so. Make no mistake both ARE businesses. Different legal entities but both businesses nonetheless.

Anyone can employ people – that does not create a business! Nor is each a legal business entity - one is a Limited company which has legal personality, the other is an individual (who has legal personality) carrying on a business activity (which does not have legal personality.)
There is no such thing in law as “a sole trader business”.

pedroeibar1

Deleted User wrote: »

When hair is getting less and I less I suppose people like to split it whenever they can!

I think its a bad idea to run different business types through the same company or individual trader. Unless there is very small money going through you need to be able to protect yourself from problems, and one business from the other business.
You can't be having some side business crippling your main source of income because of a lawsuit, and don't even want it vice versa either.

The only upside of such an arrangement is doing one set of books as a sole trader and something similar I guess with a Limited company. This benefit is not nearly enough to warrant taking the risk that one business could end up bringing down the other.

Some people split hairs for the heck of it, but it does not make them correct.:)

Allowing one operation to fail and leave creditors unpaid would have a significant impact on the creditworthiness of the other.

Running different activities through different companies is a good idea from an accounting perspective as it makes it easier to control/observe/manage costs. However, modern credit control tools inevitably link entities and suppliers take this into account as “group exposure”. That is why most 'groups' consolidate accounts and avoid publishing individual accounts for subsidiaries, instead filing a Section 17 ( where the parent guarantees the debts of the subsidiary.)