Start-up - what structure

Flatwhite

Need to go under a different reg here. I am looking to go into business with a friend, we both work for someone else (they are a sole trader) currently. He is retiring so we might as well take it up. We have the contacts etc to make a go of it so no issue there. The bit I am not sure of is should we set up a company together?  Or would a partnership make more sense? The income won't be massive - maybe profit of 80K between us after paying a few contractors. Is being a sole trader an option and try and sort it out between us

looksee

I cannot give you an answer as I am on the same quest myself. I have seen that two people cannot be a 'sole trader'. A number of people in business together will be regarded as a partnership, and in those circumstances it might not be a very advantageous situation for either of you. You need to have a written agreement through a solicitor.

Trojan

A lot of these types of businesses start out as a Partnership and graduate to a Limited company pretty quickly.

Talk to your accountant, they should be able to advise you on some of the issues involved. If you don't have an accountant yet, have a chat with a couple after getting local recommendations - most accountants will do a free initial consultation with you.

Flatwhite

Thanks, I don't have an accountant. I understand the basic concepts of the various options. The partnership option does not sound appealing or sustainable. The company options sounds the most logical but maybe OTT for such a small operation Are there any workarounds to this?

Digital_Guy

Would avoid the partnership option. Just have a simple agreement you are both happy and on board with starting out, and if all goes well set up a company!

Flatwhite

Thanks, that would be my instinct currently, are you suggesting we talk to a solicitor?

BONDIred

Im an accountant, feel free to PM with any questions and ill try to help.

Digital_Guy

Flatwhite wrote: »

Thanks, that would be my instinct currently, are you suggesting we talk to a solicitor?

I'd say an accountant, maybe ask some business people you know for a recommendation? I don't think it's essential though if you have a simple, clear agreement. But it's worth both of you chatting to an accountant all the same, especially as a lot of them give free initial consultations.

Flatwhite

Thanks for the feedback. That sounds sensible, will speak with an accountant also.

Skiba1

I have had the same question.

jasper100

Digital_Guy wrote: »

Would avoid the partnership option. Just have a simple agreement you are both happy and on board with starting out, and if all goes well set up a company!

The worst ship that ever sailed is a partnership.

Go limited company once its viable.

paulreilly05

im looking into the same thing. was advised limited the best way to go and it was cleanest to do it this way from the start. the main reason been that people are more comfortable dealing with you as a ltd company

Trojan

paulreilly05 wrote: »

im looking into the same thing. was advised limited the best way to go and it was cleanest to do it this way from the start. the main reason been that people are more comfortable dealing with you as a ltd company

I'd say the unlimited liability is the main reason why a lot of folks don't stay as Partnerships for long.

If you do go LTD quickly, just bear in mind that accounting fees will be likely to be significantly higher.