squarewheelz started this topic @ 01:13 on 07/10/2004
Hello all,
Ive already started a company to retail various cooking products as a sole trader via a website. Since starting this company I have had various requests from other companies for me to sell my products on to them at wholesale or dropshipping.
What I need to know is would I be able to set up another company VAT registered to buy in the items and then sell them on to MY other company for resale on MY website and to the other companies wishing to purchase from me trade. Therefore one company acting as a wholesaler and the other a retailer but both owned by me.
On the wholesale company I could claim back the VAT what I pay on purchase of stock and the intial business start up expenses.
I dont envisage having to register for VAT on my existing retail venture until December/January and so would like to wait until then.
Is this possible or am I totally on the wrong track?
Many thanks in advance for any information you may provide and thanks to the contributors of all the other excellent info. on unrelated topics that I have been reading through on these forums for the last 2 weeks.
Kind Regards
John
RE: Limited Company and Sole Trader
James Smith | 07/10/2004 09:09 AM
John,
And welcome to the forum, its nice to see the lurkers posting!
Yes you could do something like this, however both activities would be in the same "VAT group" which means if one activity was VAT registered then the other one would have to be too. This is because both activates are closely related. if one of them was (say) management consultancy and the other one flower arranging you wouldn’t have this issue.
Therefore the main thrust of your panning will fall apart in that there is no advantage in having the two entities, one as a sole trader and one as a limited company to avoid having to add VAT to your sales.
Given you are going to need to register for VAT in the next few months you may as well pursue your drop shipping activity aiming to coincide the set up at around the time you will need to register for VAT anyway, or just bring forward the registration.
The other point to consider is if now, having proved your business model it may be time to incorporate your entire business. There are some tax breaks available here in selling your sole trader business into a limited company, and may help you get suppliers being VAT registered and a limited company. If you need some help with this feel free to give me a ring and I can run over the basics for you on the ‘phone.
Regards,
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James Smith
Chartered Accountant
www.jamesesmith.co.uk
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Your indispensable guide to Small Business Bookkeeping, Self-Assessment & VAT
