absolutly_cat started this topic @ 15:29 on 07/07/2006
Sure this is the most common question posted here but...
I don't mind registering a company but if I don't and I choose to stay a sole trader for a while, can I still use a company name and have a logo on my busines cards?
My business idea involves manufacturing an alcoholic product and then (hopefully!) selling it on to licenced establishments and eventually supermarkets - do I need to be registered before then? To be honest, I can't understand why anyone would want to register at all - it just seems to mean you have to pay an enormous amount of tax and keep more records! When do you HAVE to become registered? I know it looks more professional to be a Ltd but is it ever necessary?
Final question (I promise!), I am still working full time and so cannot start my business in my own offices. My tenancy agreement says that I can't do it from home either - so if I rent a PO Box is that OK until I can afford to rent actual offices?
Thanks in advance!!
RE: Sole Trader or not?
James Smith | 07/07/2006 04:49 PM
Being a company is entirely your choice.
Many business stay as "partnerships" or "sole trades" as its simple to do so.
You mention about "company names". To be crystal clear, if you are a sole trader you dont have a "company" you have a "trade". You can call this trade whatever you like as a "brand" or "trading name", so long as you mention your own name at some point. ie "New Drink" could be your brand, so long as you write "Your name t/a New Drink" on your letterheads.
You don’t pay more tax as a ltd company, quite the reverse actually. One of the main reasons for incorporation is to save tax, image tends to be no.2. There is however a lot of paperwork to contend with.
As a rule of thumb I would stick at being a sole trader until you are big enough to be thinking about giving up the day job and the business model is well proven. Credibility could however come into play with something like you are doing. On the plus side if your batch of 5000 doesn’t sell, if you are a sole trader you actually get a tax refund for the losses against your day job. You don’t get this with a company as losses can only be used against profits of the same company.
To be brutally honest this is such a tough market to crack (a lot of it is about advertising rather than the drink itself) I would stick with the sole trade for a long while until you get a big order as the odds are unfortunately stacked high against this coming off. I can’t remember how many 100’s of new drinks are launched each year but its lots, most sink without trace even though backed by the majors. That said if yours works well – go for it, you may find you can sell small quantities locally and build up in that manner or get a major player interested in buying the idea.
Good luck!
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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
RE: RE: Sole Trader or not?
littlened | 07/07/2006 06:02 PM
I've more or less had a similar issue.
I found that if I traded as a sole trader, I had to put my name under the company name on all stationary. To me it wouldnt give the right impression to potential clients to I registered a limited company.
