Setting up IT company while in job [Archive]

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santi

7th August 2009, 13:51

ozbon

7th August 2009, 18:37

You're in the wrong part of the forum, but the basic answer is :

Once you start trading (and getting paid by the company you've formed) then you'll need to declare it to HMCE/HMRC (can't remember the initials they currently use) and you'll be paying basic-rate (25%?) tax for it as a second job.

Your best bet is to talk to an accountant, they'll know the best way to do this.

extremedistro

8th August 2009, 15:15

drop me a pm if you need any help on the IT company side.... ive started one up

a1isp

9th August 2009, 18:40

Check your contract of employment doesn't stop you doing this. It would be no good to get fired from your main job while you're trying to set something else up ;)

Jaytag Computer

10th August 2009, 11:03

Check your contract of employment doesn't stop you doing this. It would be no good to get fired from your main job while you're trying to set something else up ;)

Seconded. Don't ask why :(

ozbon

10th August 2009, 13:43

To my knowledge/understanding, it's actually quite hard for a company to legally enforce the "Thou shalt work for no-one else" rule, particularly if you're working for yourself in your spare time.

Personally, I always make sure that clause is taken out, just in case, but I believe it's like the "non-compete" clauses, in that it's fairly difficult to enforce them in court.

Comspec

10th August 2009, 20:23

May be hard to enforce in court, but they can usually sack you over it... so be careful.

This is something I have experienced when working for the public sector...they spent a load of dosh training us up for everyone to jump ship the moment anything better came along in the private sector.

I stayed for 10 years tbh, and only left when we had a major overhaul completed (as a result of 2 new area hospitals) and my job was about to become boringly repetitive as everything was too new.

I now have the issue from the other side, as I run an IT business, and it scares me to think of the reasons people would work for me..... to either get the training to go elsewhere, or to nick customers and set themselves up.

Not really a problem tbh, as I like competition really, and the greedy beggars tend not to be in anything for the long term :)

Gratis Guidance

10th August 2009, 21:34

Hi,
This is my first post in the forum.

I am working full time in a company as an IT consulatnt.

I am planning to set up an IT company withouot leaving the job I am doing.

Can someone advise about the tax implications assuming the company is dormant for some time and then starts trading. I mean, do I need to pay anything extra (than what I am paying as an employee in my current job) once I( register my new company?

Thanks and regards

Santosh.

I'm assuming that you are setting up a ltd company.

You are only paying tax if you make money, so if its dormant, you are not making money - no tax - however, you still need to get your accounts in on time - even if it is zero - the cost of missing it is high!

The other point regarding the no competition rule - I don't think it can be enforced due to EU rules, but don't quote me on that! :) The problem is that you could be sacked on the basis that you are not working in the interests of your employer and no tribunal is going to support you there!

Hope this helps!

upnorthal

11th August 2009, 11:03

For what its worth, I am in the same position as you.

Do you have a close and trusted friend who could register the company in their name?

That way, there is no public record of you working for the company.

They would have to prove otherwise.

Now, I'm not sure how strong one of these 'restrictive' convents is in contract law. I know there is an implied term of trust between your employer and you, and the courts do take this seriously.

So long as your activities are not encroaching on the same sector you work in, or affecting your work - I would argue it is an unfair term and not enforceable. You may want to take legal advise as that is just my personal opinion.

I'm not sure how easy it is to add yourself as a director and remove the other at a later point.

For reference, I am in exactly the same position as you.

Setting up the LTD company is pretty easy if you use a formation agent.
Unfortunatley, some of these 'agents' are not to good at advising you of your legal obligations with regards to returns.

There are a couple of points I need to investigate and you may want to too.

1: I want to look into the registered listing of business activities held at CH. I've had a look at a few and it seems normal to have pages of various sectors the company is registered to trade in. I don't know how acceptable this is and what implications there are.

2:
My company will probably be dormant for the first year, so:-
a: when do Companies House expect the first returns, what does this cost assuming the company has not traded. If the due date is soon, perhaps it is better forming the company after this date.

b: I'd like to know precisely what info should be returned at year end for a non trading company. I want to know the cost of an accountant performing this task, or if I could do it.

Cheers

Al

upnorthal

11th August 2009, 11:18

There is an interesting article here:-

http://www.out-law.com/page-7086

It would appear restrictive convents require careful drafting. The examples cited in this article all cover scenarios where an employee leaves the company and either pinches clients, copies business ideas.

Any court action requires the employer to prove some loss arising from the breach.

How on earth could an employer suffer a loss if the employee is working in another sector, with different customers and not using any business gained commercialy sensitive information?

I believe there is also a concept of 'unfair restraint on trade'. I don't see how they could prevent you starting your own IT business just because you already work for them as a consultant. You may have a problem if you start working doing the same activities as your day job.

But then again, there is the implied term of trust issue. I'd take some legal advice. My own idea although IT related, is not anything to do with my company.

wardourdrive

13th August 2009, 08:37

I in fact do this.

I am fully employed and also run my own IT business. Neither clash. As I take nothing out of my own business there is no additional costs to me.

I setup as a ltd company and am vat registered. All I had to do was declare to HMRC that I take nothing out and all is well.

I told my employer about my company and as the head of IT here i thought it best. As I don't quote for the company and my work is not affected there is no conflict of interest and they have no problem with it.

Good luck in your venture. Pm me if you need a hand.