peter peterson
14th October 2009, 14:52
Advice needed, I am a rookie here :) So make it easy on me...
I have setup a limited company to do some trading in a product which moves up and down almost daily with prices.
I can buy the product on Monday for a price lets say 100 pounds, but I wont be sure if I can sell it for more than that in the shortterm. As the market fluctuates heaviliy and the market is quite liquid.
Now the problem lies here, to make a good return, I need to order not 100 but about 50000 quid worth of product to have the price fixed and quoted in the contract and then getting to sell it before I can pay my supplier. I can put into the bankaccout anywhere between 0 - 20k. But 30k is not there.
I rely on selling the product on and getting paid before I would pay my supplier. My supplier will not deliver the product anyway before it is paid in full.(because I negotiated longer payment terms)
I thought about getting a credit facility, such as invoice factoring, ie making a sale and then buy.... but then the same argument applies, ie, might not be able to secure to product at a low enough price.
Now, I am willing to take a risk here, and been reading all about ltd etc.... If I would go down route 1 , will this mean:
1)that I will be personally liable (if it goes wrong and cannot sell) as a director, as I would have known that the company is insolvent? ie, assets 20k - liabilities, 50k is -30? or does this only count when selling(trading) , not buying
2) that my supplier can tell I am a fraudster or something? As I did not have enough capital to pay him in the first instance?
I never had a ltd before so maybe I am treating like a personal issue... but I do not want to risk a number of privately held assets.
I have setup a limited company to do some trading in a product which moves up and down almost daily with prices.
I can buy the product on Monday for a price lets say 100 pounds, but I wont be sure if I can sell it for more than that in the shortterm. As the market fluctuates heaviliy and the market is quite liquid.
Now the problem lies here, to make a good return, I need to order not 100 but about 50000 quid worth of product to have the price fixed and quoted in the contract and then getting to sell it before I can pay my supplier. I can put into the bankaccout anywhere between 0 - 20k. But 30k is not there.
I rely on selling the product on and getting paid before I would pay my supplier. My supplier will not deliver the product anyway before it is paid in full.(because I negotiated longer payment terms)
I thought about getting a credit facility, such as invoice factoring, ie making a sale and then buy.... but then the same argument applies, ie, might not be able to secure to product at a low enough price.
Now, I am willing to take a risk here, and been reading all about ltd etc.... If I would go down route 1 , will this mean:
1)that I will be personally liable (if it goes wrong and cannot sell) as a director, as I would have known that the company is insolvent? ie, assets 20k - liabilities, 50k is -30? or does this only count when selling(trading) , not buying
2) that my supplier can tell I am a fraudster or something? As I did not have enough capital to pay him in the first instance?
I never had a ltd before so maybe I am treating like a personal issue... but I do not want to risk a number of privately held assets.