Multiple Trading Names

[Steve Newbold]

Hello,

I have a small creative business that seems to be running well and to the best of my knowledge is set up correctly (ie registered with the Inland Revenue). Without going into technical detail, I now wish to branch my business into two seperate entities.

The reasons for doing this is so that i can maintain the biggest part of my business (freelance photography) whilst focusing on a potentially profitable and connected area (digital retouching) without compromising client interest. Basically if the retouching doesn't work, I don't want it to effect my photographic work.

So, here's my question. I wish to seperate the two parts of the business but not create an entirely new business for one. I wish to trade as two different names, one for each sector, whilst all the invoicing/tax returns are performed through one single sole-trading business. Can this be done?

My business advisor at HSBC suggested that I could trade under any name I wanted if it was registered with them for business use. How would this effect my tax return? What would I put as my business name?

I apologise if this sounds confusing, but I'm a little confused myself. If anybody could help or would like any further information, I would be grateful.

Steve Newbold,

Steve Newbold Photography

[gary]

Simple answer is yes, you can trade under two different names, using one company. You do need to follow some procedures though and you should check this with the Inland Revenue or an accountant, but I know it has to be mentioned on certain types of stationery, for example your cheque book would say ABC Ltd, t/a DEF Co. Your bank would also have this in their records so cheques could be made out to DEF Co as well as ABC Ltd. There's more, but as I'm not totally positive about the requirements I would rather not give you the wrong information!

Gary

[Steve Newbold]

Thanks Gary,

I'll do some more research and post my results back here in case anybody else here is interested.

I do seem to be getting different answers from different people but I'll get there in the end.

Steve

Steve Newbold Photography

[stevebaines]

Hi Steve,
Did you get to the bottom of this? I'm also interested in the laws regarding this.

Cheers - Steve

[Steve Newbold]

From what I can find out, it seems that you can trade under multiple names as long as no one is using the name in your paticular area/field.

You can register multiple names with your Bank so you can accept cheques made out to either name.

I believe that there is no real reason to declare anything extra to the Inland Revenue as there is only one set of accounts. All invoices must carry your personal name and address.

This is only what I have been lead to believe so don't take this as fact.

Regards,

Steve

[Ozzy]

Hi Steve,
That is my understanding too.

Sorry I didn't see this sooner or I would have posted the answers as you mention above (been very busy lately).

[gj]

Hi Steve

My understanding is as follows:

As a sole trader, you can have multiple trading names even within the same business. You will have different letterheads for each, but they will show that you are the proprietor/principal. In other words, people will know who they are dealing with. You are personally liable for the debts etc of both/all parts of the business(es). Therefore, if one doesn't work out, you could end up losing the other business (and all your other personal assets) if the debts of the failed business are large.

The only protection the separate trading names gives you as a sole trader is that if one fails, people may not associate it with your main business. The way to ring fence the business you might see as risky, is to run it as a separate limited company. Then if it fails, limited liability status will offer you some protection.

Bear in mind from a tax point of view that you could be regarded as having two separate trades and therefore potentially should prepare two sets of accounts and enter the details separately on your self assessment tax return. This usually doesn't make any difference and the revenue do not push the point, but it can have an impact if one business suffers losses, as there are restrictions on how these can be set off against profits from another trade.

If it were down to me, I would only use the different trading name as a sole trader, if it had a definite marketing advantage. If I perceived a real financial riosk from the second business, I would put it through a separate limited company. If neither of these applied I would just trade both sides of the business through the one trading name, just to avoid confusion etc.

If you VAT registered, and you do decide to trade as a sole trader with more than one trading name, remember that it is you who are VAT registered, not just thetrading name, so you must charge VAT on both sides of the business - and should notify Customs & Excise of the new trading name.

Hope that helps.


Graham Jenner

[Steve Newbold]

Sounds pretty conclusive. In my case having multiple trading names is a 'marketing advantage' even though the two areas are not that different.

I'm sure one day one or both of these 'business' will be developed into Companies. But until then, I don't see any problems.

Steve

[gj]

Just a final point on the "becoming companies" front - given the close link between the businesses, it would make sense to put both elements through a limited company (as trading names/divisions of that company), when the time comes, rather than complicating matters with a sole tradership and a limited company.

I am developing an interactive decision tree, to help people with the question of limited versus sole trader - would be happy to email it to you if you are interested.

Graham

[Ozzy]

Hi Graham,
I wouldn't mind a look at that tool when its ready also please :)

Cheers
Richard

[gj]

Hi Ozzy

Been busy on other things but happy to email the interactive decision tree to you once completed

Regards


Graham

[furman]

Hi,
I have started my company and I am thinking of splitting it into 2-3 parts. My company is limited btw.
One company deals with certain customer, one deals with a different set of products and one deals with another set of products. All the banking will have ABC Ltd T/As DEF. Would it cause any problems having 3 trading names for 1 Ltd company?
Thanks

[Anonymous]

Hi,
I have started my company and I am thinking of splitting it into 2-3 parts. My company is limited btw.
One company deals with certain customer, one deals with a different set of products and one deals with another set of products. All the banking will have ABC Ltd T/As DEF. Would it cause any problems having 3 trading names for 1 Ltd company?
Thanks

different trading names are often referred to as "Brands" I have 2 trading names or "Brands" within my company.

It might help you if in your mind, you stopped thinking in terms of trading names and thought instead of building "brands"

what is probably in your mind is that you will want to keep separate accounts for your (trading names) "brands" so you can keep track of your expense, and surpluses or "profits" this is ok, as long as the one that goes to companies house is the trading account of all three added together.

now then, I have long thought in the cruel world of business that what you do isn't the issue but how you think and how you describe it.

for example if you go to the bank manager and say you have 3 problems, he isn't as receptive as if you go with 3 "challenges"

changing words changes nothing about a situation, it does change the terms on which other people deal with you.

[MikeH]

Hi Graham,

Keep me posted on the interactive decision tree info as well.

Thanks,

Mike.

[Archangel]

Hi, my name is Jim.

Soz to drag up an old topic.

I'm in the same boat, and would like some opinions. I am a sole trader trading under the name Fr-Shh (pronounced fresh). It's an online retail store for beatboxing merchandise. I've been trading under that name for 2 years now.

I recently bought out ownership of humanbeatbox.com, the main online presence for beatboxing info/forum community/events etc. which the owner was a sole trader.

Now, today I called HM Revenue to add humanbeatbox.com as a trading name. They said that next year I'll receive 2 sets of tax returns, one for each trading name. I understand why they would do this. However, would it make more sense to have an umbrella trading name eg. Mouth Music or something taking care of both the retail and events, and then have humanbeatbox.com and Fr-Shh as just brands?

If so, would it still make sense to have seperate bank accounts (one for Fr-Shh and one for humanbeatbox.com) or a single one under 'Mouth Music'? Would this make things simpler in terms of the tax returns?

Apologies if this is a bit all over the place. It's kind of how I'm feeling!

Cheers,

Jim

[buhh]

Interesting topic...

I run 4 different businesses, 2 of them are under 1 Ltd company and others I have registered as Sole Trader because I want to see how the business will take up. Businesses as totally in different markets and so I will not trade under one LTD.
I met my accountant recently and was advised to do so as this will save me money because I don't need to file LTD accounts (£1000+/per company)for every company as they are more expensive.
I have however registered all my trading names as LTD companies but will keep 3 of them dormant until it's profitable to run them as LTD companies.

If you are running a company called "Dog bones Ltd" then I would be weird to trade as accountant, wouldn't it? But if you stay in "Doggy businesses" you can have many trading names as "tasty bones", Super dog toys" etc...
Just my opinion.

[Archangel]

That's the thing though. As a sole trader, having multiple trading names means having to do accounts/file tax returns for each name you're trading under. All of my work (merch retail/events/agency - I also act as an agent for a beatboxer agency which I currently bill through Fr-Shh...) is in the field of beatboxing.

As a sole trader, would it be better to just have one trading name with the other names as just 'brands'?

If so, does it work any differently. For example, just say I decided to use humanbeatbox.com as my trading name. Is there a problem with me having a website called Fr-Shh that generates revenue (albeit the sales would be handled via paypal as humanbeatbox.com)? Is this how brands work? Or do they count as individual trading names? If so, I guess I have no option but to have 2 bank accounts, 2 tax returns etc.

[Money08]

Hi

I'm new to the forum but saw that Gj were offering a decision tree between company types that might help me.

Can you send me a copy when it's finished

Thanks

[Cobby]

GJ's last activity on this forum was September 06, so you might be waiting a while for him to email you. ;]

[Money08]

Thanks Oh dear a classic newbie mistake I guess

[VeryMark]

Yes, as far as I am aware, if both businesses trade as part of the limited company, there should be no real issues providing that :-

(a) All business stationery, correspondence, emails and websites carry details somewhere of the limited company which owns the business, e.g. "XYZ Limited. Registered in England & Wales No. 12345678. Registered Office 2 Smith Place, Jonestown, AB12 3CD. VAT Reg. No. 123 4567 89".

(b) You carry out any necessary trade mark checks to make sure any proposed name is free for use, and you should also consider what you need to do to protect your business identity - see our factsheets Trade Mark & Marketing Clearance (http://www.verymark.info/?page_id=142) and Protecting Your Identity (http://www.verymark.info/?page_id=132).

[gamez-over]

Hi guys,

Having read the thread..i'm still a bit confused with regards to how this would work for a sole trader...

i.e.

If I set up a company called ABC, can I then start two websites and call them different names...but state that it is ABC trading as....blah blah

Would this work?

Thank you

[VeryMark]

If you're an individual who is a sole trader it would be "Fred Bloggs trading as ..", if you're a limited company then "Fred Bloggs Ltd trading as ..."

[samirkader]

Hi Guys

I had a question which has been bugging me for a while now.

Current Situation

We are a family run partnership having been so since 1967. We currently have 5 different brands, and all are under the same partnership of 3 partners.

Desired Situation

We wanted to have 1 holding company who would own all the properties, and would charge a rent for all the various brands using the different premises. This would be a LTD, as would the sub brands as well with diffrenet VAT numbers and company Registration No's.

Question

What we didnt want to do was to have to create separate accounts for each company, and be able to create 1 set of group accounts for all the different companies. My question is that with different VAT and company numbers, would it be possible to only create 1 set of collated accounts?

[VeryMark]

It seems to me that it would be unnecessarily complicating matters to have six different limited companies each with different VAT numbers as that would mean six different annual returns and six different VAT returns to start with, even apart from the question of accounts.

I suggest you speak to your accountant for more detailed advice.

[bukola]

Hi

I have recently registered a limited company. My finacee has also rencently registered a limited company. At present, both companies are seperate, however, because we a re working together, we were considering registered a new company name, one under which both businesses will operate. So in essence, there will be one company i.e. Alpha ltd with two businesses trading under it. The nature of the business are similar but not completely the same so we cannot simply merge the two into one. Both are web-based businesses.

My question is, will it be more tax efficient to have one compnay name under which two businesses are trading? The two businesses will have different names. Will this mean we pay tax for the registered company name only as opposed to have to seperate tax, Vat for the two trading businesses? Or will it make no difference?

I know it sounds confusing but think of the registered company name as an umbrella under which several businesses trade, thats what we aim to do.

Any advice from anyone will be great help. Can you think og examples of major businesses that have done this. Thought of Virgin, but they have several business using the same name, not quite the same.

Ahy thoughts?

[VeryMark]

Operating several businesses under a single limited company can help to keep administration costs down and have other efficiencies but, on the other hand, you can reach tax and other thresholds sooner.

The other point you need to think of is what happens if the people concerned split up or there are any disputes - a shareholders agreement would seem more than prudent.

I would recommend getting advice from your accountant before commmitting yourself.