One business or two?

[RSJ]

Seeking a bit of guidance here,

I'm wanting to set up as a sole trader as an Auto Locksmith, The thing is, I'm also an Auto Electrician. I'm finally going to go it alone.

The two companies in my mind are very similar, so I was basically thinking of starting with the locksmith but adding extra services, such as fitting after market alarms, dash cams, parking sensors, tracking, tow-bars, stuff I class as light auto electrical work.

I suppose my question is, should I be doing this?
Or should I create a different company for Auto Electrics, keeping the Auto Locksmith stuff just to its own.

As a sole trader, can I just have multiple trading names? Would this mean two sets of insurance etc?

 

[StevensOnln1]

Why complicate things? It would be far simpler to have one trading name encompassing everything you do. You should be able to find an insurance policy that covers all the work you do as a sole trader, there shouldn't be any need for separate policies.

 

[Tables Force]

Seeking a bit of guidance here,

I'm wanting to set up as a sole trader as an Auto Locksmith, The thing is, I'm also an Auto Electrician. I'm finally going to go it alone.

The two companies in my mind are very similar, so I was basically thinking of starting with the locksmith but adding extra services, such as fitting after market alarms, dash cams, parking sensors, tracking, tow-bars, stuff I class as light auto electrical work.

I suppose my question is, should I be doing this?
Or should I create a different company for Auto Electrics, keeping the Auto Locksmith stuff just to its own.

First mistake is thinking you have a 'Company' here - as a sole trader you do NOT have any 'company', not one nor two, YOU are the trade/business.

As a sole trader, can I just have multiple trading names? Would this mean two sets of insurance etc?

You can have as many trading names as you want.

I would think you should be able to put both trading names on one insurance, althoug I'm sure @Frank the Insurance guy would bw able to confirm if this is possible.

 

[John Martin]

If two businesses are very similar, you're not supposed to set them up as separate businesses. A lot of companies do this to avoid things like going over the VAT threshold, but it's a big no no. If HMRC find out you could end up in a lot of trouble.

As another poster said, best to just keep it simple. From a practical point of view, it would probably be a nightmare to keep the two companies separate anyway.

 

[Scalloway]

First mistake is thinking you have a 'Company'

The dictionary definition of a company is a business organization that makes money by selling goods or services.

 

[WaveJumper]

Keep it simple one business to encompass it all, the Halfords name springs to mind how many areas do they cater too

 

[Ozzy]

The dictionary definition of a company is a business organization that makes money by selling goods or services.

That may be the dictionary definition, but in company law and in general 'company' does more commonly refer to an incorporated body, and 'business' can mean either.
I do also feel it can help people understand the difference between incorporated body, and themselves as an sole trader when talking about business structures.

 

[John Martin]

First mistake is thinking you have a 'Company' here - as a sole trader you do NOT have any 'company', not one nor two, YOU are the trade/business.

I ran two separate businesses as a sole trader for a number of years. One was an online business and one was a real world business. They were in different niches and completely unrelated to each other.

It just meant from a tax point of view, the profits from both businesses were aggregated.

 

[fisicx]

@RSJ - as others have said, keep it simple: one business to do everything. You might for example add a roadside start service or tracker installation.

What you might want to do is have a very generic name for the business.

As an example I get my ancient car serviced by Rees Bros. There was never a Rees or any brothers.

 

[Paul Kelly ICHYB]

Assuming you will be running out of one van, definitely one business - two trading names not an issue.

 

[Newchodge]

Assuming you will be running out of one van, definitely one business - two trading names not an issue.

Except when putting contact details on the one van!

 

[Paul Kelly ICHYB]

Except when putting contact details on the one van!

True.

One either side?

 

[Frank the Insurance guy]

As both business are closely related - it is best to have a single insurance policy to cover both businesses.

 

[Gecko001]

Are both these services used mostly by the trade? In other words, are they used mostly by mechanics or car dealerships rather than car owners? If they are, then I think you could probably have a trading name of something like: "Fred Smith Automotive Services", and for letter head and advertising yu could add to this trading name: "Auto Electrician and Locksmith". That way if you added more services, you would not need to change the trading name, but you might need to tell HMRC that you are added another service.

 

[John Martin]

That way if you added more services, you would not need to change the trading name, but you might need to tell HMRC that you are added another service.

Have the rules changed?

I can't see why HMRC would need to know if you added more services. If it's the same business you can add as many services as you like, so long as you declare all the income.

Unless you mean telling them that you added another trading name.

 

[Gecko001]

Have the rules changed?

I can't see why HMRC would need to know if you added more services. If it's the same business you can add as many services as you like, so long as you declare all the income.

Unless you mean telling them that you added another trading name.

HMRC needs to know more than your trading name. They also need to know what you actually do regarding your business activities when you are a sole trader.

 

[Lisa Thomas]

Do you have an accountant you can speak to about this?

 

[fisicx]

HMRC needs to know more than your trading name. They also need to know what you actually do regarding your business activities when you are a sole trader.

Are you sure? I just told them it was ‘IT services’ as that covers a whole range of activities.

 

[Mark T Jones]

HMRC needs to know more than your trading name. They also need to know what you actually do regarding your business activities when you are a sole trader.

They might ask, but they pay little or no attention to the answer, or to subsequent activity.

 

[Gecko001]

Who says that HMRC do not check on sole traders' business activities? How do you think tax investigations come about?

 

[Mark T Jones]

Who says that HMRC do not check on sole traders' business activities? How do you think tax investigations come about?

HMRC want to know that you are declaring your activities - and that's pretty much it.

Why would they care if the OP is earning from doing car locks, or from car electrics?

 

[Gecko001]

HMRC want to know that you are declaring your activities - and that's pretty much it.

Why would they care if the OP is earning from doing car locks, or from car electrics?

Read my post. I suggested the OP could add as many services as he likes with the caveat that he might need to tell HMRC. Simple sound advice, in my view, given to the OP, yet it is met with criticism from several here. Wow, isn't this forum hard work!

 

[John Martin]

Read my post. I suggested the OP could add as many services as he likes with the caveat that he might need to tell HMRC. Simple sound advice, in my view, given to the OP, yet it is met with criticism from several here. Wow, isn't this forum hard work!

On the self assessment form it asks for your trading name, if you have one, and a description of your business.

When I had my ebay/Amazon business I just put 'Online Retail', that was it. Did that for over a decade... HMRC never questioned it or asked for any details.

OP could just write, 'Auto Electrician and Auto Locksmith'. There's no need to write down every service they offer or update HMRC every time they add a new one.

Now if they started another business that was completely different, then yes, they would need to tell HMRC.

 

[fisicx]

OP could just write, 'Auto Electrician and Auto Locksmith'. There's no need to write down every service they offer or update HMRC every time they add a new one.

Or even just ‘auto services’. Leave it vague and you can do pretty much anything vehicular.

 

[Tables Force]

HMRC needs to know more than your trading name. They also need to know what you actually do regarding your business activities when you are a sole trader.

And how/where exactly are we supposed to tell them this?

the only requirement is when starting a new sole-trade, not everytime you add/stop a specific service.

 

[Gecko001]

I advised the OP that he "might" need to tell HMRC of the change in business activity. It will do no harm as far as I can see. You can write to them at:

H.M. Revenue and Customs
Self Assessment
BX9 1AS,

Or by telephone our Self Assessment helpline, though it might be quicker to just write.

 

[Ozzy]

Or by telephone our Self Assessment helpline, though it might be quicker to just write.

How unbelievably amazing is it that it is quicker to send a letter in the post to HMRC than it is to call them on the phone, and from personal experience I know this is true and not sarcasm.