- Original Poster
- #1
Morning All,
Firstly, thanks for the taking the time to read! Appreciate that there is a lot of advice on the forum and a lot of these topics go through cycles - but am just after some opinions / guidance on something.
I am currently employed in a relatively niche sector and have been for 20 years for various companies. Over the last 2-3 years I have been thinking more and more that with the experience I have I could build a better product that targets a specific problem within that sector - all the companies kind of solve it, but I think it can be done better. So I have spent some time just assessing whether or not to ultimately strike out on my own. BUT I am a little unsure about how best to structure things for myself as the reality is that I need to keep working whilst I build my own product, I am not sitting on savings and getting a business loan at this point would be based on my own credit rating which isn't great....so I am looking at massively scrimping / saving / bootstrapping the whole thing - which I am fine with. It is a software product, so I can benefit from things like Microsoft Founders Hub that offers some good support, particularly if I am registered as a Ltd company - lots of freebies to help get the ball rolling. And here is the problem. I need to continue working, I am entering the same market as my employer and have an unusual name which means if I register as a Ltd company the option of a 'stealth' startup really isn't open to me. My objection here is not about a public company register as such, I don't have an issue with HMRC knowing I own the company or that people can look up the company and find me --- it is more that I have kept a very low digital footprint for 20 years intentionally and then suddenly I will start appearing in Google searches under my name, very high up because of my low footprint.'
So I was thinking that I could kick things off just as a sole trader, operate as 'Me trading as Some Shiny Business Name' and allow myself to keep things under wraps which seems completely sensible. But then I realised that I may not be eligable to for some of the support (like Microsoft Founders Hub) so getting the business off the ground becomes more expensive. But the other things that 'worries' me about a sole trader is just how I handle building up money in the business and how professional I look. So would it be possible to confirm my understanding of the following:
1. When sending proof of purchase receipts for products I would need to include the full 'Me trading as Some Shiny Business Name' on those documents? I worry this doesn't look professional but when I search up I get a lot of stuff about displaying this information about invoices specifically but assume the same would apply to proof of purchase receipts? Or would it be sufficient to us 'Some Shiny Business Name' on what gets mailed out but on my website the fully qualified 'Me trading as Some Shiny Business Name' within the site details / footer / privacy policy / T&Cs?
2. I am a higher rate tax payer so my belief is that any profit that the business makes as a sole trader would be subjected to tax of 40% as it would just be treated as income. I have not object to paying taxes at all and am happy in my currently role paying the 40% -- I earn more, I should pay more. BUT, what I would want to do is try to build up a pot of money to make the business self sufficient and enough to cover at least 12 months of expenses before I quit my job. But this becomes much harder to do outside a limited company I think because where there if I made £10k profit I would be taxed at 19% corporation tax but could leave the remaining £8100 in the business, as a sole trader I would only be left with £6k because of the income tax. Is there any way, other than spending the money and trying to sensibly budget and plan, to allow me to build up finances to make things self sufficient?
I feel like I am a little stuck between making it public that I am undertaking this work from the outset and getting the benefits of a Ltd company, giving me a chance to grow it but risk losing my job. Or having to take a potentially much slower road to self sustaining the business by losing more of the money earned because it is viewed as income and potentially finding it harder to grow the business because of any prejudice against Sole Trader vs Ltd Company about looking professional (particularly in my sector).
*Appreciate people will argue that within my contract there will be some sort of non-compete clause. However, I would not be going after my companies clients directly (and certainly not whilst employed) but I have also sought legal advice and simply put I cannot be denied a living and as my experience and knowledge spans 20 years in this niche space it is reasonable that any employment I gain will be with a competitor (whether working for myself or others). Whilst the company can object, they will struggle to forcibly impose my right to work and earn a living.
Firstly, thanks for the taking the time to read! Appreciate that there is a lot of advice on the forum and a lot of these topics go through cycles - but am just after some opinions / guidance on something.
I am currently employed in a relatively niche sector and have been for 20 years for various companies. Over the last 2-3 years I have been thinking more and more that with the experience I have I could build a better product that targets a specific problem within that sector - all the companies kind of solve it, but I think it can be done better. So I have spent some time just assessing whether or not to ultimately strike out on my own. BUT I am a little unsure about how best to structure things for myself as the reality is that I need to keep working whilst I build my own product, I am not sitting on savings and getting a business loan at this point would be based on my own credit rating which isn't great....so I am looking at massively scrimping / saving / bootstrapping the whole thing - which I am fine with. It is a software product, so I can benefit from things like Microsoft Founders Hub that offers some good support, particularly if I am registered as a Ltd company - lots of freebies to help get the ball rolling. And here is the problem. I need to continue working, I am entering the same market as my employer and have an unusual name which means if I register as a Ltd company the option of a 'stealth' startup really isn't open to me. My objection here is not about a public company register as such, I don't have an issue with HMRC knowing I own the company or that people can look up the company and find me --- it is more that I have kept a very low digital footprint for 20 years intentionally and then suddenly I will start appearing in Google searches under my name, very high up because of my low footprint.'
So I was thinking that I could kick things off just as a sole trader, operate as 'Me trading as Some Shiny Business Name' and allow myself to keep things under wraps which seems completely sensible. But then I realised that I may not be eligable to for some of the support (like Microsoft Founders Hub) so getting the business off the ground becomes more expensive. But the other things that 'worries' me about a sole trader is just how I handle building up money in the business and how professional I look. So would it be possible to confirm my understanding of the following:
1. When sending proof of purchase receipts for products I would need to include the full 'Me trading as Some Shiny Business Name' on those documents? I worry this doesn't look professional but when I search up I get a lot of stuff about displaying this information about invoices specifically but assume the same would apply to proof of purchase receipts? Or would it be sufficient to us 'Some Shiny Business Name' on what gets mailed out but on my website the fully qualified 'Me trading as Some Shiny Business Name' within the site details / footer / privacy policy / T&Cs?
2. I am a higher rate tax payer so my belief is that any profit that the business makes as a sole trader would be subjected to tax of 40% as it would just be treated as income. I have not object to paying taxes at all and am happy in my currently role paying the 40% -- I earn more, I should pay more. BUT, what I would want to do is try to build up a pot of money to make the business self sufficient and enough to cover at least 12 months of expenses before I quit my job. But this becomes much harder to do outside a limited company I think because where there if I made £10k profit I would be taxed at 19% corporation tax but could leave the remaining £8100 in the business, as a sole trader I would only be left with £6k because of the income tax. Is there any way, other than spending the money and trying to sensibly budget and plan, to allow me to build up finances to make things self sufficient?
I feel like I am a little stuck between making it public that I am undertaking this work from the outset and getting the benefits of a Ltd company, giving me a chance to grow it but risk losing my job. Or having to take a potentially much slower road to self sustaining the business by losing more of the money earned because it is viewed as income and potentially finding it harder to grow the business because of any prejudice against Sole Trader vs Ltd Company about looking professional (particularly in my sector).
*Appreciate people will argue that within my contract there will be some sort of non-compete clause. However, I would not be going after my companies clients directly (and certainly not whilst employed) but I have also sought legal advice and simply put I cannot be denied a living and as my experience and knowledge spans 20 years in this niche space it is reasonable that any employment I gain will be with a competitor (whether working for myself or others). Whilst the company can object, they will struggle to forcibly impose my right to work and earn a living.
