19 year old, need help please.

[James Parnell]

Hello Everyone and sorry about this,

I am hoping this will be the last time I request for help because I hate feeling like a burden to anyone but I'm in a horrible place and have no idea what to do.

So I started a business venture with someone in my community that has various businesses and was certain that my idea would be a success. He explained that he would set up the the company, business bank account and not to worry about anything other than running the website, fulfilling orders, marketing, customer emails etc the day to day running of the business. He explained that he voluntarily registered for VAT as we would be better off having it as we will hit the 85k mark invery little time. He said that if I take his guidance that the business would be making hundreds of thousands by next year so he didn't need to invest financially. I already had the stock before the business was set up so it was a matter of selling it then re-investing it later on.

After about 2 months he decided to resign as director of the business and cease his shares, leaving me at the helm of everything. He just said that it wasn't working out for him because he is too busy with other projects. I have tried to get his help with sorting this out but he keeps saying 'I'm a smart guy and not to worry'. Well, I am worrying and not as smart as he thinks and I am extremely overwhelmed and haven't been able to sleep, my parents have started to notice that I'm not the same as I was a few weeks ago - but I haven't told them the situation.

I want to 'strike off' dissolve the company, register the VAT and pay any tax or corp tax owed and basically get out. The company has stopped trading as of 3 days ago. I have read everything on this forum and spoken to HMRC through their Helpline but would appreciate some real, advise relating to my situation.

• The current balance total is £1,864 in the business bank account
• Expenses have been:
• £3,700 on agency marketing help (incl. £740 VAT Charge)
  
• £1,721 total shipping charges (£1,200 UK AND EU) (£521 Outside of EU)
  
• £132 on email services
• £223.95 for facebook costs
  
• £520 - transferred to myself
• £160 - for the website costs
  
• £1000 - for social media influencer costs

• Sales total:
• £9,321.33

I want to add that the company has 0 assests, nothing has been bought by the company or is owned by the company.

As I understand there is an accountant that works for my ex business partner and he is still connected to the ltd company, I phoned him on Friday and he said that there is an outstanding bill of £95 but to dissolve the company wouldn't cost more than a couple of hundred pounds.

How do I prepare the documents for the accountant? I've downloaded the bank statements, orders, paypal Statements, marketing invoices, everything that the business has paid or earned etc

How do I word what I want to happen to the accountant exactly? I don't want to get a bill or HMRC contact me a year from now saying that I owe x amount for something. I want this nightmare to be over, I want to pay what ever taxes I owe, corp taxes, vat etc strike off the company and bury it.

Will the £1,864 in the bank account be enough to settle everything?

Thank you to anyone who takes the time to read and reply, it means alot.

 

[Scalloway]

How do I prepare the documents for the accountant? I've downloaded the bank statements, orders, paypal Statements, marketing invoices, everything that the business has paid or earned etc

You could use these to prepare a simple spreadsheet which lists all income and expenditure from the bank account. Such as this.

https://www.beginner-bookkeeping.com/single-entry-bookkeeping.html

Ask the accountant if he can take the above and prepare a VAT return, accounts for Companies House and a corporation tax return for HMRC.

 

[Newchodge]

I understand your feeling of panic and wanting to get out, but you may still have a viable business. are you in a panic because you have been left on your own? Is the business making sales and profit, or are you not sure about that?

Can you take a deep breath, step back and see what actually needs sorting out? Is it the Vat return and accounts that you are unsure about?

 

[The Byre]

What exactly is (or was) the core business? What are you selling?

There is a great deal of totally unnecessary fat in your expenses for a start-up, like social media influencer and rubbish like that. Social media is something you should be doing for yourself - that's the whole point of social media!!! People want to connect with the business owner, not with some idiot 'influencer'.

I know a guy who sells software and he sells the third most popular software of its type on Planet Earth. He has millions of customers, has eight-figure turnover and he spends NOTHING on marketing. It's all done with social media, such as a user forum, YT videos and stuff like that. No 'influencer' and no Google ads or any other rubbish ads and PPC.

 

[Chris Ashdown]

First as you have stopped trading and assuming you are a limited company in the UK, Dont make any payments to suppliers as by law you must treat all debters on a equal basis and this includes the accountant

Tlak to your friend and tell him you need him to close down the busines as he obviously has the money and contacts to do this without much effort on his behalf, if he has really left you fully in the on your own obviously that line of action is not possible but worth a try if only as his name is on the bank account

The IP's (Insolvency Practitioners) on this forum will give you great advice and often your family if you tell them will help you through things after the initial shock wears off so better to tell them than hold things to yourself.

Good luck for the future

 

[John44]

I'd shove all the accounting stuff to one side, that can be fixed by an accountant in a month and think about whether you have a viable business? It looks like it so concentrate on that and let an accountant worry about the legal side of stuff

 

[SERC1204]

Hi

Does the business owe any money/have outstanding creditors? You listed various expenses, have these been paid?

Following on from the advice above, if it is the paperwork/accounting/administration that’s worrying you, get it organised per Scalloway’s advice in the first instance. Once you’ve done this, the accountant can advise on any VAT and or corporation tax that maybe due and any other company administration. This will of course cost, but be honest with the accountant on what money you have (in the bank, assuming you don’t owe anything), they can at least advise on the situation.

 

[dan19900]

An accountant would sort that out in about an hour, looks like you'll owe less than 1k in VAT so really nothing to be getting stressed about.

 

[James Parnell]

Thank you for all your replies, I'll try and answer the questions that you had.

You could use these to prepare a simple spreadsheet which lists all income and expenditure from the bank account. Such as this.

Ask the accountant if he can take the above and prepare a VAT return, accounts for Companies House and a corporation tax return for HMRC.

I'll be sure to do this, I have time so anything additional I can do will be a great help. Thank you!

I understand your feeling of panic and wanting to get out, but you may still have a viable business. are you in a panic because you have been left on your own? Is the business making sales and profit, or are you not sure about that?

Can you take a deep breath, step back and see what actually needs sorting out? Is it the Vat return and accounts that you are unsure about?

Yes, I know I need to stay calm - its not something I've been good at but reading up on everything I think a decent accountant will be able to sort this out.

I will continue the business but as a sole trader, I have no interest in how it looks to have a ltd company, i just want to keep everything simple and manageable. Thank you.

What exactly is (or was) the core business? What are you selling?

There is a great deal of totally unnecessary fat in your expenses for a start-up, like social media influencer and rubbish like that. Social media is something you should be doing for yourself - that's the whole point of social media!!! People want to connect with the business owner, not with some idiot 'influencer'.

I know a guy who sells software and he sells the third most popular software of its type on Planet Earth. He has millions of customers, has eight-figure turnover and he spends NOTHING on marketing. It's all done with social media, such as a user forum, YT videos and stuff like that. No 'influencer' and no Google ads or any other rubbish ads and PPC.

We sell clothing, loads of different types mainly active and gym wear for men.

All of the expenditure was down for my ex biz partner, I see the way you do but he wanted a concrete plan so we paid an agency to help with that.

Thank you!

First as you have stopped trading and assuming you are a limited company in the UK, Dont make any payments to suppliers as by law you must treat all debters on a equal basis and this includes the accountant

Tlak to your friend and tell him you need him to close down the busines as he obviously has the money and contacts to do this without much effort on his behalf, if he has really left you fully in the on your own obviously that line of action is not possible but worth a try if only as his name is on the bank account

The IP's (Insolvency Practitioners) on this forum will give you great advice and often your family if you tell them will help you through things after the initial shock wears off so better to tell them than hold things to yourself.

Good luck for the future

Yes, I have stopped trading through the ltd company nothing is coming out of the bank account other than accountant expenses and any other expenses that are needed to wind up the company.

My parent's wouldn't be able to help with this unfortunately, they are in debt themselves and it would worry them.

Thank you.

I'd shove all the accounting stuff to one side, that can be fixed by an accountant in a month and think about whether you have a viable business? It looks like it so concentrate on that and let an accountant worry about the legal side of stuff

I know the business is viable, that's why I will go ahead and trade through being a sole trader rather than a LTD company.

The accountancy thing is my main concern because I don't want to get screwed over, how much do you think an accountant should charge for winding up a ltd company and de-reg vat thats been running for 3 months?

Thank you.

Hi

Does the business owe any money/have outstanding creditors? You listed various expenses, have these been paid?

Following on from the advice above, if it is the paperwork/accounting/administration that’s worrying you, get it organised per Scalloway’s advice in the first instance. Once you’ve done this, the accountant can advise on any VAT and or corporation tax that maybe due and any other company administration. This will of course cost, but be honest with the accountant on what money you have (in the bank, assuming you don’t owe anything), they can at least advise on the situation.

Everything has been paid, there are no outstanding debts or expenses other than the accountant fees and the tax, vat owed.

Yes, Scalloway's advise is the first thing I'll be doing as that is my main concern.

Thank you.

An accountant would sort that out in about an hour, looks like you'll owe less than 1k in VAT so really nothing to be getting stressed about.

Thanks, I think everything will be okay but it's the fear of the unknown or this coming back to haunt me if not done properly. I know once I get a quote from the accountant, I'll be okay - just don't know how much they are going to charge and don't want to be ripped off - the company has only been running for 3 months.

Thank you

 

[Noah]

As an aside, your former business partner sounds like a complete arse. Save enough money to buy him a drink next time you see him, and pour it over his head.

 

[UKSBD]

He explained that he would set up the company, business bank account and not to worry about anything other than running the website, fulfilling orders, marketing, customer emails etc the day to day running of the business.

Do you know exactly what he set up?

Is he a director and shareholder
Are you sure that you are even a director and share holder

What is the name of the company?

 

[James Parnell]

As an aside, your former business partner sounds like a complete arse. Save enough money to buy him a drink next time you see him, and pour it over his head.

hahaha! I needed a laugh, I've been depressed for weeks trying to deal with this.

 

[James Parnell]

Do you know exactly what he set up?

Is he a director and shareholder
Are you sure that you are even a director and share holder

What is the name of the company?

I don't want to disclose the company but yes I am the only director and share holder, he has resigned as director and his shares have been ceased.

 

[UKSBD]

Don't know all the facts but as you have been trading for 3 months already and will need to do accounts, would you not be better carrying on as Ltd for at least another few months?

This will give you time to learn how a Ltd company works and even if after a few months you decide you don't want to carry on as Ltd you will be in a far better position to close it than you are now.

Basically, don't panic and do something quick now when you don't need to.

This is assuming you have complete control over bank, ex partner is completely out of everthing, and didn't do anything while he was involved that he shouldn't have.

Regarding sales
If you want to work out the VAT on them sign up for a free trial of an accounts software (Kashflow will be ideal for this), make sure you tick the box to say you are VAT registered, re-create all your invoices but put the amount you sold them for in the total +VAT section rather than the item sale section, this will then do everyting for you.

If you have vat receipts for all purchase too, add those and Kashflow will do the full VAT calculation for you ready to submit

You may find that VAT actually owe you based on the figures you have provided.

 

[Gordon - Commercial Finance]

I don't want to disclose the company but yes I am the only director and share holder, he has resigned as director and his shares have been ceased.

I would double check on companies house that you are a director and listed as a person of significant control. Just did a quick search to see if I could find you and unless you're using a fake name for this site, or you're not really 19, then I don't see you listed as a director for anything.

 

[The Byre]

I would double check on companies house that you are a director and listed as a person of significant control. Just did a quick search to see if I could find you and unless you're using a fake name for this site, or you're not really 19, then I don't see you listed as a director for anything.

This!

There are 34 or 31 (depending on which list one looks at) Parnells who are listed as being company directors and have 'James' as one of their first names and you do not seem to be one of them.

Check your company here - https://beta.companieshouse.gov.uk/search/companies

 

[James Parnell]

I would double check on companies house that you are a director and listed as a person of significant control. Just did a quick search to see if I could find you and unless you're using a fake name for this site, or you're not really 19, then I don't see you listed as a director for anything.

Hello, the name that I have put on my profile is not exactly correct because I wish to remain anonymous but I can assure you that I am the director and shareholder. I appreciate you looking out for me however!

The situation I find myself in and everything else is true though.

 

[James Parnell]

Don't know all the facts but as you have been trading for 3 months already and will need to do accounts, would you not be better carrying on as Ltd for at least another few months?

This will give you time to learn how a Ltd company works and even if after a few months you decide you don't want to carry on as Ltd you will be in a far better position to close it than you are now.

Basically, don't panic and do something quick now when you don't need to.

This is assuming you have complete control over bank, ex partner is completely out of everthing, and didn't do anything while he was involved that he shouldn't have.

Regarding sales
If you want to work out the VAT on them sign up for a free trial of an accounts software (Kashflow will be ideal for this), make sure you tick the box to say you are VAT registered, re-create all your invoices but put the amount you sold them for in the total +VAT section rather than the item sale section, this will then do everyting for you.

If you have vat receipts for all purchase too, add those and Kashflow will do the full VAT calculation for you ready to submit

You may find that VAT actually owe you based on the figures you have provided.

I am 100% sure that I want to become a sole trader, the limited company route isn't something that I wish to continue with. If that means that I come out of this with 0 profit made due to closing the business its not a problem, I've learnt a hell of a lot and I'll just move forward.

I do not have complete control over the bank, ex partner still has that connected to his accounts, I only have access to seeing what is in the bank but cannot make any transactions - its a mess. I have to ask him to make a transaction if I need one to be made but I'm sure he won't mind doing that.

There was only one purchase with VAT and that was £740 - the VAT owed is more but that's a small hit and nothing to be too concerned with.

I just want out of everything that me and my ex biz partner set up, in the future if I wish to open another ltd company then I will but I need to wipe the slate clean.

 

[Lisa Thomas]

Bear in mind as a sole trader if it does wrong you are personally liable for all debts of the business and can end up facing personal insolvency issues or having to go through a personal insolvency procedure.

The Limited Co offers you some protection from being held personally liable.

If you are intending on continuing by Phoenixing the business under the entity of a sole trader without really changing anything it would seem sensible to seriously consider continuing trading under the umbrella of the Ltd Co.

 

[James Parnell]

Bear in mind as a sole trader if it does wrong you are personally liable for all debts of the business and can end up facing personal insolvency issues or having to go through a personal insolvency procedure.

The Limited Co offers you some protection from being held personally liable.

If you are intending on continuing by Phoenixing the business under the entity of a sole trader without really changing anything it would seem sensible to seriously consider continuing trading under the umbrella of the Ltd Co.

There wont be any debts as the business hasn't got any overheads and the company will only use money generated by the business. I do understand that LTD companies can be better in situations that you could be sued or have large out goings.

 

[Chris Ashdown]

As you cannot control the bank account ,you cannot realy be in contol of the account and run the company, I would ask your ex partner if he would wind up the company for you even if it means making him a director for the purpose

 

[UKSBD]

There was only one purchase with VAT and that was £740 - the VAT owed is more but that's a small hit and nothing to be too concerned with.

What about the stock you bought, your PC, your office equipment, broadband fees, set up costs, acountants fees, etc, etc, etc. was there no VAT on any of those?

All the VAT on any expenses can be taken off the VAT of the sales

 

[James Parnell]

What about the stock you bought, your PC, your office equipment, broadband fees, set up costs, acountants fees, etc, etc, etc. was there no VAT on any of those?

All the VAT on any expenses can be taken off the VAT of the sales

Stock wasn't purchased by the company, it was something that I already had, no equipment was purchased either.

The accountancy fees will most likely have VAT so that will be a deductible expense!