A few brief questions regarding starting up a limited company

[JustBrowsing]

Hello ladies and gents,

I had a quick gander round the forums in the hopes of finding some answers to some questions that have been playing on my mind for some time now; hopefully you lovely bunch can help steer me in the right direction and help me better understand some of the finer details.

I'm currently right on the brink of creating my first limited company - I have been for about a month now but learning the ins-and-outs has, sadly, slowed me down quite a considerable amount.

I will be looking to sell digital products, if that makes any difference at all. I will be the only managing director and will not have a company secretary, nor employees.

1. Do I even have to register a limited company in order to sell digital products? I'm not entirely sure my business will be a success at all. When would registering a limited be necessary? Is there a certain profit quota that, once met, means you are hereby required to class yourself as a business? I do hope I worded all this right!

2. I have several websites which bring in some considerable pocket money, shall we say, from PayPal donations and member subscriptions. Would there be any benefits to somehow incorporating this scheme into my limited company? I can't imagine there being any but I thought I'd best ask while I'm here!

3. I'm afraid I have no prior knowledge of book-keeping or accounting. If I were to assume that I didn't make an awful lot of money - certainly not enough to afford a book-keeper - would it be straight forward enough to manage my own books? I realise this is a very broad question; I would just like to know how I would go about learning what would be required of me should I attempt to keep on top of my own book-keeping.

4. As a continuation of the second question that I asked above: is there any way I could make any of my other "fun" websites a part of my, well, "brand". I would love to be able to slap a little "xx.com is a property of Joe Blogs, Ltd." or something along those lines; sort of like a trademark of sorts, I suppose. I do hope I worded this one clearly, too!

5. I notice several company formation websites allow for you to order a number of "Memorandum and Articles"; why would I need to order more than one? I understand what they are for, I believe, but I can only assume that more than one would be required if I were to have directorial partners, is this accurate? Would I ever need to send them off - say in order to create a company bank account?

Actually, that's all I can think of for the time being.

I thank you for reading and I look forward to reading any and all responses. Cheers!

 

[Williams lester]

1. Not sure what you mean - but if you are referring to Corporation Tax, then yes, you will be registered (and have to pay it)!

2. Maybe, you need to really speak to your accountant on this, lets hope you are registered for tax purposes for these website businesses.

3. Judging from your post, I would say you had nil chance of correctly completing abbreviated accounts, full accounts, coprporation tax return, tax computation. So get an accountant now, as the fines for missing any of the filing deadlines is severe.

4. Yes. Speak to your accountant.

5. Some banks request them, some do not. I would advise getting an accountant to complete the formation rather than using a standard formation website, as they will be able to advise the correct setup in relation to your personal circumstances. Also some accountants offer free formations to their clients (we certainly do).

 

[JustBrowsing]

Dave,

Thank you for your response. I just managed to quickly catch a glimpse of your reply before logging off for the night, but I would very much like to return with some follow-up questions tomorrow. The idea of almost certainly having to have to employ an accountant has certainly thrown me for a loop, for a start!

Just a quick one before I sign off: What kind of fees would I be looking at for the average accountant to balance the books of a small - emphasise: very small - business? Who knows, perhaps my venture will explode and make me a millionaire (*fingers crossed*), but for the time-being, any chance you could enlighten me on what sort of pricing I would be looking at to employ an accountant? I realise there are countless variables to consider, I won't be surprised if you are unable to give me a round-about figure.

Actually, one last one (really must make this the last one otherwise I'll never get up in the morning!): The "branding" question I raised earlier is something I would very much be very eager to take full advantage of: would this only be possible via an accountant? Any chance you could give me a general idea of what sort of hoops I'd need to jump through in order to use my limited company name as, let's say, an "umbrella" brand that legally owns the rights to the content and "brands" of my websites? None of my other websites are ever likely to sell anything - I would just like for them to serve as a network, if you will.

I value all input, if there are any other kind souls whom might wish to chime in then please do so - I am making sure to take all of this onboard.

Thanks again - you will hear from me again tomorrow.

 

[CSBob]

I've been a sole trader, partner and director over the years so while I'm not an accountant, my opinion from what you've said so far is that you probably don't need the added complexity of going the Limited Company route.

Don't, for instance, choose that route simply because it sounds "kewl" to call yourself a Director... make sure it's for all the right business reasons, and for a final opinion on that you definitely need to go see a local accountant and talk things through with him first, in detail. IMHO only a complete idiot starts up in business without first seeking proper, professional advice. Starting up correctly gives you the best possible chance of success - it's as simple as that.

All that said, your description of the planned business type / size / chance of success, etc. suggests to me that you probably want to try this just as a Sole Trader to begin with, which keeps things (finances, drawings, regulations, insurance, etc) as simple as possible. You can always "convert" it to a Ltd company later, with relative ease, but going from a Limited Company to a Sole Trader would be a nightmare in comparison. And if by chance it doesn't work out for you, it's much simpler to shut down & walk away from a business as a Sole Trader, than it is as a Limited company.

As for the accountancy fees, if you keep all your paperwork in good order (lots of advice on the web for basic bookkeeping) then you'll save him time and that will save you money. For a very small business you might be looking at £300-£500 for your annual account - but a good accountant is worth far more than that in sound advice alone.

Think about asking owners of local businesses who they would recommend.

In summary:

1. DO make an appointment to go see an accountant, preferably one recommended by others
2. DON'T set up a Limited Company online without hearing his advice on the subject as regards your particular business proposal / requirements
3. DO write down a list of questions to ask / topics to discuss (saves kicking yourself later and having to phone!)

Best of luck.

 

[Williams lester]

Dave,

Thank you for your response. I just managed to quickly catch a glimpse of your reply before logging off for the night, but I would very much like to return with some follow-up questions tomorrow. The idea of almost certainly having to have to employ an accountant has certainly thrown me for a loop, for a start!

Just a quick one before I sign off: What kind of fees would I be looking at for the average accountant to balance the books of a small - emphasise: very small - business? Who knows, perhaps my venture will explode and make me a millionaire (*fingers crossed*), but for the time-being, any chance you could enlighten me on what sort of pricing I would be looking at to employ an accountant? I realise there are countless variables to consider, I won't be surprised if you are unable to give me a round-about figure.

Actually, one last one (really must make this the last one otherwise I'll never get up in the morning!): The "branding" question I raised earlier is something I would very much be very eager to take full advantage of: would this only be possible via an accountant? Any chance you could give me a general idea of what sort of hoops I'd need to jump through in order to use my limited company name as, let's say, an "umbrella" brand that legally owns the rights to the content and "brands" of my websites? None of my other websites are ever likely to sell anything - I would just like for them to serve as a network, if you will.

I value all input, if there are any other kind souls whom might wish to chime in then please do so - I am making sure to take all of this onboard.

Thanks again - you will hear from me again tomorrow.

To pick up on your point about branding your old websites, whilst you don't need an accountant to do this, there may be some tax advantages to transferring them into the limited company.

Our fees (as with many accountants these days) are visible on our website, but for a small limited company, would be £30+VAT per month. This includes everything you need on a statutory basis plus unlimited advice by phone and e-mail.

If there is anything specific you need to ask and don't want to post on an open forum then feel free to PM or e-mail me directly.

 

[elaine@cheapaccounting]

why not look at the sticky on the accounts forum on sole trader v limited company.

 

[JustBrowsing]

Thanks for the comments so far, folks. I have an appointment to speak with a local accountancy firm tomorrow; I'll be sure to give 'em a good grilling and let you lovely bunc know how I get on.

 

[Crocus]

You could make use of the free appointment offered to start-ups by the Lawyers for your Business scheme offered by the Law Society.

 

[CSBob]

If he can't answer all your questions, doesn't offer any advice or point out things for you to consider / bear in mind - or quotes a much higher fee than David above! - then thank him for his time & walk away.

Once you have a basic understanding of your needs / plans there's absolutely no reason why you shouldn't choose an accountant from among the many smart folk available right here. David's offer is a very good one, for example, and if you use something like accountsportal.com for your bookkeeping then you can also give your internet-savvy accountant direct access to your accounts.