Best business structure for internal trading software company?

[LeeT]

Hi folks,

I’m looking for some advice before I take a business idea any further, mainly because I want to make sure I understand the legal and practical side of it properly first.

I’ve built some internal trading software within my company and I currently use it myself. I also have a website where I show the tracked performance and explain what the business is doing, but I’m not selling the software, selling signals, or asking anyone to invest. At this stage I’m just trying to work out what the correct business route would be if I decided to develop it further.

In an ideal world, I’d like to understand what the cleanest structure would be. For example, whether this is something that should just remain a software/consultancy business, or whether there is a lawful and sensible way to grow it within a company and potentially raise money through shares later on.

I’m not asking how to market an investment or anything like that. I’m more trying to understand where the line is, legally and practically, between running a company that uses its own trading technology internally and doing something that starts to fall into regulated territory.

So I suppose my questions are:

• what type of business structure sounds most appropriate for something like this?
• if I ever wanted to raise money in the future, is a normal private company share structure the obvious route?
• at what point do things start becoming legally awkward if the company is trading internally and building treasury value?
• would I be better speaking to an accountant first, a solicitor, or both?

I’m just trying to get my head around what is realistic, what is allowed, and what the sensible route would be before I spend more time building around the wrong structure.

Thanks for reading, and any advice is appreciated.

 

[Ozzy]

• would I be better speaking to an accountant first, a solicitor, or both?

If you have clear aspirations of growth and profit, then yes this is good.
At the moment, based on what you have written, it seems you're not quite sure yet so doing what will effectively be a restructure would be costly and potentially unnecessary. Decide on your business plan, where you want to go, then go out and get the tax and legal advice you need.

 

[Mark T Jones]

This is probably a good time to consider ownership of IP (in your own name gives most flexibility). Beyond that, as @Ozzy has suggested its best to actually get things rolling and a clear plan before you dive into structures

 

[Gecko001]

It seems to me that the best way is to start a completely separate company for the software and then invoice your company for the software at the same price that you are selling it to others.

What you propose to do, is not uncommon. e.g. Arup (engineers and architects) started to sell their own in-house software to others years, if not decades, ago with Oasys.

 

[jack52]

between running a company that uses its own trading technology internally and doing something that starts to fall into regulated territory.

The UK regulatory perimeter is extremely confusing and can be very unclear.

You will need proper legal advice from someone who really understands what you are doing. Unfortuately innovation in UK financial services is very expensive from a legal / compliance point of view.

What exactly does the software do?

 

[fisicx]

Start simple. Set up a website as a sole trader to market the software. Compliance may not even be necessary. I sell financial plugins across the world - it's up to the client to ensure they comply with local laws not me.

If you get traction and it starts to earn a few bob you can then decide if you want to incorporate.