Can we accept orders through a LTD and invoice the LTD as a sole trader for work completed?

[Coco0k]

Hi,
A friend and I started a business making personalised plates. He makes the plates and I decorate them. We have been splitting sales and looking after our own expenses and filing self assessments etc.
We want to expand and want to form a LTD but we like having our separate setup and the LTD is more for accepting online orders, renting shared space and protecting us legally.
We want to basically invoice the LTD as a sole trader for the work completed and complete our self assessment as usual.

Is this doable?

 

[Newchodge]

No. Not if you are invoicing for work that is done by the ltd company. If you are a window fitter and own a limited company offering house cleaning services, you can invoice your own company for fitting new windows. You cannot invoice them for carrying our house cleaning.

 

[Coco0k]

If a Customer orders a plate via LTD.
The LTD pays Sole Trader 1 to make plate
The LTD pays Sole Trader 2 to decorate the plate
The Ltd company ships the plate to the Customer.
The sole traders would issue a invoice/receipt to LTD
LTD issue receipt / invoice to Customer

This is the jist.

 

[Newchodge]

If a Customer orders a plate via LTD.
The LTD pays Sole Trader 1 to make plate
The LTD pays Sole Trader 2 to decorate the plate
The Ltd company ships the plate to the Customer.
The sole traders would issue a invoice/receipt to LTD
LTD issue receipt / invoice to Customer

This is the jist.

And both the sole traders are company directors of the ltd?

 

[Coco0k]

Both would be shareholders.
Both I guess would be directors. The company has not been formed as yet.

 

[Newchodge]

Would you both be supplying other customers. or just the ltd company?

 

[Coco0k]

Would you both be supplying other customers. or just the ltd company?

At the moment it's just the LTD.

 

[Newchodge]

It may be feasible if each of you has a business supplying clients, and the ltd is one of your clients. I do not believe it can be done if your sole client is your own company.

 

[Newchodge]

In your proposal, who buys the materials? Where do you each do the work? Who pays all the production costs?

 

[Coco0k]

In your proposal, who buys the materials? Where do you each do the work? Who pays all the production costs?

We work from home.
He buys the materials and tools to make the plates etc. I buy the material and tools to decorate the plates. We have all the tools required and they have been purchased already under the sole trader so it's the materials that are purchased when required to complete orders.
So we currently cover our own portion of the production cost.

 

[Newchodge]

We work from home.
He buys the materials and tools to make the plates etc. I buy the material and tools to decorate the plates. We have all the tools required and they have been purchased already under the sole trader so it's the materials that are purchased when required to complete orders.
So we currently cover our own portion of the production cost.

But in your proposal you are going to rent shared space - is that where you will be working? In the future, when the company is set up, will it purchase materials?

 

[Coco0k]

Yes, so a portion of sales would remain in LTD to cover LTD expenses. The unit is to store completed plates to be packaged and posted or collected by customer.
They take up alot of space hence the unit.

 

[Newchodge]

I don't think it is feasible, but you probably need to speak to a commercial solicitor to get a definitive answer. they will need to see exactly what you are proposing to be able to give a view.

 

[Imme]

oh<<

 

[Mr D]

Not seeing how the limited company benefits the people involved.
You know limited companies have different tax rules and reporting rules? More expensive to run?

 

[Coco0k]

Not seeing how the limited company benefits the people involved.
You know limited companies have different tax rules and reporting rules? More expensive to run?

We just want to sell our product via a limited company so we have the legal protection of a limited company.
The additional cost to run a LTD is fine.
I think we've just got used to working this way and it works for us.

 

[Newchodge]

We just want to sell our product via a limited company so we have the legal protection of a limited company.
The additional cost to run a LTD is fine.
I think we've just got used to working this way and it works for us.

The main legal protection of a legal company is the right to close while owing suppliers and the govrnment. What other protection were you thinking of?

 

[Coco0k]

Well in this day where ppl sue for any reason we just want our own personal effects and family to not be impacted. A LTD would provide this. We are not trying to scam anyone or the gov. We just want to use the wesite to sell our products

 

[Mr D]

We just want to sell our product via a limited company so we have the legal protection of a limited company.
The additional cost to run a LTD is fine.
I think we've just got used to working this way and it works for us.

Not sure how having a limited company do the sales protects the sole traders who produce the product.

 

[Mr D]

Well in this day where ppl sue for any reason we just want our own personal effects and family to not be impacted. A LTD would provide this. We are not trying to scam anyone or the gov. We just want to use the wesite to sell our products

If your products cause harm / damage then the producer would be sued.

If I buy a pair of Nike trainers and they fall apart after say 33 seconds on the court and cause a fall its not the retailer that I will blame. Its Nike - the brand owner and provider of the trainers.

 

[paulears]

Would you also not pay tax twice - you would pay tax on the self-employment and the company would pay tax in corporation tax? Surely number plates would never be risky? If somebody pays you fifty quid for the plates and they have the wrong number on them or something, then you give them the fifty quid back? They won't take you to court for silly pocket money? It seems ultra low risk?

 

[Newchodge]

Number plates? I was reading it as ceramics! The risk for number plates is compliance - selling number plates to someone who does not own them. I can't see any risk in ceramics, unless, perhaps, they are using lead paint.

 

[paulears]

Ha! I now understand why the plates would be decorated! No idea why you'd decorate personalised CAR number plates - pretty little vines all the way around? Forgive me for being thick!

 

[NicoJ]

I've briefly read this thread and I would suggest that you look at an LLP. This seems to overcome both of your concerns. You would have limited liability (I. E. A company) but still would both be liable for your own tax affairs.

Apologies if someone already suggested this or its not viable for some reason that I missed.

 

[Coco0k]

I've briefly read this thread and I would suggest that you look at an LLP. This seems to overcome both of your concerns. You would have limited liability (I. E. A company) but still would both be liable for your own tax affairs.

Apologies if someone already suggested this or its not viable for some reason that I missed.

Thank you!

I've just read a bit about the LLP and it sounds perfect! I met with accountants and they never mentioned this type of structure even though it's exactly as I've described

Thank you again!