Drylining business start up

[MG86]

Hi there
I've just returned after a very long absense from UKBF!
A friend was recently made redundant when the plastering firm he was working for went under. He wants me to set up a company for him. I am a qualified book-keeper & I do general book-keeping for various tradespeople, and I have set up a few companies before, but this one is a little different. He is very skilled at his job, he wants to specifically set up a dry-lining company, but he has a partner who he wants to do everything else business related apart from the actual jobs (He has a high level business qualification & knowledge of the trade so is more than capable). All I will be doing is giving general tax/accounting/buying advice when needed & keeping the books up to date. After a discussion yesterday I am 75% sure that the best way to set them up will be as a partnership. But they are adamant that they want to set up a Ltd company for the sake of looking more professional & established. Would any of you wonderful people have a view on this? I know there is already a 'Sole Trader vs Ltd co' thread but I was hoping to get a more direct response here.
One of the partners would want to be paid a daily/hourly rate, and the other would want to draw profit at times, so they have decided between themselves that one would be the company director & the tradesman himself would just be an employee, I'm a bit stumped so any help to persuade them would be very much appreciated.
Thanks in advance.

 

[maxine]

I would recommend that they get some proper advice .. no disrespect to your experience and skills but they ought to get some advice that covers: Tax, employment responsibilities, responsibilities of directors, what happens when they fall out, what happens when one of them wants to move on, how does the employee partner protect themselves from being booted out, how will they take dividends, what are expenses that will be taken before dividends.

Lots of stuff.

Do they qualify for Business Link Vouchers? (think they have to either be ethnic minority, over 50, made redundant, criminally vulnerable etc to qualify now).

They could take a qualified accountant up on a free initial consultation and perhaps you and this other accountant could work together to give your client some good advice?

 

[Michael Gerard]

Because of the risks involved in being a contractor within the building industry, my advice is to set up a limited company from the off.

A limited company would also sort out the percentage ownership, whilst dividends could be paid out from the profits and, a wage can also be drawn if working in the company (ie being the tradesman).

I have many clients who are sub-contractors (and a few who are plastering sub-contractors), and from my experience and knowledge, please ensure that you dot the i's and cross the T's when it comes to the paperwork, including providing written quotations, seting out terms, recording variations, etc. It can be lucrative, but it is also an unforgiven industry for the unprepared.