Have I made a Error by creating a ltd company at this stage?

Discussion in 'General Business Forum' started by Nathanb1994, Sep 10, 2019.

  1. Nathanb1994

    Nathanb1994 UKBF Newcomer Free Member

    3 0
    Hi everyone, very new to all this so going to need to ask for help on something please.

    I have a business I want to start up by myself, it’s involving online retail (printing) and I have set up a private company on companies house.

    have I made a mistake by creating a private ltd company? Should I start as a sole trader ?

    Thanks
     
    Posted: Sep 10, 2019 By: Nathanb1994 Member since: Sep 10, 2019
    #1
  2. gpietersz

    gpietersz UKBF Newcomer Free Member

    22 1
    Unlikely to be a big mistake. May be an unnecessary expense or hassle when it comes to submitting documents every year etc.

    Lots of advantages to being a Ltd company. Not least limited liability.
     
    Posted: Sep 10, 2019 By: gpietersz Member since: Sep 10, 2019
    #2
  3. Scalloway

    Scalloway UKBF Legend Free Member

    15,117 3,208
    You can leave the company dormant for a year or two while you see how it goes as a sole trader.
     
    Posted: Sep 10, 2019 By: Scalloway Member since: Jun 6, 2010
    #3
  4. Nathanb1994

    Nathanb1994 UKBF Newcomer Free Member

    3 0
    Thank you for the response on this - I will take this into consideration.

    Thank you
     
    Posted: Sep 10, 2019 By: Nathanb1994 Member since: Sep 10, 2019
    #4
  5. Nathanb1994

    Nathanb1994 UKBF Newcomer Free Member

    3 0
    Is it a simple process to file as dormant? as this sounds like the best thing to do as I am just starting the business so it’s all very premature at the moment.

    Thank you.
     
    Posted: Sep 10, 2019 By: Nathanb1994 Member since: Sep 10, 2019
    #5
  6. Mike Hayes

    Mike Hayes UKBF Enthusiast Free Member

    1,033 261
    As has been said, there are great advantages to operating as a limited company. Even if it may not be the most tax efficient option during the early stages and has slightly higher admin expenses with the need for an accountant, I would personally still prefer a limited company for the limited liability and separation of concerns from myself as an individual.

    You need to go back to the start and assess which option you think is best for you, as you seem to have skipped this step in opening a company without being sure if this is right for you. There are plenty of discussions on UKBF and articles across the web on the sole trader vs limited company debate.
     
    Posted: Sep 10, 2019 By: Mike Hayes Member since: Jan 7, 2016
    #6
  7. MikeJ

    MikeJ UKBF Big Shot Free Member

    5,657 1,617
    Posted: Sep 10, 2019 By: MikeJ Member since: Jan 15, 2008
    #7
  8. Scalloway

    Scalloway UKBF Legend Free Member

    15,117 3,208
    Posted: Sep 10, 2019 By: Scalloway Member since: Jun 6, 2010
    #8
  9. wevet

    wevet UKBF Enthusiast Free Member

    1,095 213
    Financially,limited liability can be myth:
    Probably the majority of new businesses when raising capital usually require guarantees from the founders. Should this be the case you may have taken on the burden of additional red tape but your exposure to financial liabilities are whatever you have guaranteed.
     
    Posted: Sep 11, 2019 at 10:06 AM By: wevet Member since: Mar 7, 2008
    #9
  10. gpietersz

    gpietersz UKBF Newcomer Free Member

    22 1
    Some businesses do not need guarantees- if the founders have capital or the business does not need much upfront investment.

    it also means you know what you maximum liability is - what is specifically guaranteed. As long as you avoid things like wrongful trading.
     
    Posted: Sep 11, 2019 at 2:37 PM By: gpietersz Member since: Sep 10, 2019
    #10
  11. MyAccountantOnline

    MyAccountantOnline UKBF Legend Full Member

    12,731 2,361
    Hello @Nathanb1994 unfortunately with so little information that's an impossible question to answer.

    For anyone to give you an answer they's need a lot more information, including details of your income and circumstances which you wouldn't want to share on a public forum.

    Sometimes it can be beneficial starting as a sole trader especially if you anticipate making losses. Sometimes its not if for example you have other income.

    Certainly deciding on whether to trade as a sole trader or limited company when you start is a really important decision, and getting it wrong really can be a very costly mistake.

    I really do strongly advise you to get some advice from a good accountant.

    As an accountant who has spent making years looking after new and small businesses I sadly see it so often; people who have understandably tried to save money on accountancy fees when they start up who have not taken proper professional advice, and find what a costly mistake it has been when they do come to me for help 12 months later to complete the first years accounts and tax return.
     
    Posted: Sep 13, 2019 at 12:07 PM By: MyAccountantOnline Member since: Sep 24, 2008
    #11