How to register.. Advice plz!

[tee]

Hi guys, sought advice from a few individuals all with differing views, so thought I'd ask you guys. I'm in the import business, selling predominantly online. Business partner and myself. 2 things: firstly a couple of accountants have suggested becoming limited, are there any real advantages to this? Secondly is it worth becoming vat registered seeing as vat stings us very hard on each shipment?

Electronics and household is what I'm doing, anticipating turnover to be around the £30k mark in first year. Thanks in advance

 

[Gary Hornby]

Hi,

The major benefit of trading under a limited company is that should the company fold you are generally not personally responsibly for its debts. As a sole trader or a partnership your personal assets (including your house) could be used to pay business debts should the business run into trouble. There are also tax advantages to limited company status but this depends on business profitability. The downside is that compliance with the law tends to be more time consuming, more complex, and therefore more expensive.

If you are selling to consumers (rather than to VAT registered businesses), the general rule is that you register for VAT only when you have to otherwise your customers have to pay VAT on their purchases from you, or your margins suffer if you hold your prices, or a combination of the two.

It's a good idea to take advice from your accountant as it's quite complex.

Regards,
Gary

 

[Merlion ABS]

Ok, yes there are advantages in forming a Ltd company as Gary says. Mainly from a personal tax point of view via the small salary and Dividend route. You accountant will explain this, but you can save tax personally therefore increasing the cash you take home.

From a VAT perspective, I wouldn't register until you absolutely need too. As Gary says, it will only either increase your prices or affect your margin & profits.

The admin costs of having a ltd Co. greatly increase. Basic Company accounts will set you back £1k+ plus then you have the admin of annual returns (not a big issue) and other forms of compliance such as AGM's, Minutes etc.. all admin work and form filling which you can pay and accountant to do for you. Its not as bad as it sounds..honest!

However, if you can work out the additional costs of having a Ltd co against the tax saved and your quids in, then go for it.

Another Plus side of having a Ltd co is that it gives your business a little more trust with your customers and a better image to a certain extend. More professional touch? maybe.