New Company Setup - Adivce needed

[JKF]

Hi everyone,

I'm in the process of launching a web based business, the basic principle is many users paying for a service, but money then being distributed out to certain people. As an example, imagine a site selling images, people upload there images and they own those images, if someone pays for it the money will come into my account, the user can then "checkout" and we'll send on any monies they've built up...

I'm a bit new to some of this and would appricate if people could tell me if my thinking below is correct.

1) Setup a LTD company (there are multiple parters in this)
2) Get a Business Bank Account
3) Get a Merchant Bank Account, with Merchant Services (SagePay has been recommended to me, they seem to offer an all in one solution via HBoS for £20pm! with 2.5% charge for Credit Cards) - Is there usually anything further to pay here?
4) Start taking money from people buying on my site, this money is then transfered automatically from my Merchant Account, into my Business Account, usually with 3-5 days?
5) When someone wishes to release any money they have accrued, i would then transfer money from my Business Account to there account, ideally via internet banking.

Does the above sound right and have i missed any important steps or things i need to consider?

Thanks

 

[jim_gold]

There are probably several things a business adviser might point out, but I'll mention one very important item, one that I have seen trip up many start-ups.
Get a lawyer to help you set the company up. No ifs or buts.
The reason is that there are multiple shareholders, and almost as many times as not, there will come a time when someone wants out, or someone wants someone out. The memorandum and articles need to specify how these types of situations will be resolved.

 

[blloyd]

It would definitely be a good idea to get onto your local Business Link who will be able to point you in the right direction on a number of these points

 

[JKF]

Thanks, i will certainly be seeking legal advice with regards the setup of the company, although at this stage its more the online payment side of things i'm needing confirmation of...

 

[bwglaw]

Your post does sound like you will be running an agency of some kind and paying what seems to be 'royalties' in respect of the images uploaded.

It is diffcult to advise without the actual facts and a synopsis of your intended business. Some time needs to be spent with you in order to ascertain the kind of business you intend to operate and structure the company accordingly and in turn put the relevant contracts in place.

 

[JKF]

Its not a royalties bases website, no... That was the best example i could think of as to how the money side is setup, ie lots of people paying into my account, and me making payments out to certain people.

I appricate i've not posted much information on the format, but thats simply to protect the "idea" at this stage.

The biggest question i can't seem to find a definate answer too, is the ones regarding the ecommerce side of things. I'm a web developer by trade so building the site will be the easy part, its administrating the money and moving the money around that i'm slightly confused with.

 

[bwglaw]

...its administrating the money and moving the money around that i'm slightly confused with.

That will depend on what contractual relationships you create, unless you are referring to a more automated system of allocating funds to specific accounts?

 

[PayPoint net]

The terms of your internet merchant account – including settlement terms – are going to depend on your business model. For example, if you’re taking payments for future services (e.g. any kind of subscription or credits-based service) then the funds won’t be settled into your account until the terms of service are complete; this is to mitigate risk of chargeback.

In terms of fees, you will be charged a monthly fee for your Merchant ID. You will also pay an acquiring fee - which is a percentage of the transaction value - and a flat authorisation fee per transaction. Additional fees may be levied for refunds and charge backs. The rates of all fees may vary between credit and debit cards.

You might find this article useful: questions you should ask when getting your internet merchant account

On our website, we also explain what happens after you submit your application for our internet merchant account and payment gateway package which isn’t dissimilar to most merchant account providers.

If you like, we’ll be happy to quote on an internet merchant account and payment gateway for your business – just PM me over your contact details.

Any questions – just shout!

Rory

 

[Amy_Sagepay]

Hi JKF,

Referring back to your first post, we can offer a combined service of both payment gateway and merchant account through HBoS for £20 per month. There's no set up costs and as part of this package we also provide a number of add ons such as free fraud screening tools, 3D Secure set up and recurring and deferred payments. It can be quite a confusing time when setting up your business but the Sage Pay website has plenty of information to help you get started.

We also have 24/7 email and telephone support so if you get stuck or need any help, we're here for you around the clock!

If you have any questions, please get in touch and I'll be happy to help!

Amy

 

[astutiumRob]

5) When someone wishes to release any money they have accrued, i would then transfer money from my Business Account to there account, ideally via internet banking.

You'll need your solictor to help you get advice on e-money and banking laws as it sounds like you may be (effectively) taking/holding deposits or acting as a "clearer" for the money - this will also impact on your ability to get a Merchant Account under money-laundering rules ...