register my business as ...?

[Hans Andrei]

Good afternoon,
I am currently considering setting up a business and I am wondering if the UKBF community can help me decide what sort of business formation I require in my situation.

my main business is going to be an eCommerce website and I will be the middleman between supplier and retailer.

so when a consumer will place an order online, my website (company) will process the payment. Also I will pay the supplier/manufacturer and than share the profit with various retailers.

Hope all of above make sense. Look forward to hearing from some of you.

regards,
Hans

 

[Ozzy]

A few variables, as depends on the products being sold and what liabilities or risks are involved in the products being sold. Because you are taking the payment the consumers contract is with you, so the first point of call and liability for any potential problems lays with you. So if the products carry any risk to health or harm (lawn mowers, hair dryers, medical goods) then a Limited company may be best.
If it's low risk, like computer games or DVD's, and you're likely to make no more than a lifestyle income then a Sole Traders should be fine.

 

[Mr D]

Good afternoon,
I am currently considering setting up a business and I am wondering if the UKBF community can help me decide what sort of business formation I require in my situation.

my main business is going to be an eCommerce website and I will be the middleman between supplier and retailer.

so when a consumer will place an order online, my website (company) will process the payment. Also I will pay the supplier/manufacturer and than share the profit with various retailers.

Hope all of above make sense. Look forward to hearing from some of you.

regards,
Hans

Middleman between supplier and retailer we call wholesaler. Never seen one with just a website, all the ones I use have a physical site too.

Think the smallest one I've been in this decade has been 4,000 square meters.
Some are quite a bit bigger.

However you go on to mention consumer - they tend to be people buying from retailers, not suppliers.

Not sure why you would share profit with various retailers while operating between supplier and retailer.

Perhaps instead position yourself between retailer and consumer as a dropshipper? In which case again you don't share profit with various retailers, you pay them the price they charge you.

 

[Hans Andrei]

Thank you for your quick reply Ozzy.

Sorry, I should have mentioned that I am oscillating between setting up an LTD or LLP and we are going to be VAT registered. If going LLP all other members are going to be other businesses (LTD`s) not individuals.

My understanding so far from the research I`ve done is:
1. if going LLP - the other partner (Business member) will be responsible to pay taxes on his own share of profit (based on the contract between the 2 parties).
(note: there are going to be over 10 members, but on each website transaction will be only 2 parties involved - myself and the retailer).
So, in this case the ecommerce website should be registered under the partnership, and the website takes the payment into the partnership bank account and than will share the profit between the 2 parties based on the partnership agreement (%share).

2. if going only LTD, than whenever I have to share the profit with the other business (the retailer) they will have to invoice my company for his slice of profit based on our agreenment.

Also any ideeas which option will be better from tax point of view?

 

[Hans Andrei]

Middleman between supplier and retailer we call wholesaler. Never seen one with just a website, all the ones I use have a physical site too.

Think the smallest one I've been in this decade has been 4,000 square meters.
Some are quite a bit bigger.

However you go on to mention consumer - they tend to be people buying from retailers, not suppliers.

Not sure why you would share profit with various retailers while operating between supplier and retailer.

Perhaps instead position yourself between retailer and consumer as a dropshipper? In which case again you don't share profit with various retailers, you pay them the price they charge you.

Thank you for your reply Mr. D

In the supply chain, we are positioned as an online retailer between Brick and Mortar Stores and the End Consumer. The eCommerce store will sell goods to the End Consumer. The eCommerce store will attract Local Stores as members in exchange for many benefits. Unfortunately, to build a strong eCommerce website in our days is not cheap, and is very difficult to compete with the bigger boys in the industry.

In other words, I am trying to create a partnership with brick-and-mortar stores but I own the eCommerce platform. I am the one to take payment for the goods sold online but the brick and mortar stores are responsible to receive deliveries from suppliers and ship them locally. This is the reason for sharing the profit on orders received online.

Hope all above make sense. Thanks

 

[Paul Norman]

I am not going to comment on your business model, as you have not asked for that.

Personally, I would set this up as a LTD company, given the choices you mention.

I would make sure that I get a decent shareholders agreement drawn up, and for anyone working within the business (potentially as a director) I would get a robust contract of employment.

Make sure that both deal with really well with what you want to happen the day you all wake up hating the sight of each other.