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Separate Company vs Trading As?

Discussion in 'General Business Forum' started by anonuk, Mar 13, 2019.

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  1. anonuk

    anonuk UKBF Regular Free Member

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    I'll try and keep it short...

    My wife and I are the 2 directors of a ltd company that manufactures a specific type of product. We have been going for 4 years and have an eBay account and Amazon account with decent sales histories and good feedback comments. Our eBay account is currently a Top Rated Seller.

    We have made the decision to start making a new line of products under a new brand, that we would want to also sell on eBay and Amazon also. These are different products from our core business but could be integrated into the business if needed, without too much trouble. We already have accounts through our ltd company with the suppliers we would need to purchase from.

    I could really do with some advice on whether we should keep it all as one company, or would we be better splitting the new products/brand into a separate company?

    My initial thoughts are that it'd be easier to see what sales, etc are coming from the new brand if it's a separate company, and would look more professional to prospective buyers than abc t/a xyz, but it would mean starting from scratch on eBay/Amazon, would mean another set of accountants fees, etc.

    If we did it all as one company, it would mean just one set of accountants fees, we could do everything through our current eBay/Amazon accounts/all of our order management software could be used for the new brand as well....

    Would appreciate any thoughts, and experiences if you've been through something similar please :)
     
    Posted: Mar 13, 2019 By: anonuk Member since: Feb 27, 2014
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  2. ecommerce84

    ecommerce84 UKBF Regular Free Member

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    For me, your penultimate paragraph makes a very good argument for simply launching the new brand under your existing Ltd company. It sounds like a lot less work than starting afresh and I don’t see any real benefit to starting afresh.

    It will be possible to separate sales from the new brand and the existing brand to show you how each is performing.

    And I wouldn’t worry about looking unprofessional as Existing Company Ltd t/a New Brand as most consumers simply wont notice and those that do won’t care. Many companies have multiple trading names, many of them turning over hundreds of millions of pounds.

    And, should the need every arise to split the new brand into a new company, it would still be possible to do so in the future.
     
    Posted: Mar 13, 2019 By: ecommerce84 Member since: Feb 24, 2007
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  3. anonuk

    anonuk UKBF Regular Free Member

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    Yes, it will be a lot less work in one sense, but my main worry is whether it’ll make it more difficult to ‘build the brand’. For example, people would be less likely see the brand name on eBay or amazon unless they purchase a product. Whereas if it were a separate eBay/amazon account under the brands name, it would be more visible.

    Again, I think my main worry is about building the brand. It’s kinda like Mars brands (not that I’m ever expecting it to go that big) but people go out and look for ‘uncle bens rice’ for example. They don’t look for the company ‘Mars’ because they make uncle bens rice. Does that make sense?

    Maybe I’m just over complicating it haha.
     
    Posted: Mar 13, 2019 By: anonuk Member since: Feb 27, 2014
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  4. anonuk

    anonuk UKBF Regular Free Member

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    Does anyone have anymore thoughts on this?
     
    Posted: Mar 14, 2019 By: anonuk Member since: Feb 27, 2014
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  5. Scalloway

    Scalloway UKBF Legend Free Member

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    I would go for one company and set up your accounting system so income and expenditure for each brand is identified separately. And a separate accounts heading for shared overheads.
     
    Posted: Mar 14, 2019 By: Scalloway Member since: Jun 6, 2010
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  6. anonuk

    anonuk UKBF Regular Free Member

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    Thanks. How would I do that?

    One thought was that it could all be under one company (abc Ltd), but we could then have abc Ltd t/a xyz. Have a separate quickbooks account for xyz and a separate bank account but all still under Abc ltd. Is that what you meant?
     
    Posted: Mar 14, 2019 By: anonuk Member since: Feb 27, 2014
    #6
  7. Scalloway

    Scalloway UKBF Legend Free Member

    16,593 3,514
    No. if you are VAT registered that would be a nightmare.

    There are various ways you could do it. The simplest would be to have accounts called Sales Brand A, Sales Brand B, Purchases Brand A, Purchases Brand B, Expenses Brand A, Expenses Brand B, etc.

    Quickbooks offers other ways to separate the Brands. I must admit I have not tried them but their is some guidance here.

    https://www.accountingdepartment.co...and-differences-between-divisions-and-classes
     
    Posted: Mar 14, 2019 By: Scalloway Member since: Jun 6, 2010
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  8. MyAccountantOnline

    MyAccountantOnline UKBF Legend Full Member

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    Based on what you've said I'd keep admin costs down by keeping it within one company but your accountant is the best person to ask as they will have details which we don't have here.
     
    Posted: Mar 14, 2019 By: MyAccountantOnline Member since: Sep 24, 2008
    #8
  9. anonuk

    anonuk UKBF Regular Free Member

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    Accountant has suggested the same from a point of view of saving money but of saving a bit of money is the only advantage then I’m not sure that’s a good enough reason.
     
    Posted: Mar 14, 2019 By: anonuk Member since: Feb 27, 2014
    #9
  10. MyAccountantOnline

    MyAccountantOnline UKBF Legend Full Member

    13,303 2,500
    I would hope your accountant has given an opinion based on more than just admin costs.

    Have you queried this further with your accountant?
     
    Posted: Mar 15, 2019 By: MyAccountantOnline Member since: Sep 24, 2008
    #10
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