Setting up a limited company: a question on 'trading as'

[Damian-ELC]

Hi,

I have been running two small online companies (Company A and Company B) as a sole trader since 2012. Total annual profit is now around £18,000. I would like to set up a limited company (Company C LTD), to include Company A and Company B. I read that provided I ensure that this is clear on the websites and all stationary (e.g. Company C LTD trading as Company A/B), and also in the articles of Company C LTD, then this is acceptable. I also read that it would be fine to use one business bank account in the name of Company C LTD, provided that I inform them and HMRC of the relationship between these three companies. I am aware that I would need to keep separate accounts for these two 'trading as' companies, and that I run a risk of jeopardising the other if one runs into trouble.

Are there any other issues or potential problems that I should be aware of?

Thanks in advance.
Damian

 

[STDFR33]

What is the turnover of these two businesses?
Are you VAT registered?

 

[Damian-ELC]

Total turnover of both companies is around £21,000, so neither are VAT registered.

 

[STDFR33]

Ok.

Firstly, the two businesses are not companies. They are sole trader businesses.

Fortunately, the turnover of these businesses added together are below the VAT threshold, so there are no immediate registration issues.

If you operate business A and B under the same company, all invoices etc should state the company registration number.

Yes, one bank account is fine for one company.

There would be no need to inform anyone about the three companies as there would only be one company. One company with multiple trading names.

If both businesses are brought under the same company and one fails, then there is a risk that the company folds as a whole.

 

[Lisa Thomas]

... on the other hand if the Ltd Company fails then you are less likely to be held personally liable for the Company's debts...

 

[Damian-ELC]

STDFR33

Thanks for the correction on the terminology. That's important to get right.

I hear the risks to the other business, and to the company as a whole, and will keep them in mind. Really the turnover does not justify two individual limited companies, despite the protection that would offer.

I also appreciate your advice on banking and including the company registration number on any invoices.

 

[Damian-ELC]

Lisa Thomas

That's an interesting counter point. Thanks for your input.

 

[Lisa Thomas]

You're welcome. Best of luck.

 

[STDFR33]

The company will need its own bank account. A personal bank account in the name of the company will not suffice.

The company registration should be shown on all company correspondence, including invoices.

The company should engage the services of an accountant. The compliance of a company is much greater and complicated than that of a sole trader.

 

[Damian-ELC]

@STDRR33

Thanks for the info. The company bank account is planned, and I'll be including the registration number in all invoices, emails and other correspondence. I am starting to agree on the need for the accountant. I handled things fine as a sole trader but a limited company does looks more complex, especially as I'll be paying myself a salary.