Setting up ltd company while still employed- help please

[alexhill7]

Hi to everyone,

I was wondering if anyone could help us understand a few things...........
We are 2 design engineers currently employed at 2 different companies, and are looking to embark in setting up a separate ltd company.

We both have extensive knowledge in design and manufacturing and have picked a product (not related to our current employment) which we know quite a lot about from previous experience.
Therefore we are looking to start the business and fund using our current wages, we also have families and dependants to support, so to leave our current roles from a financial point would be impossible.

We have read through our employment contracts and there is no conflict of interest, however we are not about to be start making our employers aware.
From a legal point of view is there any reason why we cannot do the above?
Can we still be PAYE while being a director of a ltd company?
Will our employers find out anyway?
Appreciate your comments
Thanks
Alex

 

[faradaykeynes]

Yes you can be on PAYE of your Employer while being a director of your own ltd company. Once company is registered its details are available to all public via companies house.

 

[DaveSUK]

As the post above suggests, there would be nothing wrong with being a director of your own limited company and an employee on PAYE for someone else. The fact that you are a director of a company will become public information and can be seen by your employers (if they search for it)

The only problem that could arrise is if your employer has some clause in their employment contact which states you cannot do this.

Once you are a director in addition to the standard PAYE you will also be required to submit a self assesment.

 

[TODonnell]

The only real fly in the ointment is your current employers knowing you've set up a company. Should they find out, what will happen? Could you tell them upfront?

They will think: "Will this venture impact on their work for us?", I'd guess.

You can register a limited company and use a Director's Service Address for you and your partner, as well as a Registered Office, separate from where you live. That might help obfuscate matters.

 

The employer may be put on notice if HMRC issue you a new code becuase of earnings in your new company

With regards to conflict you state that you cannot find it in your contract. That does not necessarily mean that you are not conflicted it simply means it is not black and white in the contract

 

[alexhill7]

Thanks for all your responses!

I guess you are all saying yes it is possible, but you should really let your current employer know first.
While I agree with what you are saying, in reality no employer is not going to say, that's fine you are setting up a business.
We both have fairly senior roles, and they will be thinking we will be leaving in the near future and could jeopardise our positions.
At the moment, we may as well try the new business venture and see if it takes of first?

 

[red-source]

Start up, give it 6 months, then take it from there. I see no need to inform your current employer, considering that as you say there are no conflicting interests. Check that your current contract does NOT state " You cannot start your own business ". If it doesnt then go for it! Dont worry about the directorship information becomming available, its only if somebody wishes to look for it.

 

[PrestonLad]

You say that you both have families. Does that include wives/husbands?

Could you not start the company in their names... surrounded by a few legal nicities to protect everybody's interests?

I say this just out of deviousness, rather than experience. I have no idea about the feasibility or pros/cons.

 

[ParfittTaylor]

You might be surprised by your employer's reaction espec if it's not a related product. I know someone who had his own company whilst also working for a company. All work on his own company was done in his own time.
But if you don't want to tell then yes go ahead and start the company. Would your employer really go checking? That's the only way they are likely to find out unless someone decides to tell them for you or they become suspicious. Worth considering their reaction if they did find out and if you would be bothered. Do you want to sour your relationship?
If you don't need to pay yourselves from the new company then there shouldn't be an issue with PAYE and your tax code shouldn't change.

 

[MyAccountantOnline]

''While I agree with what you are saying, in reality no employer is not going to say, that’s fine you are setting up a business.''


I disagree - I am proof of that.

Many years ago when I set up my first practice I did so whilst working as a manager for a large international firm of accountants with their full knowledge. I was entirely open and honest with them and they were super. It paid off and I'd highly recommend being honest and open.

Now I have many clients in similar positions who run side-line businesses or who are building up new businesses with their current employers full knowledge.