Sole Trader or Limited Company for catering business?

[ccv]

Hi
I’m wondering whether it would be better to have a limited company set up for my catering business rather than operate as a sole trader. For now we will be producing frozen meals to the general public but the goal next year is to be serving hot vegan food from a catering van at events. I’m a bit nervous about the liability, I haven’t any experience of running a food business however I have run my own business before. I’ve registered with the local council as a catering business and am getting to grips with food safety standards. I know I will need liability insurance but am concerned, worst case scenario I poison someone and my liability amount is not enough if I get sued then I am personally responsible. Hope that makes sense! My last company was limited and I found the accounts a bit of a nightmare, however I have learnt a lot from 8 years running a business.
Thanks in advance
Cass

 

[Mr D]

Depends what you want.

Limited company protection can be removed.

 

[DontAsk]

If you are worried about liability then Ltd will give you extra peace of mind but will not cover you for deliberate or negligent acts, for example.

Either way take out public liability insurance which, again, is not a panacea.

Accounts don't need to be a nightmare. Keep good books yourself and it will only be a few £100 to get an acountant to do the rest.

 

[ccv]

Depends what you want.

Limited company protection can be removed.

Thanks for your response. I’m not quite sure what you mean though. Is it that we’re I to be sued the limited protection (if I had a limited company) could be taken away anyway, therefore leaving me liable?

 

[Mr D]

Thanks for your response. I’m not quite sure what you mean though. Is it that we’re I to be sued the limited protection (if I had a limited company) could be taken away anyway, therefore leaving me liable?

Not quite.

Usually it would be the company that a claim is made against. You personally are not responsible.
However there are circumstances in which your corporate protection is stripped away - uncommon as it is.
I can think of only about 5 instances it has happened. Probably a number more where it has happened too but not reported in the press.

More for your actions being a problem I think. Say you caused someone to have an allergic reaction by using cheap oil to make food. Then later after being warned you again cause a problem by still using that stuff.
No idea in that case if he was made liable but from what I have seen that is the sort of instance the corporate protection could be removed.

Not trying to scare you. Most of the time you do stuff right you should have corporate protection - and you will be getting insurance for the business.

 

[ccv]

Thank you Mr D, really useful to know. Obviously I am going to be doing everything by the book and be cautious of ingredients. Just to clarify I would be better going in as a limited company as being a sole trader only offers me protection through liability insurance? Thanks again

 

[Mr D]

Yes, its more expensive to run a limited company (accounts are more expensive) but protection itself is worth something.

 

[ccv]

Yes, its more expensive to run a limited company (accounts are more expensive) but protection itself is worth something.

Thanks again. I think the extra expense/hassle sounds well worth it!

 

[Greg Thomas]

Limited Company brief Info:
There are many benefits, such as reducing your financial risk and a perception of
greater credibility and status for the business and its owners.


However, you need to be aware that the formation and operation of a company is highly regulated and you will have to commit time and money to ensure compliance.



The main legislation covering the regulation of companies is the Companies Act 2006 (the Act), which has largely replaced the previous Companies Act 1985 and the Companies Act 1989.


A company has a separate legal identity to that of the owners, unlike a sole trader or a partnership where there is no distinction. This means that a company can own property and other assets

Sole Trader Brief info:

There’s not really a difference between being a sole trader and being self-employed.

‘Sole trader’ describes your business structure, while ‘self-employed’ is a way of saying that you don’t work for an employer or pay tax through PAYE.

As a sole trader, you are the legal entity in your own right, employing people and entering into contracts.

You have no limited liability; your own assets are at risk should the business fail

 

[Numerix Accountancy]

Hi
I’m wondering whether it would be better to have a limited company set up for my catering business rather than operate as a sole trader. For now we will be producing frozen meals to the general public but the goal next year is to be serving hot vegan food from a catering van at events. I’m a bit nervous about the liability, I haven’t any experience of running a food business however I have run my own business before. I’ve registered with the local council as a catering business and am getting to grips with food safety standards. I know I will need liability insurance but am concerned, worst case scenario I poison someone and my liability amount is not enough if I get sued then I am personally responsible. Hope that makes sense! My last company was limited and I found the accounts a bit of a nightmare, however I have learnt a lot from 8 years running a business.
Thanks in advance
Cass

Hi,

Aside from the liability / risk protection aspect.

There may possibly be other advantages to running a Limited Company rather than a sole trader business.

For instance, with a Limited Company there is scope to determine profit extraction for the individual business partners/shareholders in this instance.
As a sole trader, there's very little scope for tax planning. All your profits go onto your tax return.

Feel free to private message me, if you want to set up a call.

Regards

Numerix Accountancy
Tel 0333 344 2750 / 07799 572808