Sole trader + responsibility

[flare91]

Hello all.

I'm in the process of starting a business, as a sole trader. It will be an e-commerce business. As I understand it, you personally are held liable for any debts etc.

So if there's any debts I can not pay off/I am sued for whatever, my possessions will be taken if I cannot pay. My question is, what if I do not own anything? I'm only 20 years old, and don't own a house/car/anything!

So what is the situation in this case? Do they chase my family? Surely they can't chase the landlord as I'm only a tenant?

Any help/ideas?

 

[lynxus]

Hello all.

I'm in the process of starting a business, as a sole trader. It will be an e-commerce business. As I understand it, you personally are held liable for any debts etc.

So if there's any debts I can not pay off/I am sued for whatever, my possessions will be taken if I cannot pay. My question is, what if I do not own anything? I'm only 20 years old, and don't own a house/car/anything!

So what is the situation in this case? Do they chase my family? Surely they can't chase the landlord as I'm only a tenant?

Any help/ideas?

If you dont own anything then they have nothing to take from you.

if your family are not involved in the business in anyway then they cannot be held liable for any debts.

I suppose one problem would be bankruptcy or just living the rest of your life not being able to ever get any kind of loan / credit again ( That isnt 9000% apr )

 

[tony84]

You shouldnt have too many debts anyway. If you pay for your stock upfront then your only bills will be hosting, payment processor and tax.
Tax is the one that you can go to prison for i believe although i think its quite rare.

 

[flare91]

Oh, of course. Sounds so obvious.

Tony- you're quite right: all equipment + stock will be bought in advance and when needed to replenish stock. Chances are it will be hard for me to get into debt, but it's always good to know these things before jumping in head first.

Lynxus - 9000% ?!?! Is that an exaggeration or are you serious? I'm hoping the former, but I fear the latter.

 

[lynxus]

Oh, of course. Sounds so obvious.

Tony- you're quite right: all equipment + stock will be bought in advance and when needed to replenish stock. Chances are it will be hard for me to get into debt, but it's always good to know these things before jumping in head first.

Lynxus - 9000% ?!?! Is that an exaggeration or are you serious? I'm hoping the former, but I fear the latter.

Not far from the truth Obviously you can do things to sort your rating however you would probably just be declined credit rather than an insane APR like the payday loans "Representative 1734% APR. from QuikQuid.."

Obviously you would be a fool to use said sites but yeah.. If you get into bad credit then you will certainly have troubles later down the line.

Morale of the story is..
- Pay up front. ( or at least have an order from someone before getting credit to fulfil the order )
- If the business idea is of a very great risk of failing or getting into bad debt quickly then re-think the funding / business plan or just scrap the idea.

 

[Blood Lust]

Hello all.

I'm in the process of starting a business, as a sole trader. It will be an e-commerce business. As I understand it, you personally are held liable for any debts etc.

So if there's any debts I can not pay off/I am sued for whatever, my possessions will be taken if I cannot pay. My question is, what if I do not own anything? I'm only 20 years old, and don't own a house/car/anything!

So what is the situation in this case? Do they chase my family? Surely they can't chase the landlord as I'm only a tenant?

Any help/ideas?

My advice is not to worry too much about debts. Most businesses wont take you to court unless the money you owe them is at least £2000.

This is because court papers cost £750 and even if the judge rules against you it can be ignored. For a business to then get the judgement inforced it costs them even more money and the end result is it just isnt worth it unless its a few grand that you owe them as debt.

My best advise to anybody starting a new business is -
1. Do your own marketing calls and emails. A large amount of businesses go bust because they spend their startup funds on adverting which doesnt work.
2. Spend as little as possible. Most businesses go bust from cash flow problems not because the business isnt a success.

If you are made bankrupt to a supplier dont worry. You apply to the court to have the interest frozen, you pay it off a tenner a week and after 5 years the bankruptcy is forgotten.

 

[flare91]

Great advice folks.

My start-up cost is just around £1000, and then about £50p/m monthly costs, so quite hard to get into debt.

Thanks all

 

[Spearmint]

Tax is the one that you can go to prison for i believe although i think its quite rare.

Look on the positive side if you did spend some time in prison, you may get to see an MP, you may even share a cell with one of them!

I'm just trying to remember some of the celebs that have done time - mainly for tax evasion. I think Lester Pigott was one. Did Ken Dodd? Theres a few more mind

 

[flare91]

haha!

Lester Pigott did, but I don't think Ken Dodd did. Wesley Snipes did though!

 

[Rumpole56]

haha!

Lester Pigott did, but I don't think Ken Dodd did. Wesley Snipes did though!

Ken Dodd was indicted for tax evasion in 1989 but was acquitted. Had to check as I was pretty sure he had been jailed, too.

Let's not forget Al Capone. Tax evasion was the only charge they could get to stick.

 

[tony84]

Ken Dodd was paying 1p per pound i think