Which Structure Would Be Best?

[VGroupLtd]

Hi all,

Just looking for a quick little bit of advice, a friend and I are starting a business together and we're looking for the best way to structure it to make it as easy as possible, here is some background info:

• Both currently already in full-time employment with employers handling tax payments
• I have a dormant LTD company registered alongside a registered office which has been registered for 4+ years now
• Everything else is all ready to go, we have our products, suppliers, store is set up, domains etc everything is ready to "press the button" so to speak.

We could use the LTD company and not pay ourselves, and keep the money within the company until later down the line however, we'd like to start supplementing our income with our profits pretty soon.

 

[Mark T Jones]

If you're not fully committed I'd probably say a partnership until you know where you're going

Either way, partner/shareholder agreement is critical

 

[WaveJumper]

As above make sure you put a proper agreement in place in whatever structure you decide upon. Hopefully nothing in your current employment contracts re-running a company on the side or holding a directorship

Vgroupltd - confirmation statement?

 

[Socio South West]

Whatever set up model you end up opting for, either a firm partnership agreement or a considered company constitution (not the first one in a tin you come across on the web) is vital.

A partnership is the easiest, but may obstruct you when it comes to setting up supplier accounts etc: On the other hand suppliers can be very wary of new companies and getting company bank accounts is not always straightforward.
Given you are both still in employment my advice to you would be to start as a partnership with a view to incorporating as a company once you gain some traction and the business idea starts coming to fruition.

At some point you have to face the 3 sided equation of earnings from your employment v earnings from your new business v loss of leisure/lifestyle time - I hope that you both come to face this equation at the same time: This forum is littered with examples of where it has not, and for this reason you need your agreement and constitution to be constructed to face this possibility.

Best of luck

 

[VGroupLtd]

If you're not fully committed I'd probably say a partnership until you know where you're going

Either way, partner/shareholder agreement is critical

Thanks Mark, much appreciated, I'll start looking at getting an agreement together today, whichever way we decide to go.

As above make sure you put a proper agreement in place in whatever structure you decide upon. Hopefully nothing in your current employment contracts re-running a company on the side or holding a directorship

Vgroupltd - confirmation statement?

Thank you Wave, I don't believe anything in our contracts currently prevents us, we're just not allowed to own a controlling share in a business that shares the same industry, so should both be okay.

Ah that's not my company haha, username is shorthand for an old company I had many years ago

Whatever set up model you end up opting for, either a firm partnership agreement or a considered company constitution (not the first one in a tin you come across on the web) is vital.

A partnership is the easiest, but may obstruct you when it comes to setting up supplier accounts etc: On the other hand suppliers can be very wary of new companies and getting company bank accounts is not always straightforward.
Given you are both still in employment my advice to you would be to start as a partnership with a view to incorporating as a company once you gain some traction and the business idea starts coming to fruition.

At some point you have to face the 3 sided equation of earnings from your employment v earnings from your new business v loss of leisure/lifestyle time - I hope that you both come to face this equation at the same time: This forum is littered with examples of where it has not, and for this reason you need your agreement and constitution to be constructed to face this possibility.

Best of luck

Perfect, thank you for all of the info Socio, very much appreciated! I think we will be going down the partnership route, as you and the others suggested, it would definitely be the easiest for us regarding tax payments and accounts etc

Fortunately we're both at the same point and have been there and friends for a long time, both of us are quite happy to pack in our full-time time jobs and focus solely on the business when it's time, just need to keep the lights on until then! But either way, we'll ensure that we get an agreement and constitution put in place so if either of us does have a change of heart, the other will be covered.


Thank you all for your input, I wish you the best in your endeavours!