Both Limited Company and Sole Trader?

4thfrog

Hi,

I really need some advice on my tax situation as I’m getting kinda worried about it.

I run two website and the combined turnover is getting close to the £67,000 vat allowance. I don’t want to hurt my basic competitiveness by becoming VAT registered, as I just wouldn’t be able to compete on prices with my non-registered competitors.
Is it possible, as a business adviser suggested to me, to run one website as a limited company and continue with the other as a sole trader to get a separate turnover allowance for each? The products and suppliers are different for each website, and I already use separate bank account for the second website as I use paypal merchant account, which need separate bank accounts for separate paypal accounts. But the two websites share a royalmail, franking machine and courier account between them.

If it is possible what sort of costs would there be to having limited company? Would I need an accountant to do everything for me or could I file the companies house returns myself? And are the basic accounts done differently for limited companies?

Hazzo

The taxman ain't that stupid! If this were a legitimate loophole, we would all be doing it. In short, it is the 'person', not the business, who is registered for VAT. I suggest that you should look at HMRC's website for the free information available on this subject. Please take professional advice based on your own specific needs; the administrative demands can be well worth paying for.

Elaine_Wilson

Yes, it is possible to do that but it must be done correctly. I did something similar myself a few years ago.

The limited company will be considered a separate "person" and registration will be considered on the details of its business alone. But the two businesses will have to be run independently. If there is any significant element of financial dependence between them HMRC will issue a direction for the two to be treated as one business for VAT purposes.

There is a fair bit of hassle too. The company will need its own bank accounts and accounts with Paypal, suppliers, Royal Mail, etc. The website will have to comply with dislosure rules (mainly on a contact page). The sale of the business to ther company should be documented.

Setting up a company can be cheap depending on whether you do the work yourself but could cost up to £250. You will no doubt be paying yourself a salary so will need to operate a payroll. There are many other aspects which are not all that complicated but if you do not know what you are doing can seem daunting. I think you ought to take professional advice on this.

4thfrog

Elaine_Wilson wrote: »

There is a fair bit of hassle too. The company will need its own bank accounts and accounts with Paypal, suppliers, Royal Mail, etc. The website will have to comply with dislosure rules (mainly on a contact page). The sale of the business to ther company should be documented..

Thanks for this, I couldn't split the royal mail, franking and courier accounts: having two franking machines and courier pick ups would just be silly.
Seems like I would be better off staying under the VAT threshold, £67,000 seemed like a lot but when it's turnover, not profit, it gets used up so quickly