SB: Small Business Start Up Discussion

cassie35

hi, i would be really grateful if someone could help me with this!! sorry i dont know if im posting correctly - im new to the site! I have set up a business for a colleague and he has said he wants to give me shares in the company. He has now said that he cannot tell me the % of the shares until he has reviewed the profitability after 12 months, as he does not want me to be liable for any debt if the company does not do well. Is there any way that I can make this legally binding, or should I push for him to give me a % figure and could I just ask him to put this in a partnership agreement stating no liability for loss? (is a partnership agreement a legally binding document?) thanks

lesleycoups

Hi everyone,

I live in Bradford West Yorkshire and i want to start my own business (i want to open a sandwich shop) i've just been to see some premises for sale, its all kitted out with the appropriate equipment, all i need now is money to buy it and start up, but as i'm on JSA and am currently signed to the Work Programme, i can't get any financial help from the Job Centre, so i was wondering if anyone knew of any way i could get a loan/grant to start up

Thank you

Cheetah

I am currently investigating the feasibility of a business. If I deem it profitable I will start a limited company.

Now my question is, I have bought some assets to test out the feasibility of the project. If I do create a business, can I somehow more the assets into the company and reclaim the VAT?

emilyka

Hi,

I hope I'm posting in the right place- apologies if not.

I am after a little advice. There is a vacant 'snack bar' in my town which is both a very good price and in the perfect location for a small wine bar. The property has a flat above it which is included in the sale.

My question is regarding finance. I purchased a property last year (flat in the next road from the 'snack bar') and therefore have no savings and little equity in my flat (prob c. 30k from the deposit). How would I obtain financing to purchase this snack bar? The purchase price is only £60k above what I purchased my flat for however I borrowed as much as the mortgage people would give me and therefore wouldnt be able to just get a bigger mortgage.

I would be happy to sell my property and move into the flat above this property however if I would rather not if that is an option- I would rather rent out the flat above the premise.

Please can someone help me with the knowledge surrounding funding? I would need to buy the property and have some cash for refurbishment and stock.

Many thanks,

Emily

Savvy_Sue

Unless you can find a partner to put up some finance, I'm not sure you'll be able to finance it yourself.

I'm also going to ask whether you'd definitely get planning permission for the change of use you'd need to change a snack bar (presumably open during the day) to a wine bar (open in the evenings). I'd clarify that before taking this idea any further forward.

Do you have experience in the licensed trade?

emilyka

Thank you very much for your reply.

I used to be a restaurant manager so do have experience in the industry. It's a real shame I can get more on the mortgage and do it that way- it's only 60k above my existing mortgage! It is unlikely I would be able to find a partner I would trust with the capital to help

I was kind of hoping that with a solid business plan the bank would just lend me the money but I know that's naive nowadays! I know they do commercial mortgages however it looks like you need 40% which would be 104k- even if I sold the flat I would still need 70k.

The property has A3 planning, an alcohol license possible as well as A4 planning (drinking establishment) in line with Unitary Development Plan (UDP) and the parades retail mix. My town is screaming out for a tapas style wine bar- having discussed it with neighbours they have all said that a nice place to go in the evening is really needed- I really hope I can find a way to make this work.

Wywth

emilyka wrote: »

Hi,

I hope I'm posting in the right place- apologies if not.

I am after a little advice. There is a vacant 'snack bar' in my town which is both a very good price and in the perfect location for a small wine bar. The property has a flat above it which is included in the sale.

My question is regarding finance. I purchased a property last year (flat in the next road from the 'snack bar') and therefore have no savings and little equity in my flat (prob c. 30k from the deposit). How would I obtain financing to purchase this snack bar? The purchase price is only £60k above what I purchased my flat for however I borrowed as much as the mortgage people would give me and therefore wouldnt be able to just get a bigger mortgage.

I would be happy to sell my property and move into the flat above this property however if I would rather not if that is an option- I would rather rent out the flat above the premise.

Please can someone help me with the knowledge surrounding funding? I would need to buy the property and have some cash for refurbishment and stock.

Many thanks,

Emily

You'd need to find a buyer for your flat.
Assuming you can sell your flat for at least as much as you paid plus all the extra costs you incurred, then that will leave you about £60k short.

Whilst waiting for a buyer, develop a business plan to demonstrate how the wine bar you hope to rum will be a little gold mine, and, assuming it is well researched and composed, you should find no issues raising the extra £60k on the back of it.

It may be that you will need a commercial mortgage for the whole amount, rather than a residential one you have now, and the minimum deposit may need to be looked into, but I don't see any big issues if it's a good business proposition.

Presumably you have already looked into licencing and that you think shouldn't be a problem?

Good luck!

BizSol08

As a Christian and a small business owner, I think its important to give back to our communities as much as I can. I sell mobile phones for a living, and I try to give back in small ways, like offering discounts to neighborhood organizations and donating old phones to charity. Another way I give back is by using Christian Processing for credit card payments. I feel good about this service because it is secure and safe, but also because they give back 25% of the revenue to the church of my choice. For me, that's Crossroads Christian Church here in Texas.

This is important because, to me, giving back is a huge part of being a good Christian. Our communities are the reason our businesses thrive, so it only seems right to help out and support others. So, I'm asking for ideas from other Christian business owners: what are other ways we can reach out and give back to our communities?

uk1.fraser

For registering my company i used blue sky formations, there are many companies that are a similar price. I found them very helpfull though.

For my website (and logo) i used evolutionmediadesign.com, they had my site up and running within 4 days. Great quality and cheap, they do this to help start ups.

Brassedoff

chalkie99 wrote: »

Looks like your questions might be passed by with others coming after so I will try and answer a couple of points at least.

Sole Trader or Limited -

Less complex accounting - Yes, although the Ltd route is not that much more onerous. It does mean submitting a separate form to Companies House each year as well as the HMRC returns. Additionally, your director names and address details and basic financial performance can be searched online by any interested parties.

VAT registration - Irrelevant to whether you are Ltd or not.

Registration is compulsory when turnover exceeds £73,000 in either case, and voluntary under that amount.

we don't need to raise capital - not particularly relevant. If you did need a loan then a personal guarantee is usually required whether Ltd or not.

low profits expected Is this a full time venture or is there income from elsewhere?

If the personal tax allowance is already being used up by other employment then the Ltd route may prove advantageous.

Salary - as a sole trader there is no such thing really. You make a profit (or not!) and are taxed on the profit (less your personal allowance of £7475) which is yours to spend or invest as you wish.

If you went the Ltd route then, yes, you generally want to take a salary not exceeding the personal allowance of £7475 after deduction of which the Company pay 20% Corporation Tax and the net remainder can be drawn as dividends at no extra cost, effectively saving you the National Insurance contributions. (Up to the 40% tax band limit).

the other thing you might want to consider is the main reason for being a Ltd Co. - i.e. the legal protection it affords you.

Imagine if one of the little dears has a mishap and the parents decide to go for compensation. Now suppose for some reason your insurance company wriggle out of it. In those circumstances you can, at least, fold the company and walk away with your house and other possessions protected.

Hope that helps!

If I can add my experience as a Business Consultant and Chairman & Club Welfare Officer. CRB's are no longer in effect, you now need to use the DBS (Disclosure & Barring Service)

First, and most importantly, anyone who has unsupervised contact with children or vulnerable adults must have a check done.
Second, trustees of organisations working with children or vulnerable adults should be checked. It's the law in certain circumstances that if you or anyone else is working unsupervised with children, vulnerable adults or disabled persons. You will need a DBS certificate. You can DBS yourself directly or via Social Services.

You are not allowed under the terms of the 2010 Act to access any public funds if you cannot provide a fully inclusive service. You will need to have certain adaptions made to the property, plus you will need to have compliance with Health & Safety legislation. That means adiquate first aid stations.

You have the options on sole traders, Limited company, but have you considered an LLP (limited Liability Partnership)?

You choice of business structure with respect to companies as already been said Many people assume that being in business is synonymous with running a company. This is not the case. There are actually four alternative common forms of business structure in the UK:

1. a sole trader;
2. a conventional partnership (where the individual works with one or more partners in the business);
3. a limited liability partnership - LLP - (this provides the individual and their partners with the protection of limited liability, just as with a company); or
4. a limited company.

Or you have a fifth option not many think about, but are not really in your style - the Limited partnership (as distinct from LLP) - but this is rarely an attractive or feasible choice for smaller businesses. These old style limited Partnerships were very restrictive, required at least one partner to have unlimited liability and precluded the limited partners from being involved with the management of the business. The LLP is a very different animal.

LLPs were first introduced into the UK in 2001, they were originally intended as an alternative business structure for professional firms such as accountants and lawyers. Over the last few years some of the biggest professional firms have become LLPs. (they have incorporated as LLPs when small, but grew larger). The concept took a while to take off as it was not until 2003 that the rules were established for how to present LLP accounts. Anyway, that's all history.

The idea did catch on for other types of firms, I started doing LLPs in 2005, it is now anyone sees that LLPs can be used by any business that wishes to secure the benefits of Limited Liability without the constraints and complications of operating as a limited company. Already the vast majority of LLPs registered at Companies House are NOT professional firms.

Advantages and disadvantages will depend on what matters to you. For example if you make more profits than you need to draw out of your business each year, you will probably want to use a limited company. Alternatively if you have a fundamental objection to allowing your accounts to be made public you will want to operate as a sole trader or a conventional partnership.

The limited liability you enjoy compared to being a sole trader, is exchanged with the one of the price you have to pay for the privilege of trading with the protection of limited liability. Thst is registration at Companies House and the publication of certain business information.

The protection of limited liability for the members of an LLP is essentially the same as for the directors and shareholders of a limited company.

The difference is that these days one person can establish a limited company, but there need to be at least two persons to form a Limited liability partnership. However, there is nothing to prevent you setting up your own (non active) company and for the LLP members to simply be you and your company in order to get the protection of a LLP.

The law imposes restrictions on limited companies as regards what is called 'capital maintenance'. This often causes problems when the owner tries to pay dividends when there are insufficient accumulated profits. There are no equivalent rules for LLPs. So that's an advantage if you need to have drawings sooner.

Companies, but not LLPs are required to hold, record details and maintain minutes of Directors' meetings, shareholder meetings, annual and extraordinary meetings. There are some annual reporting requirements and a specified format for LLP accounts but this is not much different to the rules for a limited company. You don't for a sole trader.

In certain restricted circumstances the members of an LLP can be required to repay drawings and profits back to the LLP after it become insolvent.

The massive advatage is that the profits of an LLP are taxed in the same way as for a sole trader. This will often be more attractive than operating your business as a limited company.

Go and see an accountant rather than doing it on line. I can incorporate a company for only £4.99 + VAT, but thst is no where as good as sitting down with a good Accountant/Wealth creation expert.

Working from home requires a change of planning with your local authority. Be aware, if the planning officer feels there will be distruption to your neighbours, they will turn you down.

A portion of your home could attract business rates.

You are required by law to have the property Distribution board checked, plugs and carrying system certified. The devices (sowing Machines) will require PAT testing too.

Insurance should be adequate.

You need fire alarm, extinguishers and tac points.

Then you will have to have a full list of the correct risk assessments for the property, tasks, machinery, fire, first aid.

I don't mean to add to your woes, but in many instances when I get asked this type of question, if you are doing it to earn money, all local authorities have starter units that cost anything from £25 a week. They do not need to have half the things changing that making changes to your property. And, as a starter business in a business centre may have no tax or Business Rates applicable for a period of time.