New business help please

steve1980

In reality you would not do a 50/50 split. It should be a 51/49 split so someone can make a majority decision.

Savvy_Sue

jexygirl wrote: »

SIDE NOTE FOR SUE!
I wonder if Sue reads this, whether she knows someone clever and in the know with up to date advice, a regular on here perhaps, who could post something to be stickied, with the pros and cons of ltd co V sole trader V partnership etc. Just random basic rules and explaination, as so many people ask which way to go and what the benefits are, no idea if its even possible to produce a generic basics!

That's what I'm not clear about either. And I think the answer will usually be "it depends". However, Businesslink gives a summary of the options, doesn't it?

steve1980 wrote: »

In reality you would not do a 50/50 split. It should be a 51/49 split so someone can make a majority decision.

Heed this advice from steve, OP. ATM you and your beloved look lovingly into each other's eyes, all is peace and harmony. You can do what you like business-wise, your partner will see no wrong, all will be well.

In 6 months time, he wants to buy another trailer, you think it's crazy talk, you think you've won the argument and suddenly he says he has to go out for the day and he comes back with ... another trailer, bought on E-bay, dirt cheap and in dire need of a complete re-fit.

You think "enough's enough, I want out", but how DO you split the business?

The only one to profit from a 50/50 partnership in this situation will be the lawyers / accountants you each employ to sort out the resulting mess.

Get professional advice at this stage, pay for it, minimise the costs by doing some research and reading around first (that way you will know to run a mile if a 50/50 partnership is suggested, for example!), visit 3 different accountants for advice and see who sounds sensible before you commit. But get a partnership agreement drawn up by a solicitor who specialises in that kind of thing, think of it like extra insurance - you may never need to refer to it, but if ever you do, you will need it VERY badly!

Mrs_Chip

Thanks all, some very sage advice there.

It's all very daunting - we are both long-term 'employees' so making the big leap into self-employment is a bit nerve wracking. We are very lucky, we are financially secure, but it does not make it any easier!

paulwf

Mrs_Chip wrote: »

I would not want to be vat reg if at all possible.

To be taking a £24K profit a year when the business has matured means very likely you'll be around the VAT threshold. You MUST think about this now and what impact it will have on your business, it will impact on your strategy on how you grow the business in the long term. Please don't skimp on your business plan, come up with a five year strategy and if you identify the need for an accountant or solicitor to clarify any points at the outset it will be money well spent if it prevents problems down the line.

BTW to make a grand a month each in catering means you'll be working your @rse off for long hours, catering isn't an easy choice for a "lifestyle business". If both of you are working long hours together in a confined space will you still get on well?

pipscot

s_b wrote: »

sole trader is more tax efficient than partner as you pay partner tax as well as income tax and class 4 to the govt
split the business 50 /50

This is incorrect advice - the partnership does not pay tax! The partnership fills in a separate partnership tax return which contains all the turnover, expenses etc of the business. The net profit is then divided into shares for each partner. The share is copied to the individual partners' tax returns and individual tax bills are generated (including class 4 nic)

E.g. the business makes £24K profit - the profits are then shared 50/50 - so each partner puts £12K on their own tax returns. Each partner pays tax and class 4 NIC on this £12K. This means that each partner makes full use of their personal allowance.

Mrs_Chip

Hi paulwf - We need our business plan ready for Street Trading consent, so yes we will be looking very carefully at that. Mr chip is drafting at the moment.

Hoping that we can hovver just below VAT threshold, really don't want to have to stick another 20% onto our prices, and most of our stock is 0% rated so not much benefit in being registered.

:rotfl:well I did say we were aiming for £2k - but we certainly do not want to end up divorced over it, and we could manage on £1.5k or less if we needed to, so hopefully we won't end up in court!

I am not under any illusions about how hard we are going to have to work, no rose-tinted glasses here, it's going to be difficult I know.

chalkie99

Mrs_Chip wrote: »

Hi paulwf -

Hoping that we can hovver just below VAT threshold, really don't want to have to stick another 20% onto our prices, and most of our stock is 0% rated so not much benefit in being registered.

If your products are zero rated (and you are just selling those products without an added service) then you would not be adding 20% to your prices. You could, however, benefit from registering, even voluntarily below the threshold, by being able to reclaim any VAT paid out on other purchases.

The threshold, incidentally, is actually £73,000, not as stated by SB

Mrs_Chip

We are goint to be selling hot take-away food, so sadly the 20% has to go on if we register.

davidjwest

paulwf wrote: »

BTW to make a grand a month each in catering means you'll be working your @rse off for long hours, catering isn't an easy choice for a "lifestyle business". If both of you are working long hours together in a confined space will you still get on well?

Out of interest, what would you consider to be an easy choice for a "lifestyle business" is?

Savvy_Sue

davidjwest wrote: »

Out of interest, what would you consider to be an easy choice for a "lifestyle business" is?

:rotfl: I shall watch for answers with great interest!

For my money, I'd say don't touch catering, and definitely don't touch childcare / other forms of 'care'. I've never worked in catering (know my limitations!) but I have set up and run a couple of out of school clubs, and whenever anyone asked for advice I'd always say "Don't do it!"

And I wasn't even trying to make a profit from those clubs, just doing it on a voluntary basis ... if I'd been trying to get another salary out of it - well, it just doesn't bear thinking about!