Best way to start up?? Personal ownership or set up company? General pointers pls.

tushingham

Hi Everyone,

Would appreciate some general advice (if possible) or a link to relevant further reading if anyone has it?

My question is about how best to purchase a new business. Should I just buy in my name or should I set up a company and then buy under that? I know this would be a very detailed and specific area but wonder if anyone can tell me the general pros and cons of either method please? Particularly with regards to tax implications/savings?

Im very early on in the process and thought I better start researching now. Im currently a self-employed, higher-rate tax-payer and have an investment in a buy to let property in my own name. All the income from my job and the property go on my tax return via my accountants. If the new ventures go well then I may end up in the highest rate tax band.

I have found a retail business I want to buy and am also interested in another buy to let property. Would it be 'best' to just buy them in my name 'Mr Tushingham' and run them or set up 'Tushingham Ltd' and run them under that? Would/Should/Could I then transfer my exiting rental property under that company?

Many thanks in advance,

t

ps- looking for the specific adv re above query rather than on the business itself or the merits of buy-to-let

Savvy_Sue

For specific advice, you really need to speak to your accountant - what might be 'best' if this was your only investment could be quite wrong for you.

General reading while you wait for your accountant to open: businesslink.gov.uk? They will certainly have a section on the general pros and cons of limited companies.

antrobus

The con of having a limited company is that you will incur an additional overhead in terms of paying your accountant a few extra hundred quid every year to do the accounts. The pro is that having a limited company can have tax advantages particularly if you're a higher rate tax payer.

I probably wouldn't stick the retail business and a BTL into the same company, because you might want to sell one and keep the other at some point in the future. In fact it's probably not a good idea to stick a BTL into a company at all, unless you intend building up a BTL empire and selling it off as a single entity in the future. Most people who play that game look upon BTLs as individual investments and intend selling them off individually when the time comes, and you don't really want the gain being taxed once in the company, and then twice when you take it out of the company. I'd guess that you'd probably be better off sticking the new retail business in ltd co in order to minimise your own taxable income, and keeping the BTL in your name and gearing up on it for the same reason.

But that's only a great big guess, Savvy_Sue is quite right, you're self employed and you already have some accountants, so go ask them and get some proper professional advice tailored to your exact circumstances. Yes they'll charge you for it, but at least you can sue their behinds off if they get it wrong.

Savvy_Sue

antrobus wrote: »

you're self employed and you already have some accountants, so go ask them and get some proper professional advice tailored to your exact circumstances. Yes they'll charge you for it, but at least you can sue their behinds off if they get it wrong.

:rotfl: I like your turn of phrase: I usually describe it as 'advice you can rely on' but that's what it boils down to, isn't it!

Annisele

I suspect it also depends on the setup of the "business" you're buying. For example, if it is a limited company and you'd be buying all of its shares, then it's unlikely to be sensible to set up your own limited company and have that new company buy the shares of the existing company.

bris

If you do buy a new company, don't transfer any existing assets into it, if the new company fails it would take the existing stuff down with it.
If you are buying out a sole trader/partnership, then yes buying it in a newly formed ltd co may be a good idea. It doesn't cost much to keep a ltd co going, any slightly profitable company could meet the costs of this, but the personal protection makes up for it.

tushingham

Thanks for all the helpful info guys,

much appreciated.

t