Going LTD and other advice

Savvy_Sue

bowlingo wrote: »

I am thinking about going LTD, getting a website, business cards made etc then starting a persistant campaign contacting lots of housing associations, insurance companies, property management companies etc within a 50 mile radius until hopefully something comes together. This I know is going to be difficult as nowadays it seems the big companies employ other big companies to carry out maintenance etc.

I'm struggling to see why you need to go Ltd to do any of the extra promotion: I can see that you think being Ltd would help with appearing 'serious', but as you're already VAT registered and you've been trading for some years I'm not sure it would really make that much difference.

Personally I'd concentrate your efforts on getting more work in. HAs may well have a tendering process so find out quickly when tenders are next going to be sought, get your name out to all the local estate agents who do lettings and think about all the ways you can diversify / add value / find new business.

I'd also be looking at cutting costs: would your current employees be interested in working for the HA you currently do lots of work for? If so, I'd encourage them to apply because that will be cheaper and less stressful than redundancy, this is something to talk through with your accountant of course but clearly you won't be able to keep them both on if you've only got 20% of your previous workload.

blinko

I'm an accountant the main benefits of going LTD are the protection, and the better take home pay. Disadvantages are increased admin and increased compliance.

paulwf

Check the wage calculations for yourself before turning the new job down as it may not be as simple as the accountant has put it. Being employed you'll get holiday pay (min 5.6 weeks), sick pay, a guaranteed monthly wage, on the job expenses paid for and things like that. You also won 't need an accountant to do your tax return as tax will be sorted by your employer.

It may well not work out but don't dismiss it without careful consideration. If the net figures are a little closer and you can still do your own work out of hours (check the contract) it might be worth taking the job for now. At least it will give you some breathing space to build up your own businesses instead of jumping in at the deep end.

Premier_2

bowlingo wrote: »

The reasons I am looking to go LTD is due to the limited liabilty side of things and also I believe I have more chance of being entertained by the big outfits if ive got LTD after my name

What are you trying to protect yourself from exactly?
Going ltd is not the way to protect yourself against technical mistake, but you can get insurance for that and I would expect any large cuustomer to demand to see such indemnity before they allow you to work on thir sites.

The only thing ltd liability would really protect against is if, for example, you had huge credit accounts with suppliers of cabling and other materials you use, (and if a customer ends up not paying you, then you may not be able to pay your supplier). But as a new ltd co, no one is going to extend huge credit to you unless you give personal guarantees ... in which case ltd co is pointless.

What I would suggest is you speak with your accountant to establish what credit checks you should make on customers wanting credit, and then what credit it would be safe to extend to them.
Also get the terms of supply clarified, so that even if you do the work and rewire some properties, you still own the copper you installed until it's paid for and if it isn't, take it back out again!
(maybe difficult if people are then living in the property so important to get your terms clarified by a legal expert)

Or don't extend credit. Ensure it's cash up front or stage payments at worst. At the first sign of default, stop work.

As for only being able to get work if you becoame a ltd co, well find the work first, then if that is the case (it often isn't) then make the necessary company. A new ltd co can be set up in minutes and for less than £20 on the web.

bowlingo

Savvy_Sue wrote: »

I'm struggling to see why you need to go Ltd to do any of the extra promotion: I can see that you think being Ltd would help with appearing 'serious', but as you're already VAT registered and you've been trading for some years I'm not sure it would really make that much difference.

Personally I'd concentrate your efforts on getting more work in. HAs may well have a tendering process so find out quickly when tenders are next going to be sought, get your name out to all the local estate agents who do lettings and think about all the ways you can diversify / add value / find new business.

I'd also be looking at cutting costs: would your current employees be interested in working for the HA you currently do lots of work for? If so, I'd encourage them to apply because that will be cheaper and less stressful than redundancy, this is something to talk through with your accountant of course but clearly you won't be able to keep them both on if you've only got 20% of your previous workload.

Hi sue..Thanks for your reply...the 2 people who help me out do so on a CIS self employed basis as they are already registered electricians and help me out 2-3 days a week each.

Thanks

BoGoF

I'm surprised you aren't CIS registered yourself - does the HA deduct CIS tax from you?

bowlingo

BoGoF wrote: »

I'm surprised you aren't CIS registered yourself - does the HA deduct CIS tax from you?

I work for another subcontractor...theres 2 other contractors before the HA..they deduct my CIS

BoGoF

Thing is, if you want to move further up the pecking order I believe HA's would prefer (in fact some insist) that you have gross payment status - it cuts down on their admin.

For a Ltd company you have to have a turnover of at least £200,000 to apply for gross payment status.

Miss_Beaumont

I've always used "Companies Made Simple" for Limited Companies. Very easy.

(We actually registered one for £5 as they had a promotion on)

The Limited accounts cost us around £500, but the rest is very straight forward... just some paperwork to sort through and learn about. The accountant will help a lot, but I was actually surprised by how little there was to do...

Savvy_Sue

Premier wrote: »

Or don't extend credit. Ensure it's cash up front or stage payments at worst. At the first sign of default, stop work.

I was meaning to say the same: when you're getting new customers, you've GOT to make sure they're going to pay. If you think about it, you'd be in exactly the same position if the HA ceased trading.