Help new start up company

Jason.Dewsbury

Hi All,

Please can you provide me with some tips an help. Me and my wife we are looking to start up new company (limited company or sole trader) to sell on ebay and amazon etc online selling. However we need our company name that not other companies will use.

I work full time and i earn 40k a year my wife doesn't work as we have two little babies.

I need some information about what is the best to register the company in my name or her name. I pay NI contribution on my salary if i register the company will i still pay NI contribution for the new company.

Any information that will be great help.

Thanks All

agrinnall

It's a bit complicated for a forum to answer fully, perhaps you could make an appointment with Business Link?

http://www.businesslink.gov.uk/bdotg/action/home

chrismac1

To me the obvious setup here is for you each to be directors, so one vote each in the boardroom, and also 50% shareholders in the Ordinary shares. To get anything major done in a company you need control of both boardroom and shares so this means you need to agree.

Then create 100 £1 "A Ordinary" shares, all of which are owned by your wife. This is not an expensive process but needs to be done properly to have legal effect.

For the sake of argument, let's say the company has retained profit after tax at 31 March 2012 of £20,000. If you were to pay more than £2,000 or so of this to yourself you'd get an extra tax bill at 22.5% on those dividends, not nice.

So low and behold you declare a dividend on the Ordinary shares of the £2,000. You each get that so that's £4,000 of the retained profits used up. You then declare £16,000 of dividends on the "A Ordinary" shares, which all goes to your wife. No extra tax for either of you to pay.

Any accountant who is worth his or her salt you approach to set up the company should at least offer you this sort of scheme.

Company name - use something that will have the sort of brand image you want on e-bay. Chances are this will already have gone at Companies House, each company name must be unique. This is what happened to me when I set up my own company.

No problem - suppose you live in York and you want E-bay traders Limited. Instead, ask for "E-bay Traders (York) Limited." if that has gone go for E-bay Traders (Fulford) Limited and so on until you get a geographical area which Co. House accepts.

You then have the trading style you want to use, so long as you can't be accused of "passing off" - so for example "Apple Mac (York) Limited" should be rejected as an obvious attempt to appear to be Apple.

jjlandlord

chrismac1 wrote: »

You then declare £16,000 of dividends on the "A Ordinary" shares, which all goes to your wife. No extra tax for either of you to pay.

I'm not a tax expert but if a company declares a dividend but only pays it to a single shareholder, HMRC will see through this obvious tax dodge.
Dividends are paid per share. So here OP and his wife would receive £8000 each.

Pennywise

jjlandlord wrote: »

I'm not a tax expert but if a company declares a dividend but only pays it to a single shareholder, HMRC will see through this obvious tax dodge.
Dividends are paid per share. So here OP and his wife would receive £8000 each.

HMRC may think it's a tax dodge, but as long as the shareholdings etc are done properly, HMRC can't do anything about it as it's not against the law. HMRC lost a court case about this!

The thing to ensure is that all the shares have full rights, i.e. to vote, to dividends and to capital. As long as all shares are equal, it's perfectly acceptable to have different classes, to enable the company to vote dividends to different people.

The problem comes when the shares don't have equal rights, i.e. non voting preference shares etc., - it's those that are caught by the legislation.

chrismac1

Yes - make sure whoever you go to is aware of the Arctic Systems limited case a.k.a Jones versus Garnettt a.k.a the "Jones case". There have been various other cases, but this was the landmark case in this area of "husband and wife" tax. The ruling in that case was pretty specific but set down some key principles which HMRC have not seen fit to challenge since then. Of course they know fine and well that any such challenge would very likely be taken up by the Professional Contractors Group or similar body, hence would not be stroll in the park for HMRC.

pelirocco

Would you need to be a limited company ? , whats your expected turnover?

Jason.Dewsbury

pelirocco wrote: »

Would you need to be a limited company ? , whats your expected turnover?

Not but i need unique name for my company that no one else can use. I think the company will make about 10000 year profit. What is the best way to run it to pay less tax between me and my wife.

Thanks