Starting my first business

LIB3RTY

So I am starting my own business. I am planning on buying a machine I need next week. I originally planned to set up my ltd company next month and then buy the machine but I have recently been informed by the company that makes this that they only have one remaining and that they don't know when the next delivery will be or if they are even getting anymore of that model.

My question is can I buy the machine now and then set up the business and claim the VAT back on it or does the company need to be founded first?

chalkie99

First of all - that sounds like a typical sales line. If they truly have only one and cannot source any more then perhaps the machine is not all it is cracked up to be.

I'm sure you don't want to give too much away but can you give us a clue as to what sort of machine it is? Perhaps someone will have some knowledge to offer.

Secondly, have you taken professional advice from an accountant to see if a limited company is really the right thing for you and are you sure you really should be registering for VAT? Are your sales going to exceed £77,000 per annum or are the majority of your customers VAT registered themselves?

LIB3RTY

The machine I am getting is a Laser Engraver. And I was gonna go Ltd for the legal protection that it offers. I dread to imagine something goes wrong and someone tries to sue. I want my personal assets protected.

And no, I won't make anywhere near that kind of money my first year. Probably closer to £20K after expenses. I want to redce my start up costs as much as possible though and will need to claim back anything I can.

chalkie99

OK - for VAT registration it's not what you make, it's what you take. In other words, it's based on your turnover (sales) and not your earnings.

You can register voluntarily and claim back the VAT charged on the machine and materials but do you realise that you will have to pay VAT on everything you sell? I only ask this because many start-ups don't seem to understand this. If your sales are mainly to the public you will either have to charge them extra to cover this or lose some of your profit margin.

This is not a million miles away from what I do so I would reiterate that you should be very wary of sales patter. Some of these machines are sold as money making tools but are, in reality, little more than hobby items.

Mistral001

The decision to register for VAT voluntarily can depend on the following:

1. Do you sell to the public or to businesses who are VAt registered? If you sell to the public the customer cannot recover the VAT. You will have to add VAT unto your time costs/markup remember which neither you nor your customer can recover.

2. There are admin costs associated with VAT. Also it is one more layer of red tape.

3. Being VAT registered gives you a sort of kudos with customers in my view. It demonstrates perhaps to customers that you are more than a back room business, even if you are just that. However, some customers are looking for a small firm perhaps that can give a good local service and be cheaper than the big firms who have to charge VAT (see point 1.)

paddyrg

There are several sources for laser engraving machines - so unless this actually is something special, bear in mind it may just be a spun line. Or it may be true, but is that a company you want to deal with - one with no spare inventory in case of problems/repairs?

If you're B2B (eg corporate gifts) then VAT registration is generally a decent idea, neither of you suffer the tax that way. Ltd is probably a good plan in principle but does come with costs. If you're letting the public play with your laser (madness!) then remember the company director still can be culpable if not taking adequate precautions - may be better to keep as a backroom thing then going ltd becomes less pressing.

fishybusiness

Don't bother with VAT reg, it makes you less competitive - perhaps you should read some more before committing to business.

Ltd company - good idea - not no difficult to run, just make sure you keep your returns up to date for Companies House and HMRC, hefty fines for late returns are no fun!

Best getting an accountant to deal with it whilst you concentrate on business.

Your machine - if there is only one and the company are not sure if they can get more, it begs the question of support and spares. I'd be making sure my investment could be serviced and repaired quickly if business depended on it.

LIB3RTY

Thanks for the replies.

To add some more light on the business:

- I will be selling engraved products to other businesses. I will not be selling to the public.

- Nobody but me will be using the machine

- I run various websites that generate income via advertisement space that bring in money each month. I want to put these under the business name. One of these sites posts political opinion pieces and it sometimes recieves hatemail. I am careful of what gets posted but if something is ever interpreted as slander or such I want to be protected.

paddyrg

OK in your setup all b2b I'd probably go for the VAT registration - after all if the price is £100 or £100+£20 VAT won't make a difference to a VAT registered client, and you get to recover the VAT on your supplies.

Not sure how a limited company would offer any protection from hate mail though, may even expose you more as the directors details are a matter of public record, and the limited company can't slander, only the author can. Notice how with the phone hacking thing it's all individuals getting the trouble, the company doesn't absolve individual responsibility.

Seriously though, look for another supplier if this one is saying straight that you're going out of business if there is even a tiny fault on the machine which they can't say when can get replaced/parts for. Too much of a gamble, you need to be reliable, or don't do it, so you're only as good as your backup!

Mistral001

paddyrg wrote: »

, and you get to recover the VAT on your supplies.

Not sure how a limited company would offer any protection from hate mail though, may even expose you more as the directors details are a matter of public record, and the limited company can't slander, only the author can. Notice how with the phone hacking thing it's all individuals getting the trouble, the company doesn't absolve individual responsibility.

Good point. I would also say that the OP's company or the Op if he stays sole trader will probably not be sued for slander or libel but the person who wrote the original libelous comments as far as I can see. However aren't there certain comments which can be criminal offenses to make rather than the civil matters of libel?. I believe rascist and hate come under that and those have to be deleted and the writer of them reported to the police as soon as they appear I would have thought.