Help with setting up new business !

Uk_Lover

Hi

Hope i'm in the right place I'm after some advice about starting a new business.
Last year I took redundancy and received a payout. I'm currently unemployed but not receiving anything.
The intention was to start buying cheap flats, do them up and sell on, making a nice profit.
I've completely renovated one flat and had it on the market for a few months. Had a few offers but not at what 3 estate agents have said it's worth or what I can afford to sell for. While it's been on the market the EA has said it would rent out in no time. Always intended to go into BTL but thought I'd sell a few first.
So, now I'm going to rent it out. Done all the sums etc and works out as reasonable income plus hopefully will increase in value in the next couple of years. I'm a couple of weeks away from completing on my second flat and have another offer in for another one which I'm waiting to hear if I've been accepted.
Potential in the next 2 months I could have 3 BTL's, hopefully giving me 10k pa, (not a huge amount but it's a good start!)

So this is where I'm stuck !! I haven't a clue how to set this up.
Do I create a company running everything through that, Do I become a sole trader or what ?. Got an appointment with a financial adviser in a few weeks but wanted to hear what others had done.

Bare in mind I have no other income (GF earns about 30k if important)

Many thanks

antrobus

Uk_Lover wrote: »

..., Do I become a sole trader or what ?..

You are a sole trader. You became one the minute you purchased your first property with the intention of making a profit from it.

I'd go and talk to a proper accountant, rather than a financial adviser.

Brassedoff

Correct, an Accountant knows about business accounting and tax rules. A Financial Advisor sells insurance policies etc. Their training is nothing like that of an accountant who has to get a degree and then some more training to do their job.

Suarez

Brassedoff wrote: »

Their training is nothing like that of an accountant who has to get a degree and then some more training to do their job.

You don't need a degree to become an accountant.

Lovelyjoolz

As antrobus said: from the moment you purchased flat 1 with the intention of flipping it for profit you started a business and became a Sole Trader. You need an Accountant, not a financial advisor. Most FA's whilst red-hot on pensions/mortgages/investments etc don't know their !!!!! from their elbow when it comes to running a business and won't be able to advise you on how to run your business and plan efficiently for taxation (Capital Gains Tax is your primary tax concern).

So, as you are already in business you need to register with HMRC for Self Assessment and complete a tax return each year. You also need to plan and set aside money for your tax bill and your NI contributions.

You need to be keeping careful records of expenditure and collating all invoices, receipts and bills. Are you employing sub-contractors? If so, are you implementing a CIS scheme and making the proper payments to HMRC?

Are you a cash buyer or are you borrowing to buy the properties? If so, is your lender aware that you are flipping? And have they given you Consent to Let?

Are you aware of the legal responsibilities and duties of a Landlord? Read ALL of this:

http://forums.moneysavingexpert.com/showpost.php?p=41160642&postcount=12

This is your starting point, but there are many, many other things to consider. Don't let it put you off - if you think you can make a decent amount out of this then go for it. Just make sure you arm yourself with as much information as possible, know exactly what you should be doing and don't fall foul of the law and the taxman.

Most importantly - GET A GOOD ACCOUNTANT!!!

Jobseeeker

just register with HMRC and you will be a sole trader

be careful with financial advisor, they are sales people not necessarily impartial

Jobseeeker

Suarez wrote: »

You don't need a degree to become an accountant.

Most have a degree and/or qualification similar to a degree (ACCA)

Uk_Lover

wow thanks for the quick responses guys.

All the properties are bought cash but plan to re mortgage so I can buy more, the reason i'm seeing the financial advisor, he's sorting the mortgages. Ok so you all seem to advise to get a good accountant, next on my list ! A friend did say he would sort it out for me as he has 6 properties and does all his own returns and said it's easy (when you know how!!).

I'm sort of up to scratch with the financial implications and know I need to save money for tax and NI but guessing that I wont have to pay much/any tax in the first few years as I wont be earning enough ?

Know the legal responsibilities for being a landlord just wasn't sure if it would be better to set up a company on not worth it ?

cheers

Prothet_of_Doom

I realise that I will have to ask an accountant, but if you had a portfolio of DTL's would it be better to be LTd or Self employed.

I ask, because in my Ltd company there is almost enough to fund a BTL, but when I talked with a specialised mortgage advisor, he was trying to convince me to remortgage my own house because the interest would be lower, and use the equity for the BTL, and for obvious reasons, I didn't like the risk impliactions.

Uk_Lover

I'm taking some money out of my house but we have over paid by 35k so well ahead of what we should be so not such a risk. Not sure I would if I wasn't ahead.

I think self employed is probably best for me as I have no other income and tax will be minimal for a while

Jobseeeker

Uk_Lover wrote: »

wow thanks for the quick responses guys.

All the properties are bought cash but plan to re mortgage so I can buy more, the reason i'm seeing the financial advisor, he's sorting the mortgages. Ok so you all seem to advise to get a good accountant, next on my list ! A friend did say he would sort it out for me as he has 6 properties and does all his own returns and said it's easy (when you know how!!).

I'm sort of up to scratch with the financial implications and know I need to save money for tax and NI but guessing that I wont have to pay much/any tax in the first few years as I wont be earning enough ?

Know the legal responsibilities for being a landlord just wasn't sure if it would be better to set up a company on not worth it ?

cheers

Go see the business gateway, they will give you impartial advice for free, you can also get an hour with an accountant or lawyer for free. FA's are not necessarily acting in your interest if you know what I mean