Start a parent company or change current company name?

sheepysheep60

Hiya,

I currently am a freelancer and own a limited company that basically pays me, and buys my equipment, and pays tax at the end of every year (this part is sorted out by my accountant).

I'm looking into starting a collective with some like minded friends, and think it would be good if we all traded under one company name. So my question is should I set up another limited company, which pays everyone (including my company, which pays me), or should I just change the name of my company and pay everyone from that?

So, to bring it back to the title of the question: the prices that the main company will quote will generally be matched by the contractors for that job, so if the company charges £1000 for a job, the expenses for the job will be £1000... so will it need to pay any tax on that cash flow? Are thee benefits to having two companies or a single company?

Anyone done anything like this? Shall I keep my personal limited company or just go all new? I'm so sorry if this is a rambled, nonsense question!

Annisele

I don't think it's a nonsense question - but my answer is that I think you should speak to your accountant (and possibly also to a solicitor).

Some random (and certainly non exhaustive) things that occur to me:

What exactly do you mean by "collective"? Would the clients be expecting a particular person to do work for them, or are you envisaging you'd all do pretty much the same thing?

What would be the benefits to trading under one name, rather than each having a separate business?

Presumably you are the director and (sole?) shareholder of your existing limited company - giving you control of that company. Would the other people involved be happy for you to be in control of the whole thing? Would you be happy to give up control to other people?

How would you manage credit risk? If the company charges £1,000 for a job and the client doesn't pay, you could still end up liable to pay the contractor the £1,000 you'd agreed.

Are you anywhere near the VAT threshold, either individually or collectively?

Would you be better off with a partnership structure? Or with taking on some of the people as employees?

Brassedoff

Form the other firm , but not as part of a holding firm. If you do, you end up being classed as an employee.

You could look at getting others who are like minded, but you'll have a load of competition in your area of operation.

The only way it will work is for you to be part of a loose collection of consultative experts. That works quite well, having tried both, I know the latter is the only real option.

Mistral001

What are you bringing to the table with these friends to prompt them into joining you rather than them just working self-employed for themselves?

Ok maybe you can share information and technical expertise and it will not be so lonely an existence, but financially I cannot see any benefit for them or indeed yourself.