What sort of business should I go for?

ostaragirl

I'm setting up a small business hiring out vintage china for weddings etc but not sure what type of business I should be for tax purposes etc. I've heard of sole trader, self- employment but I work full time as well. Does it depend on how much earnings you think you will make that affects what sort of business you should be? bit confused...

PlutoinCapricorn

Registering as a sole trader seems best at this point: you can always create a limited company if and when the income makes this step advisable. If and when the combined incomes take you into the higher tax bracket, that is the time to think about becoming a company.

It is true that some organisations will only do business with limited companies, but there are many sole traders around. You are not likely to build up huge debts, where limited liability does help.

paddyrg

If you're dealing with weddings, you're probably dealing direct with people, not corporations requiring LTD status.

There *will* be losses and breakages, so make sure you work out a realistic deposit scheme in your terms and conditions - for instance what happens if one cup from a set gets damaged? Is the set unusable, etc.

dearlouise

You'll need to be a sole trader & do a return once a year. Don't consider anything else at this point.

densol_2

First year - bound to make losses as you are setting up and investing in your business assets ( AIA) ? Then self employed as you can use losses against tax paid on other income ( PAYE ) which can't do if limited co ... And if business takes off in second year - maybe think about limited company for the dividend benefits ?

ostaragirl

Thanks that makes sense. I have worked out deposits to factor in damages, however my really good sets have been separated just now until I think about whether or not to use them, a lot of my stock is mix and match so continually being added too.
I'm no book keeper so I'm going to open a separate bank account and just keep invoices/receipts etc just now until I work out what to do. What is the position with buying new stock will I be able to offset that/claim vat or something?

paddyrg

You're not VAT registered, so no, you cannot claim it (otherwise you would also have to charge it, and that makes your prices go up 20%). You can offset the cost of buying the stock that you then lease out, I'd talk to an accountant for advice.

Mistral001

ostaragirl wrote: »

I've heard of sole trader, self- employment but I work full time as well.

Sole trader and self-employed are really the same thing if it is just you working in the business. The "sole trader" term is used to distinguish between firms which operate where there is one person who is personally responsible for finances ie. sole trader and those firms where financial responsibility is shared or limited or both. Some sole traders have 100's of employees, so the "sole" part can be confusing.

PlutoinCapricorn

You say that you work full time. In theory, what you do in your spare time is your own business but sometimes there can be problems if you do other work: is there anything about this in your contract of employment?

Is the main job connected with the wedding business? Could your self employed work make you tired and distracted so you could not give enough attention to the main job? Would you ever take phone calls or emails or use the printer and other resources in your employer's time and office? These are the main issues that you may need to think about.