ltd Company for eBay Selling

mootonandy

Hi,

I am exploring the "dropshipping" business model for selling on eBay, but I think it would be safer to open a ltd company to trade on eBay in case someone tries to sue me for injury or copyright infringement or something else?

I will only be using suppliers who expressly allow you to dropship their items.

I think then my personal assets are safe and its just the ltd assets they can go after?

Just looking for advice on how to do this safely because I have seen on facebook groups people getting sued for various things resulting from their dropshipping activities.

Thanks

twhitehousescat

you should get many helpful answers , as drop shippers are thought of very highly

ballisticbrian

you should get many helpful answers , as drop shippers are thought of very highly

It's funny you say that because goo-gle does an amazing job of caching this very site, so every kid out there goo-gling "dropshipping ideas" comes crashing onto this site.

Pennywise

Nothing wrong with a ltd co - just make sure you engage an accountant before you set it up so you can do everything properly from the start. It's very different from being a sole trader, a lot more complexity, separate insurance needed, separate bank account needed etc. You have to remember it's a separate legal entity - a completely different "person" to you, so you need to make sure you don't get you and the ltd confused or muddled. You need to factor in the additional costs of the limited company too. Please don't just use a cheap formation agent and try to muddle through yourself thinking it's the same as a sole trader - it's not. Even some allowable expenses are different. If you want to take money out for yourself, it's got to be a wage (via a PAYE scheme) or dividends (for which you need management accounts) - no such thing as drawings for a limited company. None of it is rocket science, but you really need to know what you're doing.

Berkshire_Beancounter

Pennywise wrote: »

Nothing wrong with a ltd co - just make sure you engage an accountant before you set it up so you can do everything properly from the start. It's very different from being a sole trader, a lot more complexity, separate insurance needed, separate bank account needed etc. You have to remember it's a separate legal entity - a completely different "person" to you, so you need to make sure you don't get you and the ltd confused or muddled. You need to factor in the additional costs of the limited company too. Please don't just use a cheap formation agent and try to muddle through yourself thinking it's the same as a sole trader - it's not. Even some allowable expenses are different. If you want to take money out for yourself, it's got to be a wage (via a PAYE scheme) or dividends (for which you need management accounts) - no such thing as drawings for a limited company. None of it is rocket science, but you really need to know what you're doing.

That was my thought too. Having a limited company involves an annual filing return (cost = £13 so not enormous, but it needs to be done on time)., You also have to file annual accounts, for which an accountant is highly recommended. You'll also need to register with HMRC for Corporation Tax. Tax returns need to be filed whether you've made a profit or not. There are penalties if you don't file on time. You'd need to set up a separate bank account in the name of the company.

Having a limited company does mean your personal assets are separated from those of the business assets, but it does involve a fair amount of work to ensure all the requirements of running a limited company are complied with.

RFW

mootonandy wrote: »

Hi,

I am exploring the "dropshipping" business model for selling on eBay, but I think it would be safer to open a ltd company to trade on eBay in case someone tries to sue me for injury or copyright infringement or something else?

I personally like to know that I won't be selling anything that could injure anyone or infringe on a trademark.


As far as injury goes a limited company wouldn't protect you anyway, as a company director you'd be liable for criminal prosecution.



I've not got a problem with dropshipping (although don't see it as a long term business) or having a limited company. I would urge you to know what you are selling, if you do dropship, do some test purchases so you know the products are ok.

MEM62

mootonandy wrote: »

I think it would be safer to open a ltd company to trade on eBay in case someone tries to sue me for injury or copyright infringement or something else?

mootonandy wrote: »

I think then my personal assets are safe and its just the ltd assets they can go after?

You personal assets would not be completely safe as you will have obligations as a company director and can also be personally liable for any wrong-doing. In particular, a LTD company would not protect you from the repercussions of illegal activity.

Gary123456790

It sounds like you haven't actually sold anything yet on ebay - it is probably best to see if you can actually sell enough first rather than worry about what type of business it is. Unless you are clever in how you go about it then there are already 10 other people doing exactly the same as you are already planning.

There are exceptions, but dropshipping is not just as easy as setting up some ebay listings and watching the money roll in. I cringe when I see all the youtube videos about how easy it is to setup an online business using drop shipping... Don't get me wrong it can be done, but its not easy.

forgotmyname

The problem with dropshipping is that you dont see the goods they are sending and have little control on how they are sent.

You will get buyers that dont like drop shipping and leave negative feedback and then the buyers that dont get the item 5 minutes after ordering and they leave negative.

Then the quality control, your test sample appears OK but the quality between batches varies a lot. I order a lot from China and even across the same batch quality can vary.

Want to avoid being sued then avoid anything thats not 100%. Know your supplier and your product.

Your not going to get brand named goods from China for pennies unless something is dodgy.

mootonandy

What got me worried was that someone in a facebook group said he sold a gazebo and it collapsed onto some children, then the buyer told the seller he's going to sue him.
I'm thinking just a bit of bad luck is enough to land you in a lot of trouble and end up bankrupt.

forgotmyname

Thats where you need to know the product. How strong is the frame? Does it have enough tie down points? Are they adequate for a 50mph wind?

Are the instructions clear that it needs to be taken down in high winds?

Can you trust the sellers fire labels? If your selling the goods you should be ensuring they are safe not relying on insurance to cover you.

Your insurance could ask you what tests you gave the product, especially if not not from a UK company/supplier.