When does it become a business?
Clau1990
Posts: 1 Newbie
Hello everyone.
Hello,
I want to create a website with some friends. We want to create a sort of network/ hub for a specific industry. Companies will be able to create profiles and interact with each other, among other things. We are engineers, and at this point this is more a hobby than anything else, an opportunity to learn more about this industry and explore possibilities of open innovation inside it. As such, we don’t intend to make any profit from it, at least in the short term. Everything will be free, and we will not seek revenue from it.
With this in mind, I wanted to check, do we have to register it as a company or treat it as a company in any way?
If not, at what point will it become necessary to incorporate as a company? Only, when we intend to profit from it?
Do we classify as sole traders even if we don’t “trade”, as it is free?
Thank you for all your help,
Best wishes,
Claudia
Hello,
I want to create a website with some friends. We want to create a sort of network/ hub for a specific industry. Companies will be able to create profiles and interact with each other, among other things. We are engineers, and at this point this is more a hobby than anything else, an opportunity to learn more about this industry and explore possibilities of open innovation inside it. As such, we don’t intend to make any profit from it, at least in the short term. Everything will be free, and we will not seek revenue from it.
With this in mind, I wanted to check, do we have to register it as a company or treat it as a company in any way?
If not, at what point will it become necessary to incorporate as a company? Only, when we intend to profit from it?
Do we classify as sole traders even if we don’t “trade”, as it is free?
Thank you for all your help,
Best wishes,
Claudia
0
Comments
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It's not a company, it's an Interest Group.
If you make a decision to monetise it, then register - as a sole trader/one person, or as a partnership.0 -
My feeling is that you should probably incorporate before your website goes live. Someone has to be responsible for the website, and I would assume that a court will look the person who pays for the external services you need to get the website up and running; e.g. web-hosting - you will need to pay for something to get your website live. You and your friends could end up all being liable for everything. However, I'm not an expert, but a solicitor would be able to confirm if the above is correct. If you have home insurance and legal protection as part of this, you can probably get this confirmed over the phone via the legal protection provider. Just say you are considering this as a personal venture but aren't sure if this could make you liable for anything. They should be able to give you advice on how to protect yourself personally.The comments I post are my personal opinion. While I try to check everything is correct before posting, I can and do make mistakes, so always try to check official information sources before relying on my posts.0
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HMRC use "the badges of trade" to assess that fact, if you are trading, then you are in business
https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim20200
until then it appears it is merely you being philanthropic
that said the comment re insurance may be valid depending on what your website actually does and therefore what liability it exposes you to.
people seem to think business means company, they are wrong, as above, most start as sole traders (or partnerships if appropriate), and only incorporate when, or if, it is either a) more tax efficient to do so or b) they need and want the protection of limited liability0 -
It sounds to me like it could very well be a not for profit organisation rather than an interest group.
I will assume these companies are going to contribute to the upkeep of the servers etc.
You should seek expert advice from a solicitor or perhaps your accountant who you probably have anyway.0
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