Separate Company vs Trading As

gazfocus · 14 March 2019 at 12:20AM

My wife and I are the joint directors of a printing company (and the only two shareholders). Our main business is general printing and also personalised gifts.

My wife and I are working on a new clothing brand which will be items of apparel printed with our own designs.

What we are trying to work out is whether to make the brand a part of our existing ltd company or a complete separate business with its own accounts, etc.

Any opinions would be greatly appreciated.

Aquamania · 14 March 2019 at 1:03AM

gazfocus wrote: »

My wife and I are the joint directors of a printing company (and the only two shareholders). Our main business is general printing and also personalised gifts.

My wife and I are working on a new clothing brand which will be items of apparel printed with our own designs.

What we are trying to work out is whether to make the brand a part of our existing ltd company or a complete separate business with its own accounts, etc.

Any opinions would be greatly appreciated.

Speak to your accountant.

But ultimately it's up to you.

Separate companies with separate accounts may mean it's easier to handle, and certainly if one business fails it won't bring the other down. (or have any adverse affect on it)

But you should have separate managment accounts anyway to control the 2 separate businesses.

The downside of 2 companies is twice as nuch work, e.g company accounts, hmrc reporting, bank accounts, etc.

Also you may have a benefit of 2 separate companies if the combined total t/o starts to reach the VAT registration threshold

gazfocus · 14 March 2019 at 1:18AM

Aquamania wrote: »

Speak to your accountant.

But ultimately it's up to you.

Thanks - I will be speaking to our accountant but he charges for repsonding to emails so trying to keep it to a minimum

Separate companies with separate accounts may mean it's easier to handle, and certainly if one business fails it won't bring the other down. (or have any adverse affect on it)

Aquamania wrote: »

But you should have separate managment accounts anyway to control the 2 separate businesses.

So if we went down the t/a route, do you think we should have one set of accounts for each 'trading as' entity rather than just having all the accounts together?

The main appeal at the moment of having everything under the one company is being able to use the current ebay/amazon accounts with excellent sales histories. This would make it incredibly difficult to keep two sets of accounts.

Aquamania wrote: »

The downside of 2 companies is twice as nuch work, e.g company accounts, hmrc reporting, bank accounts, etc.

This is my biggest concern really...well, having to pay the accountant twice for tax returns/company accounts/etc.

Aquamania wrote: »

Also you may have a benefit of 2 separate companies if the combined total t/o starts to reach the VAT registration threshold

With regards to VAT, our existing ltd co is already vat registered. We may get away with any second business not being vat registered but I suspect they will be too close to risk accusation from HMRC of vat avoidance.

00ec25 · 14 March 2019 at 2:17AM

gazfocus wrote: »

We may get away with any second business not being vat registered but I suspect they will be too close to risk accusation from HMRC of vat avoidance.

well founded suspicion, it is called "disaggregation" and as I assume you are already aware is a hot topic for HMRC

"Are the businesses closely bound by financial, economic and organisational links? Separation of structure has also featured in cases."

if the vat reg print company does the design printing on the apparel you'd be struggling to demonstrate an arms length relationship

Separate Company vs Trading As

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