Dangle_kt
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| posted on 9/1/13 at 11:56 AM |
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OT - Setting up a Ltd company question
I want to start a small business - if nothing else to prove I can, a bit like those inflatable tracks you see with 50cc quads for the kids to ride at
festivals and events...
If I set the company up as Ltd, would I need public liability insurance?
It's only as a bit of a sideline, and I can get the stuff cheap - so as long as I was happy to see the small bit of cash I invest in the company
disapear if someone tries to sue me, would this work?
Basically I just want to make sure I'm not personally liable, and as its just starting off I dont want to take on a load of fixed/startup costs
that I can possibley avoid.
Obviously if it took off (which I doubt), I would look to protect the ltd company with insurance etc.
Thanks guys
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mookaloid
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| posted on 9/1/13 at 12:12 PM |
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You will need public liability insurance whether you go Limited Company or not. If you can be proven to be negligent then as company director you can
be pursued personally so you can't hide behind Limited company status I'm afraid.
It sounds like you would be better to have the insurance and stick with sole trader status for the time being because there are costs associated with
having a Limited company which you don't really need at the moment.
"That thing you're thinking - it wont be that."
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coozer
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| posted on 9/1/13 at 12:15 PM |
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"costs associated with having a Limited company"
What costs are those mate?
1972 V8 Jago
1980 Z750
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mookaloid
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| posted on 9/1/13 at 12:20 PM |
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quote:
Originally posted by coozer
"costs associated with having a Limited company"
What costs are those mate?
Hi Steve 
Well you have to buy or set up a company first. Not hugely expensive - certainly less than £100.
You have to submit accounts to Companies House every year which will probably involve an accountant to prepare these. Probably still only a few
hundred but they are costs never the less.
Cheers
M
"That thing you're thinking - it wont be that."
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coozer
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| posted on 9/1/13 at 12:44 PM |
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quote:
Originally posted by mookaloid
quote:
Originally posted by coozer
"costs associated with having a Limited company"
What costs are those mate?
Hi Steve
Well you have to buy or set up a company first. Not hugely expensive - certainly less than £100.
You have to submit accounts to Companies House every year which will probably involve an accountant to prepare these. Probably still only a few
hundred but they are costs never the less.
Cheers
M
Aye, been there done that, it was £50 to set up and the accountant is £175 a year.. but I claim it all (and more) back off the tax...
1972 V8 Jago
1980 Z750
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Dangle_kt
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| posted on 9/1/13 at 01:14 PM |
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I'm not planning on making any profit out of the business except hopefully have it be able to afford a van, which I can use for
"free".
I just want to try it out rather than jump in with both feet, but I'm screwed if I've got to pay £££'s in a premium I might not even
need if no bugger turns up etc.
I've got a decent full time job, but I've always fancied doing something with motorsport - I thought this might be a cheap way in, and
prove I can run a small business at the same time.
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Ninehigh
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| posted on 9/1/13 at 01:16 PM |
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I was under the impression that a limited company has no financial liability beyond the company itself, meaning that if you have assets of £10k and
debts of £20k then only the £10k can be taken. I might be wrong but if I am what IS the advantage of a limited company?
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matt_gsxr
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| posted on 9/1/13 at 01:23 PM |
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"limited liability company" protects directors but has more paperwork.
"sole trader" doesn't protect you but has lighter paperwork.
Look here
http://www.lawdonut.co.uk/law/starting-up/choose-the-right-form-of-business
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JonnyS
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| posted on 9/1/13 at 01:33 PM |
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quote:
Originally posted by Ninehigh
I was under the impression that a limited company has no financial liability beyond the company itself, meaning that if you have assets of £10k and
debts of £20k then only the £10k can be taken. I might be wrong but if I am what IS the advantage of a limited company?
That is correct as long as the owner of the debt cannot prove negligence. It would be very hard to prove in most circumstances. Hence your comment is
correct 999 times out of 1000.
However as in the case of the OP, If I was selling motorsport parts, I would get insurance. A faulty part could cost lives and have a massive effect
on the limited company and potentially the director. Any person working in motorsport as a sole trader is asking for trouble.
A limited company has lots of advantages but there are some disadvantages too.
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JonnyS
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| posted on 9/1/13 at 01:35 PM |
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quote:
Originally posted by Dangle_kt
I'm not planning on making any profit out of the business except hopefully have it be able to afford a van, which I can use for
"free".
You can't use a van for free in a limited company. It can only be used for business purposes (and commuting under certain conditions) unless you
pay a benefit in kind, which will cost you between £600 and £1,400 a year. HMRC are very hot on this and go out of their way to catch people out.
[Edited on 9/1/13 by JonnyS]
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mookaloid
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| posted on 9/1/13 at 01:45 PM |
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quote:
Originally posted by coozer
quote:
Originally posted by mookaloid
quote:
Originally posted by coozer
"costs associated with having a Limited company"
What costs are those mate?
Hi Steve
Well you have to buy or set up a company first. Not hugely expensive - certainly less than £100.
You have to submit accounts to Companies House every year which will probably involve an accountant to prepare these. Probably still only a few
hundred but they are costs never the less.
Cheers
M
Aye, been there done that, it was £50 to set up and the accountant is £175 a year.. but I claim it all (and more) back off the tax...
I don't wish to be picky but when expenditure is offset against tax you don't claim it all back.
you do save paying tax on the equivalent amount of income. i.e. you won't get back all the £175 above but the effective cost of that £175 to you
is actually £140 because you don't pay tax on that £175
So it is still a cost.
"That thing you're thinking - it wont be that."
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Dangle_kt
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| posted on 9/1/13 at 01:46 PM |
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quote:
Originally posted by JonnyS
quote:
Originally posted by Ninehigh
I was under the impression that a limited company has no financial liability beyond the company itself, meaning that if you have assets of £10k and
debts of £20k then only the £10k can be taken. I might be wrong but if I am what IS the advantage of a limited company?
That is correct as long as the owner of the debt cannot prove negligence. It would be very hard to prove in most circumstances. Hence your comment is
correct 999 times out of 1000.
However as in the case of the OP, If I was selling motorsport parts, I would get insurance. A faulty part could cost lives and have a massive effect
on the limited company and potentially the director. Any person working in motorsport as a sole trader is asking for trouble.
A limited company has lots of advantages but there are some disadvantages too.
Thanks - It's not selling the inflatables, its letting little jonny ride them for 10 mins or whatever.
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mookaloid
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| posted on 9/1/13 at 02:05 PM |
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quote:
Originally posted by Ninehigh
I was under the impression that a limited company has no financial liability beyond the company itself, meaning that if you have assets of £10k and
debts of £20k then only the £10k can be taken. I might be wrong but if I am what IS the advantage of a limited company?
The main thing about a Limited Company is that it is formed by the sale of shares. The shareholders invest in the company and their liability is
limited to the value of the shares so when the shares are worthless then their liability ends. This enables money to be raised either privately or on
the stock market which can be used for business purposes to make a profit and pay back an investment income i.e. dividend to the investors. They would
never invest if they could buy £100 worth of shares but lose their house if the company went bust.
As a director you have additional responsibility for running the company within the law of the land so your liability dos not necessarily end with the
value of the shares.
Many people also use the Limited Company as a vehicle for (not to put too fine a point on it) paying less tax e.g. footballers are generally not paid
directly but are employees of their own Limited Company which means that instead of paying £40% tax on most of their income they can claim for
expenses and probably only pay half the tax.
"That thing you're thinking - it wont be that."
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FASTdan
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| posted on 9/1/13 at 02:09 PM |
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quote:
Originally posted by coozer
Aye, been there done that, it was £50 to set up and the accountant is £175 a year.. but I claim it all (and more) back off the tax...
Thats a cheap accountant isn't it? Is that purely them doing a tax return at the end of the year?
NEW danST WEBSITE NOW LIVE! Bike carbs, throttle bodies and more......
http://www.danstengineering.co.uk/
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NOTE:This user is registered as a LocostBuilders trader and may offer commercial services to other users
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BangedupTiger
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| posted on 9/1/13 at 02:30 PM |
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most of the info here is a bit sus.
Go ask a professional.
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mookaloid
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| posted on 9/1/13 at 02:36 PM |
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quote:
Originally posted by BangedupTiger
most of the info here is a bit sus.
Go ask a professional.
That's a bit of a sweeping statement. Care to expand?
"That thing you're thinking - it wont be that."
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BangedupTiger
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| posted on 9/1/13 at 02:40 PM |
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I'm an accountant, my advise is not to listen to advise from people unless they are qualified to give it.
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mookaloid
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| posted on 9/1/13 at 02:44 PM |
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quote:
Originally posted by BangedupTiger
I'm an accountant, my advise is not to listen to advise from people unless they are qualified to give it.
excellent then perhaps you could give us the benefit of your expert knowledge instead of simply knocking everything that has been said?
"That thing you're thinking - it wont be that."
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BangedupTiger
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| posted on 9/1/13 at 02:50 PM |
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quote:
Originally posted by mookaloidexcellent then perhaps you could give us the benefit of your expert knowledge instead of simply knocking
everything that has been said?
Based on my expert knowledge gained over the years. I would advise the op to do what I said in my first post. Go ask a professional.
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Ninehigh
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| posted on 9/1/13 at 03:34 PM |
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quote:
Originally posted by BangedupTiger
quote:
Originally posted by mookaloid
excellent then perhaps you could give us the benefit of your expert knowledge instead of simply knocking everything that has been said?
Based on my expert knowledge gained over the years. I would advise the op to do what I said in my first post. Go ask a professional.
You're a professional!
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adithorp
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| posted on 9/1/13 at 03:49 PM |
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quote:
Originally posted by Dangle_kt
Thanks - It's not selling the inflatables, its letting little jonny ride them for 10 mins or whatever.
In which case you'll have to have public liability insurance... unless you intend to pay millions in compensation for Little Jonny's
spinal injury out of your back pocket.
"A witty saying proves nothing" Voltaire
http://jpsc.org.uk/forum/
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JonnyS
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| posted on 9/1/13 at 05:56 PM |
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quote:
Originally posted by BangedupTiger
quote:
Originally posted by mookaloidexcellent then perhaps you could give us the benefit of your expert knowledge instead of simply knocking
everything that has been said?
Based on my expert knowledge gained over the years. I would advise the op to do what I said in my first post. Go ask a professional.
Well for a professional you're not being very professional I'm afraid.
As far as company/tax threads go, this one isn't that bad. I'm an accountant with two decades experience, employ 20 people etc etc. The OP
has asked for some specific advice and he's got what he needed. The advice that he needs public liablility insurance.
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plentywahalla
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| posted on 9/1/13 at 06:48 PM |
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quote:
Originally posted by JonnyS
quote:
Originally posted by BangedupTiger
quote:
Originally posted by mookaloidexcellent then perhaps you could give us the benefit of your expert knowledge instead of simply knocking
everything that has been said?
Based on my expert knowledge gained over the years. I would advise the op to do what I said in my first post. Go ask a professional.
Well for a professional you're not being very professional I'm afraid.
As far as company/tax threads go, this one isn't that bad. I'm an accountant with two decades experience, employ 20 people etc etc. The OP
has asked for some specific advice and he's got what he needed. The advice that he needs public liablility insurance.
His definition of a professional accountant is one who won't give advice until you cross his palm with silver.
Rules are for the guidance of wise men ... and the obedience of fools. (anon)
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MakeEverything
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| posted on 9/1/13 at 07:27 PM |
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quote:
Originally posted by plentywahalla
His definition of a professional accountant is one who won't give advice until you cross his palm with silver.
Who will then say that he is just helping the economy rather than giving things away for free!! 
Kindest Regards,
Richard.
...You can make it foolProof, but youll never make it Idiot Proof!...
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AdrianH
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| posted on 9/1/13 at 07:28 PM |
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Lloyd’s used to sell a small book on setting up your own business. That was a bit of an eye opener.
There was a section in there about the differences between Sole traders, Ltd companies and partnerships.
I am sure it said that a single person could not really set up a Ltd company to remove the liabilities, as that person would still be sole owner.
There are also other duties that must be done as part of a Ltd co. Must have a company secretary etc.
I think you would be fine under the sole trader banner with public liability insurance, but I would also suggest you go ask a professional, say your
manager or advisor at your bank.
Have a look at small start-up books available and work out a business plan with outlays, time, expected running costs and one thing that many can
forget is covenants on your house if you decide to run the business from home!
At one time I tried it running as a small sole trader selling surplus electronic test equipment and radio equipment, did it for 4 years in spare time
before realising howe little I made and gave up.
Some times you just have to try.
Adrian
[Edited on 9-1-13 by AdrianH]
Why do I have to make the tools to finish the job? More time then money.
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