Receiving payment from local business

[CitizenSmif]

I've almost finished setting up my 'business' offering various web services to local company's, I'm yet to contact anyone yet - I need to know if not registering as an LLC etc when promoting/doing business will be a problem? I will (hopefully) be receiving large payments and also recurring charges, am I going to be OK with using my personal bank account and using a random (made-up) company name while still technically being defined as a single person?

I'm clueless when it comes to this side of things, I've never had to look into it - but surely if I was making money I'd have to register as a business as the Government will be itching to tax it. I'm sure I could register an LLC no problem but I'd prefer to just pretend I have a business with its own name nd shit..

On the other hand, if I promoted the fact I'm a sole person and use my real name to promote my services would that be OK? (if I do have to register an LLC in the above question) I'd prefer not to do that aswell... :321:

Based in the UK.

Also, anyone know where to find information describing this side of things general without having to trawl through endless wordy irrelevant articles?

 

[Taraqil]

You should probably ask this question in a UK entrepreneur-forum. That said, don't pretend to be a company when you are not, can't see that ending well.

 

[Kyle]

Well, you will be receiving income therefore you will be taxed, regardless of whether you're an LLC or a sole trader (which is legally what you are if you are a 'sole person') or whatever.

In brief:

Deciding whether to trade as a sole trader, a LLC or a LLP, etc, is a generally a matter of working out which offers the most tax efficient way of taking the money you earn and putting it in your pocket, given how much you're earning and how you are earning it.

(Also to be noted - protection offered by the company structure is also important. As a sole trader you, personally, are completely liable. So if you default on a payment they can come after YOUR car, house, etc. As an LLC you are protected - defaulting means they can only come after the companies assets as long as you haven't offered any personal guarantees.)

As a sole trader you can still use a cool name but on company stationary you must state your personal name as well as the trading name: eg. John Doe trading as Cool Name Design Services. I don't think you are legally allowed to call yourself a 'company' if you are a sole trader but check this.

In summary, speak to an accountant. If you can't afford an accountant yet, work as a sole trader until you're making some cash, then hire an accountant.

You will also have to register with HMRC as soon as you are start earning. Read more at Business support, information and advice | Business Link it's a pretty helpful website.

 

[LazyHippy]

Talk of LLC is a bit misleading as it includes both private limited companies (LTD) and public ones (PLC) amongst others. I guess you'd only be considering an LTD.

You can register a LTD company at Companies House for a few quid, but probably wouldn't be of any benefit initially and certainly a lot less straightforward. The protection that used to be there has also been partly removed, directors are often personally liable for company debts. (HMRC or Business Link can give you a lot more info on this.) They've also removed most of the tax benefits of using a LTD company for small businesses. (Pay yourself minimum salary, rest as dividends.)

My advise would be to register as self employed/sole trader with HMRC (just phone them) and set up a separate business bank account, should be no problem with your existing bank. You can call yourself anything you like.

No idea about the stationary stuff, never heard that before - got any more info on that, Kyle?

Business Link is a great resource for this stuff and their local groups are very handy for networking too.

 

[kidChaos]

I can't speak for the UK, but this is my experience in America:

Biggest difference between entity status is liability on personal assets. You're taxed the same self-employment tax regardless, and if you have employees a lot of other taxes come into effect.

I use Harvest to manage my time/invoicing for client work. I just have different rates I charge based upon the type of work (i.e. design, code, content/syndication) and invoice based upon terms per client. (returning clients can get net 15 or 30, usually payment due on receipt.)

More so than just tax liability, if you're launching software as a service or providing any sort of infrastructure for clients you will want the legal protection of a corporate type entity. (LLC or S-Corp in US)

Clients can get sue happy over downtime and other factors that might be out of your control. Be prepared! I also have a $2mil insurance policy to cover any unexpected fuck-ups. Hopefully the EU is nicer than the FTC.

 

[CitizenSmif]

Thanks to all for the info, businesslink.gov.uk is exactly what I'm looking for - a lot of easy to understand explanations about shit I've not managed to take the time or effort to learn from the 'wordier' resources.

I'm assuming aslong as I'm a British resident that I'm going to have to register the business in the UK? I'm emigrating to another European country within the next few months but I would obviously want to keep (and gain) clients in Scotland. How will this affect me? As I said, I know very little about this but it seems tax rates etc can be much more glamourous outside the UK. You've both suggested working under a sole traders name until I'm making cash, if I gain business here as a sole trader then when I leave can I register the business at my destination or will I have to keep it in the UK?

 

[LazyHippy]

Thanks to all for the info, businesslink.gov.uk is exactly what I'm looking for - a lot of easy to understand explanations about shit I've not managed to take the time or effort to learn from the 'wordier' resources.

I'm assuming aslong as I'm a British resident that I'm going to have to register the business in the UK? I'm emigrating to another European country within the next few months but I would obviously want to keep (and gain) clients in Scotland. How will this affect me? As I said, I know very little about this but it seems tax rates etc can be much more glamourous outside the UK. You've both suggested working under a sole traders name until I'm making cash, if I gain business here as a sole trader then when I leave can I register the business at my destination or will I have to keep it in the UK?

I'm fairly certain you can register a business anywhere in the EU and trade in any member state without much bother. If it's outside the EU it might get a bit more complicated.

You'd have to look into it more but as far as your customers are concerned it would just be a payment to a company, plenty of big companies trade in the UK but are registered elsewhere (e.g. eBay, reg'd in Ireland) and it has no real effect on the end user.