Registered a Ltd company for sole trader?

[lame plumber]

I'm very risk adverse, dont like heights, dont like finance sales folk, hate builders and bankers alike, but love working for myself (which is a dangerous as it gets), so never buy stuff I cant afford, always pay my bills and plan my cash flow carefully. I also hate paperwork, so choose not to go ltd or vat registered and find that still leaves me enough money to live a comfortable life. I do though own my own house and other properties outright which means I dont have to stress so much as the likes of Sag prehaps and most of all I like a little banter. Prehps sag beginning to realise that now

 

[Sag]

Who says I stress? I'm director of an Ltd which I run properly, it's VAT registered and insured. My account deals with anything I can't/don't want to deal with.

I also love working for myself (let's not debate the self employed v employed due to 'working' for the ltd), pick and choose my jobs. Life is good.

 

[MOSSEP]

Of all the business decisions I have made becoming VAT registered is probably the best. I believe it generates us a lot more commercial work, and it doesn't scare off all of the domestic clients like some would think it does. I think some folk misunderstand, but its only the labour we add 20% compared to non VAT companies, they still have to charge the VAT on materials.

As long as you keep your book keeping in good order it's not hard to do returns, and I love the fact that everything my business needs is now 20% cheaper than when we were not VAT registered.

 

[SafeGasInstall]

And you lose the opportunity to make a margin by supplying the goods at the same price they could have got them for, but by buying them at trade price......

Trade price ? ??? Are you kidding me

 

[SafeGasInstall]

What will happen if some can not longer make payments on there credit card , bank loan , motor finance , suppliers bills ?
I did know some one who wiped out £120k and them changed his job , and he told me after 6 years he will be cleared of his records . Is that how it works ?

 

[Sag]

Trade price ? ??? Are you kidding me

No, we did one recently and there was a few hundred off for trade. Why is that so hard to believe?

Have you seen the price of these mobility bathrooms?

 

[Sag]

What will happen if some can not longer make payments on there credit card , bank loan , motor finance , suppliers bills ?
I did know some one who wiped out £120k and them changed his job , and he told me after 6 years he will be cleared of his records . Is that how it works ?

Defaults stay on your credit file for six years. Bankruptcy used to be the same but they changed it quite a few years ago. I think it was branded the enterprise act. It was dropped to one year and their main reason for doing so was to encourage people to go into business for themselves without the worry of 6 years of poor credit rating if it failed. However, the 1 year timescale applies too most bankruptcies, not just failed business owners.

 

[Nostrum]

I'm with sag on this one.

Ray has a completely different perspective on this matter which you have to appreciate. As a lender he wants to to know he will get back what he has lent. It's pretty common knowledge that if your company (ltd so an entity in itself) runs into financial difficulty, merchants are normally the last on the list to get paid, which is very often not at all)

The simple solution is to require a personal guarantee so that the director is personally liable for debt, much the same as the bank will require if you take out a loan.

In reality, this shouldn't be an issue so long as you run your company responsibly in the same way you would a sole trader.

Williams and Co are a ltd company, why? Because running a business on this scale does carry risk. Lame, if you run your business with zero risk then very well. I know of 2 business owners (sole traders) who have lost their house during the recession due to non payments. The contracts were large and non payment meant bankruptcy. Neither were stupid either, the recession bite hard as a long spell of growth suddenly snapped into downturn. These businesses thought they were doing well and expanding steadily as most business owners intend on doing

It depends where you see your business going, as Ray has said you can't just go limited, you start from scratch as the company becomes an entity in itself with no credit history no claims bonuses etc. so if you are in full swing this can be very disruptive to business decisions, lower credit, higher costs.

So as a sole trader I would say you are limiting your business prospects and decisions if you want to ensure you don't end up potentially losing your personal possessions as a consequence of non payment, larger the job, greater risk.

If you just want to earn a wage and have no intention of growing considerably then a sole trader is fine, if you want to take on jobs that inherently carry more risk (greater valve, larger scale, or multiple jobs at once with employees etc) then you risk everything you own doing so as a sole trader.

Business and risk go hand in hand, it's about limiting the damage as far as reasonably practical, this goes for us and lenders (merchants)

is Ray being irresponsible buying 50 magnacleanse units that he has no guarantee of selling, or has he taken a calculated risk to secure a better profit margin?

 

[Sag]

I know of 2 business owners (sole traders) who have lost their house during the recession due to non payments. The contracts were large and non payment meant bankruptcy.

Business and risk go hand in hand, it's about limiting the damage as far as reasonably practical, this goes for us and lenders (merchants)

Which is why I set up as an ltd. You pay insurance to avoid/limit risk/liability.

I pay more in accounting and a little more time doing administration for exactly the same reason.

It's all too easy to say it cost too much or it's too much hassle, but it's a known cost vs the unknown cost of the failure of a business and the debts it would leave to be paid back personally, or bankruptcy.

 

[Nostrum]

And I also agree with Sag on the credit accounts. I have enough money in my bank account to cover my merchant credit limit but I choose to use the account to aid cash flow and simplify the process. If you are borrowing thousands of pounds a month but have only a few hundred quid in your bank then you need to look at why. Cash flow is the key to any business, you can't run on empty all the time and rely on credit, this itself is more irresponsible then being a limited company. Increase profits or decrease your wage to allow the business to grow.

 

[lame plumber]

Of all the business decisions I have made becoming VAT registered is probably the best. I believe it generates us a lot more commercial work, and it doesn't scare off all of the domestic clients like some would think it does. I think some folk misunderstand, but its only the labour we add 20% compared to non VAT companies, they still have to charge the VAT on materials.

As long as you keep your book keeping in good order it's not hard to do returns, and I love the fact that everything my business needs is now 20% cheaper than when we were not VAT registered.

not quite true.if you add a mark up on your materials, that cops 20% vat as well so its labour and materials mark up. if your mainly domestic it does effect your market somewhat as a job with £200 labour, materials inc vat of £120 for a non vat co would total £340 with a 20% materials mark up. If you are vat reg that would now be £384 some £44 more, which would hurt most folks down here. So the choice is do you put the whole 20% on or absorb some. Ok materials and tools come in 20% less so that can help your pricing, but the aim is to be earning not saving on materials and vat is a tax on earnings if your a business so that expect your earnings to be more than your costs such that the balance is their way. you then pay income tax on your net profit, so non vat claim more against tax than vat reg folks which evens it out a bit.

I would like to see the figures for a business with vat limit approaching to see how the overall difference in claiming vat, against income tax and a change in trading takes effect on both sides, then make an informed decision as whether or not to go vat registered. to date the accountants have always told me to take time off rather than hit the limit as he works the works for both sides with tradesmen around here, the ones who have transferred to being registered, seem to be the ones who have gone under in recent years, now that could be down to various factors but its rather sobering to see.

 

[MOSSEP]

Any business we may unknowingly lose by being VAT registered has been more than offset by the increase in commercial work we have secured since VAT registration. Our turnover increase since VAT registration has been good, although it was on an upward trend anyway.

We didn't gain our commercial clients due to being VAT registered, it was all from recommendation, but we certainly would not have kept them if it were not the case. I can see the view of trying not to go over the limit, but I would not restrict a companies progression to do it.

 

[Centralheatking]

NICE ONE RAY its good to see u being open and honest - at the end of day we are all in this together CHK

There is another side to this, which is the nature of your purchases.

Merchants make different margins on different types of product. For us, the level of margin is roughly the same as the banks interest rate.

Since heating products, and particularly boilers, have very low margins, our appetite for unsecured lending to a limited company doing lots of boilers is pretty low. Spend more on higher margin product lines, and our appetite for risk may be higher, as our rewards are higher.

Don't forget that all the bad debts that a merchant takes are paid for by the good customer who do pay.

 

[Centralheatking]

Lame plumb is right - this is just what have done thus

All my business is vat /declared etc no problem because when we decide to
sell the business the potential buyer can see the truth . we have been down this road
a few times times. Build up a business keep a database I then sell for 50% equity and and
keep a share of the profit for 2 year.

My Turkish best mate George does this with chip shops and guess who does the
gas water buiklding etc CHK

 

[Centralheatking]

George is a good player and makes his curry sauce in a electric dedicated cement mixer
2x per week and each time its worth £1000 when put into little cups

he heats it up with a propane roof burner set made by guess who CHK

 

[Kev the gas]

George is a good player and makes his curry sauce in a electric dedicated cement mixer
2x per week and each time its worth £1000 when put into little cups

he heats it up with a propane roof burner set made by guess who CHK

Thanks for that !

I "USED" to be quite partial to a bit of curry sauce with me chips

 

[SafeGasInstall]

Lame plumb is right - this is just what have done thus

All my business is vat /declared etc no problem because when we decide to
sell the business the potential buyer can see the truth . we have been down this road
a few times times. Build up a business keep a database I then sell for 50% equity and and
keep a share of the profit for 2 year.

My Turkish best mate George does this with chip shops and guess who does the
gas water buiklding etc CHK

No way a Turkish man is caled with Christian name !!!

 

[WaterTight]

George is a good player and makes his curry sauce in a electric dedicated cement mixer
2x per week and each time its worth £1000 when put into little cups

he heats it up with a propane roof burner set made by guess who CHK

well at least as a freebie i imagine you get all the cement-mixed roof-burned diarrohea coloured gloop you can keep down

 

[Kev the gas]

BBC - Religions - Christianity: Saint George

there you go Stan.

 

[SafeGasInstall]

We also have st. George (Bulgaria)
and we selebrare this on the 6th of May (also national army day)

but not Muslim from Turkey is called George !!!
I grew up in Bulgaria and we had lots of Turkish people in my country and no Turkish man will call his son George !

 

[SafeGasInstall]

BBC - Religions - Christianity: Saint George

there you go Stan.

Here is something for you too Kev
Madara Rider - Wikipedia, the free encyclopedia

 

[village idiot]

After reading all of this stuff, I have decided to go on-line and register my company name with Companies House as a Ltd company. (Only trouble is, I have made one blunder: I have registered all the TEN shares as ''fully paid up''. That was not a smart move. I should have taken up SIX shares and leave FOUR as unpaid. That way, I can in future hand a share each to missus and kids, but remain as the majority holder so my decisions will be final. Only just submitted it a few minutes ago, then realised I had made a poo-poo?)

Any way, they say it takes 24 hours for it to be accepted or declined. I hope it is declined now? The only reason I have registered the company is so that someone else doesn't take up the name. It will stay Dormant while I continue to trade as a Self Employed fool.

And as a matter of fact, the benefits of being VAT registered (even if your transactions do not hit the threshold) far outweigh the reasons for not being registered. But I choose not to be VAT registered.
Also, the benefits of trading as a Ltd company far outweigh the reasons for not trading as one. Again, I prefer to stay as Self Employed for now. Have been for the past EIGHT years.

Every Accountant I know or do jobs for starts screaming at me and my stupidity for not trading as a Ltd company. But I know what they want: The opportunity to provide me with tax savings advice. REALLY??? As a Self Employed bloke, I do my own tax returns, so it costs me nothing. And even when I require a major loan and the banks insists on Audited Accounts, I personally prepare the accounts and hand them to an accountant who then ''prepare'' it under their company logo, and present it to me after charging me an unnecessary ''hefty fee''? I mean, to charge someone £900 for an accounts they have prepared themselves and which takes you 15 minutes to transfer and sign and put your company stamp on is ridiculous. But that is the world we live in.

 

[Dan]

Don't mind me while I bump some threads in the plumbing forum category. This thread might not be a current topic, if it isn't, just let it drop off the list.

If you DO want to reply to it, go ahead, that's fine. Your post might add some value to the thread and help newer members in the future.