There are two directions to go, both with their own pro's and con's:
1) Sole Trader: Usually a single person looking to work for themselves with as little hassle as possible. Very easy to set up, very easy to manage BUT... here is the horrid catch, and one that stopped me from doing so! You are responsible for all debts etc... which the company incurs. Also if the company gets any bad rap (As to put it) or any liability i.e. it caused a major catastrophe at a company etc... Then You are liable for everything, debt included. So whether the company closes down, that debt and bad news follows you like a ghost. The other bad thing is that your company name will appear as 'Joe Blogs Trading As IWriteApps.com'
Pro's
- Simple to manage the books
- Cheaper in terms of insurance
- Can easily trade doing pretty much anything under the company
- Easy to operate from home (i.e. due to rent agreements not allowing companies from home)
Con's
- The company name will be horrid i.e. 'Joe Bloggs Trading As iWriteApps.com'
- You have to pay for public liability insurance personally
- You can't register to claim back the 20% VAT
- Any company debts are YOUR debts, not the companies
- Any company liabilities i.e. court cases which order you to pay over £x is your liability, not the companies
2) LLC (Limited Liability Company): Also very easy to set up, costs a news £14 at companies house... BUT there is a lot of 'responsibilities' which you have to attend to as your primary need (over and above the work your company does). The tax man, companies house, insurance companies etc... don't care if you're losing money doing their paperwork, they comp first as a responsible director. On the good note, 'Limited' at the end of your company name has a BIGGER punch in any market than that in sole trader. So you can call yourself 'iWriteApps Limited'.
Pro's
- Easy to set up
- Gives you a well formed company name i.e. 'iWriteApps Limited'
- Insurance, Car Dealers, Banks, Lenders etc... would rather deal with a limited than a sole
- You can easily get credit accounts with suppliers i.e. software or hardware supplies
- You distance yourself from any incurred company debts
- You distance yourself from any company liability i.e. if the company was sued
Con's
- You have to be METICULOUS to the nearest 10th of a penny with book-keeping
- If registered for VAT, you HAVE to do your VAT runs ON TIME or you get nasty fines
- You HAVE to do your Annual Returns (and account) with companies house OR GET A NASTY FINE
- The books take a good few months to get into, but it's easily managable
- There is ALOT of paperwork involed whilst running the company
I hope this has helped you out, but feel free to drop me a PM
I'm more than happy to help another budding entrepreneur out with firing up a new company.
Things to remember:
-It's scary YES, but I can tell you know that the pride you feel when you see your company logo on paper is inexplicable!
-Money is NOT an issue if income is low in the initial period, there are ways to resolve that!
-You'd be surprised how many friends, family and random people appear out of the woodwork to give you a leg up
-Best of all, you HAVE NO BOSS
The freedom is great! I've been running for 3 years now, just opened up my second company and it's great. Ok fine, some weeks I have to pull 60 hour weeks, but other weeks, when I've had enough, I can just close shop, divert the phones to my mobile and vanish into the park with a book
Pop me a message
I can ell you through the entire process (of both sole trader and LLC). The paperwork which the companies house gives you for 'advice on starting a business' etc.. is DAUNTING. IT should ONLY be a page long of simple but to the point bullet points. So ignore most of that rubbish
Good on you for going it on your own!
Cheers
Adrian S
