Accountants for LTD with 2 trades: software + side

Accountants needed: IT contractor, Ltd. Plus starting a side IT project under the same company

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Hi all,

This is my first post here, apologies if it's not in the appropriate category (if that's the case please advise me on correct one).

I have a software consultancy business - IT contractor. I worked on a side project for a while and I would like to bootstrap it via my existing company with a view of making it profitable in a year or two (it's most likely to be loss making in the first year, so I would like to offset losses with the software consultancy arm of the business).

I'm currently with Crunch and been with them for almost 4 years now. I do all daily bookkeeping myself and they're preparing year ends and quarterly VATs (standard scheme) on my behalf. I asked them on how to reflect transaction relating to a new trade correctly in the books to which they suggested me to go and find a new accountant, so here I am @ aweb.

About the new trade:
We have a website which lists fitness classes in a certain niche from different independent studios. At the moment it's just a directory of classes where you can find a class based on discipline, price range and your location, all the bookings are done directly with the studios (we do not take payments at the moment), we are generating good traction and we would like to start experimenting with monetisation.

We are planning on putting relevant links for affiliate marketing (e.g. Amazon) and receiving commissions on sales of related sports equipment, clothing, tickets to related sports events or adding paid premium services in addition to free basic listings (such as paid promotion as in Google Ads or EarlyBird in Spareroom).

We would also like to offer gift cards (MPV) which can be used in any of participating studios and receive either a commission for the agency services or a fee as a reseller (depending on which one is more optimal from the taxation perspective, e.g. VAT).

In terms of day-to-day bookkeeping we can either do it ourselves as we did with Crunch for the last 4 years as long as we know what we need to do or have someone else doing it for us (depending on the price).

From what I've read on this forum this setup might (or might not) require 2 separate sets of accounts and 2 P&Ls (my latest understanding you need 2 separate P&Ls only if you expect the entire company to be loss making in any year as in this case the losses from different trades will have to be treated separately but as long as profits from one trade can offset losses in the other separate P&Ls are optional and needed solely for the internal / analytical purposes).

I've contacted a several "contractor" accountants, but as soon as they heard of a side business, which is outside of their standard IT-contractor scenario they advised me to keep on looking somewhere. Can anyone here advise on UK-based accountants who would be suited / qualified to do our accounts in the circumstances described above?

Location-wise, our current accountants (Crunch) are based in Brighton but we have never actually met them in person in 4 years and happy to work with the accountants remotely (phone, email, online tools). We have also received some quotes from accountants who claimed they "can do everything for you for £400/year regardless of circumstances" and this is a red flag for us. Honesty is the best policy as we are hoping to establish a long term relationship.

Thank you for taking the time to read this long post till the end.
Andrey

Replies (10)

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By Tim Vane
21st Nov 2019 07:27

Your post is not in the wrong category, just the wrong forum.

When you wave a loaf of bread around in Trafalgar Square don’t be surprised to be shat on by pigeons.

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By Richard Grant
21st Nov 2019 09:16

Most practicing accountants should be able to accommodate you, the contractor factories will be out of their depth because this is beyond their paygrade.

It sounds like an interesting project but will cost more for the correct advice and support, (it will be money well spent). No doubt someone will PM you but make sure they are qualified and have a practicing Cert.

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By lesley.barnes
21st Nov 2019 09:50

Have you rung some of your local accountants? The best way to find an accountant is by word of mouth. Try asking friends and family for recommendations. Failing that look at the various accountancy bodies for members in practice.

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Replying to lesley.barnes:
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By andrey.e
21st Nov 2019 11:31

Hi Lesley, certainly, I would love to find an accountant based on personal recommendation, but no one in my "Friends & Family" network is running a business which requires a scheme like that. The closest scenario with 2 trades would be: IT-consulting + some kind of property investment for which they are using same "contracting factories". Some of them are good at what they do, but they don't want to deal with my type of business, especially when you bring up the subject of MPV taxation, and start discussing pros and cons of different setups such as "disclosed agent" vs "reseller", what are the tax implications of each and how to reflect them in the books. That makes them disappear in a split of a second.
Here is more info if you're interested in specifics:
https://www.gov.uk/guidance/find-out-about-changes-to-vat-legislation-on...

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paddle steamer
By DJKL
21st Nov 2019 09:51

Do take professional advise and think about the future if the venture flies- whilst you seem to have your heart set upon one company and two trades within same have you considered a group position instead? It actually may be simpler, cheaper in the long term and could be more flexible if a later sale of the new activity were to be considered.

Good advice now may pay for itself many times over in the future, do not skimp just on its cost would be my advice.

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Replying to DJKL:
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By andrey.e
21st Nov 2019 11:31

DJKL, thank you for the advice. I haven't heard about group position, where can I read about it? Currently we'll be bootstrapping this part of the business and the most immediate concerns are finding efficient ways to use profits from software contracting to invest in this online platform without incurring too much tax. Sounds like offsetting losses from one trade by profits from the other is the best option here (compared to inter-company loans or doing some magic with Director loan accounts). If it suddenly skyrockets tomorrow that would be a nice problem to have and in the end of the day, nothing stops us from re-structuring business to adapt to new realities and spin off the profitable trade into a new company.

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Replying to andrey.e:
paddle steamer
By DJKL
21st Nov 2019 11:50

Look up group relief for tax for starters, but actually a chat with a firm of accountants more versed in this sort of thing will be money well spent as they may, with a full picture, be able to offer clever ideas.

By all means do your own research- knowledgeable clients are better than ignorant ones- but do not get blinded by your perceived solutions as you cannot see what you do not know.

https://www.gov.uk/hmrc-internal-manuals/company-taxation-manual/ctm80105

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By andrey.e
21st Nov 2019 11:32
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By kiwilondon99
21st Nov 2019 16:28

and when speaking with your new accountant who reviews your business there may be some R&D claim / benefits for all the tecky development. GET a good accountant = pay for the advice

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By geoffmw1
27th Nov 2019 13:30

I suggest you contact the Institute of Chartered Accountants in England and Wales who maintain a register of practicing firms. If I were still inpractice I would have private messaged you for a discussion to see if we fit each other.
Have you been invoicing the second business through the company? That would be the first necessary matter for the company to be the trading vehicle.

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