Limited Company and Sole trader revenue

Trading through their own Ltd company whilst also trading as a sole trader in the same industry?

Didn't find your answer?

I would be grateful if anyone can clarify the following:

Can an individual legally trade through their own Ltd company whilst also trading as a sole trader in the same industry?

Effectively billing the majority of trade through their Ltd company and a small minority of trade via a Sole Trader. Technically they operate via two different websites, but i'm not sure whether this is relevant.

I know you're thinking "why would you want to do this"! There is a valid reason.

I would appreciate anyone's insight.

Kind regards 

Replies (17)

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By Tim Vane
04th Jun 2020 15:30

Can two separate legal entities carry on similar trades in the same industry? Why would that be a problem? Are either or both of them VAT registered?

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Replying to Tim Vane:
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By Mike84
04th Jun 2020 15:36

I'm just trying to make the billing system in place bulletproof. Neither are VAT registered.

Providing a bit more insight, it is a business providing subcontractors, so the same subcontractor could potentially be invoiced via the Ltd company for a piece of work and then invoiced by the sole trader business the next week for a separate piece of work. Make sense?

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Replying to Mike84:
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By Accountant A
15th Jun 2020 18:22

'h

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Replying to Accountant A:
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By Mike84
04th Jun 2020 16:24

Combined income is not even close to the VAT threshold.

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Replying to Mike84:
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By Cheshire
04th Jun 2020 16:30

Even on a rolling basis?

Why so coy with the facts?

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Replying to Mike84:
By petersaxton
04th Jun 2020 23:10

What is the point of being in business if the combined turnover isn't even approaching the VAT threshold, given the profits will be less and there would be quite a lot of costs, even more so given the messing about with invoices?

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Replying to Mike84:
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By legerman
04th Jun 2020 16:42

Mike84 wrote:

I'm just trying to make the billing system in place bulletproof. Neither are VAT registered.

Providing a bit more insight, it is a business providing subcontractors, so the same subcontractor could potentially be invoiced via the Ltd company for a piece of work and then invoiced by the sole trader business the next week for a separate piece of work. Make sense?

I can see no conceivable reason to run a duplicate Ltd Co and Sole Trader hand in hand. Any particular reason why you still need to be a sole trader?

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Replying to legerman:
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By Mike84
04th Jun 2020 16:55

Yes, the Ltd company is circa 1 year old and there are legacy contracts with the sole trader business. Gradually everything will be moved until Ltd co.

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Replying to Mike84:
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By Cheshire
04th Jun 2020 17:02

So now we are getting very close to the nub of it, although I suspect there is more.

If you are winding down the sole trade, only having legacy contracts in place, why is there a need for a website. Surely such things should be shelved, to, if nothing else, dissuade further contact/interest.

But more so, why was the sole trade just not moved into the limited, contracts and all?

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By Calculatorboy
04th Jun 2020 15:45

Of course it's ok so long as all transactions are at arms length.

It still begs the question Why ?
if they are below vat threshold It Seems hardly worth the bother.
If it's to avoid vat reg. Think again

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By paul.benny
04th Jun 2020 16:11

It looks like an attempt to evade VAT registration (even though it might not be so).

I'm curious about the reasons since it doubles up on almost every cost/activity - two sets of books, two tax returns, two insurances, etc.

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Replying to paul.benny:
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By Mike84
04th Jun 2020 16:30

There is duplication but only for record keeping and tax returns. It is an online business (or two businesses). Subcontractors have legal contracted with both the Ltd company and sole trader.

To give you some context, you're looking at circa 35K revenue billed via Ltd company and circa 3k as sole trader.

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By lesley.barnes
04th Jun 2020 16:49

What is the valid reason for having two businesses, doing the same thing? Give us a clue I feel there is a piece(s) of info missing. Are both businesses CIS registered if they are providing subcontractors and presumably paying sub contractors? Double insurance, 2 websites. You are right it doesn't make any sense all that duplication for 3k self employed income - so many questions.

Yes you can trade through a limited company and a sole trader in the same trade if that is all there is to it. Why did you think that the client couldn't?

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By Cheshire
04th Jun 2020 19:38

Mike84 wrote:

I would be grateful if anyone can clarify the following:

Can an individual legally trade through their own Ltd company whilst also trading as a sole trader in the same industry?

Effectively billing the majority of trade through their Ltd company and a small minority of trade via a Sole Trader. Technically they operate via two different websites, but i'm not sure whether this is relevant.

I know you're thinking "why would you want to do this"! There is a valid reason.

I would appreciate anyone's insight.

Kind regards 

Its like pulling teeth. As per.

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Replying to Cheshire:
By mrme89
04th Jun 2020 20:19

Wants , presumably relevant answers.

Valid reason for the two entities.

Not divulging that info.

Bizarre.

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By Matrix
04th Jun 2020 20:10

Are you the accountant or the business owner? If the latter then why wait a year to ask the question?

If the former, why wait a year to ask the question? Unless you are new, in which case what do you mean by sub-contractor? Are they an employment intermediary?

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Replying to Matrix:
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By Tax Dragon
04th Jun 2020 23:02

Matrix wrote:

Are they an employment intermediary?

My thought too. (Along with "I bet that's two sets of potential penalties.")

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