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start-ups and trading structure

1st Mar 2011
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Hello new client and I hope that this email finds you in good health.

Meeting

I found our meeting informative and the following are my conclusions.

Co-operative

Complicated but this can be a limited company. It must have its own business bank account. Sole trader You are better off beginning as a sole trader and you merely invoice the limited company for services rendered that would include your introductory commissions, hourly rate and some residual profit that is either left within the limited company for future projects and becomes working capital or would be drawn by you as dividends and declared on your personal tax return form. It depends on the drawn contracts.(if you want I can write these?) This is a simpler structure for you and is therefore a far cheaper option for you than going down the road of forming a limited company. You can also incorporate into the financial statement s any other graphic design work that you complete on your own behalf. You should have only one bank account for both these businesses.

Import business

You would not be able to incorporate the detailed trading, profit and loss account/balance sheet into the figures for the design business as you will not have a proper turnover/direct costs of production/overheads/net profit (the former are labour only.) Instead you can trade as a sole trader since the business is in your name only but you should have a second dedicated business account for this business. At the end of the first year I will look at incorporating this second business rather than the first. It is possible that some banks could insist that the import business trade as a limited company because there is an element of risk involved as there are purchases and an element of risk. One perk of a limited company is limited liability in the very unfortunate circumstance of a business being unable to meet the debts of a business as they full due. As a sole trader you have full liability for all the debts and this could be risky for you.

Charges

My normal charge is £25-£30 per hour. However, because this is a new business and your financial position needs to improve (and I am sure it will in the future( then my charge will be reduced to £24 per hour and includes free unlimited email/text/phone advice.

HMRC

It is better if you register with HMRC online as a newly self employed tradesman at tel: 08459154515 or online at website HMRC.gov.uk/newly self employed and follow the links. Even better I should complete this task for you. Title:

First name

Last name

Date of birth

National insurance number

Full postal address including postcode

The CWF form asks for the date you began trading and the sort of self employed work that you do. The trade that I would register is the first trade whatever it is and whenever you began trading. For the import business this would be when you first began to incur expenditure and for the graphic design at the time you began work on the first project. In due course you will receive from HMRC a UTR number that is a unique tax reference number and on its receipt please let me know what it is (it is always 10 digits long.) I enter this into my system and I then represent you as agent for HMRC and national insurance subject to submission of 64-8 new form. 64-8 new form.(enclosed.) direct to HMRC at Central Agent Authorisation Team, Longbenton, Newcastle upon Tyne, NE98 1ZZ scanning back to me a copy for my own records.

There must be a live proper signature by you on the form. This Part is called red tape and it is onerous but must be completed for all intending traders.

I look forward to your reply and your commitment to my practice and of course my commitment to you.,

David Barry davidbarryaccountants.co.uk

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