Ltd or not Ltd, that is the question

[discomobiledj]

What is best? Is anyone on here a limited company, if so, was it worth it?

I am seriously thinking of doing this but don't want to pay out £50 to set up a ltd company if I don't really need it.

Same with VAT registration, should I do this as well?

[Jiggles]

Do a search on the subjecy, there was a thread not long ago on the subject/

[rob1963]

What is best? Is anyone on here a limited company, if so, was it worth it?

I am seriously thinking of doing this but don't want to pay out £50 to set up a ltd company if I don't really need it.

Same with VAT registration, should I do this as well?

Hi there,

I'd suggest that you just start off as a sole trader and see how things go, as forming a limited company is more complicated & more expensive.

You won't have to register for VAT unless your turnover is more than the threshold, which I think is £64,000 for the present tax year.

Hope this helps.

:)

[groovy-nights]

We are registered for vat.

[rob1963]

We are registered for vat.

groovy nights,

Are you suggesting that discomobileDJ should register for VAT?

:confused:

[DMX Will]

There is no point in registering for VAT tbh.

Ok, so the advantages are you don't pay VAT on any business purchases, great. But you've also got to charge VAT, which either means putting up your prices (to an increase of 17.5%) or, you're going to make a loss, because 17.5% of what you take (if you don't increase your rates) is going to have to be given to the VAT man.

So, if business is going to plan, your taking in more than you are spending out....so it's worth holding off VAT registering, unless your turnover is £60k +.

Also whilst we're on this note....anyone buying flyers etc, these are VAT exempt, so don't pay any VAT on them! Something that has saved us for our Club Nights!

[discomobiledj]

even if I don't go over the threshold, I would still have to pay VAT?

[Corabar Steve]

Yep. If you are VAT registered that's exactly waht you are, VAT registered. There's no "oh I only made £5,000 this year", you're registered you pay. Unless you want a hefty fine or to go to prison.

[Marc J]

Also whilst we're on this note....anyone buying flyers etc, these are VAT exempt, so don't pay any VAT on them! Something that has saved us for our Club Nights!

Unless it has a tear-off slip or can be used for another purpose, i.e. "discounted entry with this flyer". It's then no longer just an advert (it's also a token, voucher or response form), and so attracts VAT ;)

[Corabar Steve]

Ltd or not would depend on your situation. We're Ltd, always have been (but then we started out as a subsidiary of another company, a "trading as" if you will, the Company is Corabar Ltd. we operate as Corabar Entertainment)

I suppose it would also depend on how many staff you have to an extent, although I'm not sure on that. Having 5 (permanent) staff & all tha various outgoings & insurances involved I suppose it makes sense for us.

Limited company
Definition

A business structure used in Europe and Canada, in which shareholder responsibility for company debt is limited to the amount he/she has invested in the company. Abbreviated Ltd or plc.

Meaning should anything go wrong Angela would only be liable for the ammount she bought the company for plus anything additional that she's invested since.

Other definitions found on the web:

LIMITED LIABILITY COMPANY - A business structure that is a hybrid of a partnership and a corporation. Its owners are shielded from personal liability and all profits and losses pass directly to the owners without taxation of the entity itself. (from the US, not sure about a British POV on this)





Limited Company Definition:

In a Private Limited Company the liability of Shareholders, Directors etc is not more than the capital they have invested in the firm.

Private Limited Company Features:

A private UK limited company is considered as one of the most easily managed and cost effective business structures. Some of its outstanding features are:

Share Capital Limits - No minimum or maximum share capital requirements.
Owner Qualifications - No specific qualification requirement for company director, secretary or shareholder.
Nationality Restrictions - No nationality or residence restrictions for company director, secretary or shareholder.
One Company Director Required - A private limited company can just have one director who may also be the only share holder.
Resource Utilization - A private limited company's resources can be used to assist in the purchase of shares of the company when someone wishes to leave the company.
No Public Shares - A private company is prohibited to issue its shares to the public.
Abbreviated Accounts Filings - Private companies up to a certain size can be permitted to file abbreviated accounts with the register of companies.
Annual General Meeting - Only a private limited company can dispense with obligations to hold an annual general meeting
General Meeting - Only a private limited company can dispense with the formalities of holding general meetings by having a special resolution in writing
Trading-A private limited company can start trading immediately upon incorporation. It does not require any trading certificate to start its business.
Limited Company Registration Benefits:
Company registration of Private Limited Companies can be carried out at Formations House's website. Limited Company Formation has the following benefits:

Limited Company is a separate legal existence.
Shareholders have limited liability.
Protected Personal assets of limited company's shareholders and directors.
Structured dispute resolution.
Private Limited Company Requirements:

Following requirements are to be fulfilled to form a limited liability company in the UK:

Registered address within the UK i.e. a valid postal address in England, Scotland or Wales
A minimum of two persons, 1 company director and 1 company secretary.


This may also help

Sole Traders, Partnerships and Companies
There are a number of different forms that a business can take and there is no prescriptive method by which you can decide which one is right for you. Whilst there are other options, most new businesses start in one of three forms:

Sole Trader

This is the simplest way of starting a business with very few formalities. You will need to advise the Inland Revenue that you are self-employed for tax and National Insurance contributions. They will provide the relevant guidance booklet and notification form upon request.

Control of the business will be entirely yours and you will be responsible for all management decisions. You will, however, also be personally responsible for any debts that you incur and, should your business fail, any personal assets that you have can be seized and sold to repay those debts.

On the plus side, any profits that you make will belong to you. Moreover, whilst you have a responsibility to maintain proper accounting records for tax and VAT purposes, any records that you keep are not available for public inspection.

Partnership

If you are going to start your business with one or more other people you could form a partnership. In effect, this is the same as a sole trader with all the partners sharing responsibility for managing the business. The same applies to any debts of the partnership, in that each partner is personally liable.

In some cases, it may be necessary for a 'Deed of Partnership' to be drawn up. Whilst this is not required by law it can be useful to resolve disputes or where, for example, the profits of the business are not to be shared equally. You may also consider the option of establishing your business as a limited partnership. Whilst the basic concept of limited partnerships has been available for some time, new legislation has been introduced to widen the scope of such partnerships. You will need to seek specialist advice from a solicitor. You can also obtain guidance notes from Companies House free of charge.

Company

There are four main types of company:

Private company limited by shares - members' liability is limited to the amount unpaid on shares they hold.
Private company limited by guarantee - members' liability is limited to the amount they have agreed to contribute to the company's assets if it is wound up.
Private unlimited company - there is no limit to the members' liability.
Public limited company (PLC) - the company's shares may be offered for sale to the general public and members' liability is limited to the amount unpaid on shares held by them.

[CRAZY K]

There is no point in registering for VAT tbh.

Ok, so the advantages are you don't pay VAT on any business purchases, great. But you've also got to charge VAT, which either means putting up your prices (to an increase of 17.5%) or, you're going to make a loss, because 17.5% of what you take (if you don't increase your rates) is going to have to be given to the VAT man.

So, if business is going to plan, your taking in more than you are spending out....so it's worth holding off VAT registering, unless your turnover is £60k +.

Also whilst we're on this note....anyone buying flyers etc, these are VAT exempt, so don't pay any VAT on them! Something that has saved us for our Club Nights!

Good point on prices--a customer would have to think---does a Disco charging VAT give more "value" than one that doesnt ---for the extra 17.5 per cent.

CRAZY K

[A1DL]

What is best? Is anyone on here a limited company, if so, was it worth it?


Hi Steven, having had a brief look at your website, I assume you operate a single show. I'm not sure if there would be any benefits in forming a Ltd Co, and if there were any, at this scale, whether they would be far outweighed by the additional work and costs you would incur ongoing.



I am seriously thinking of doing this but don't want to pay out £50 to set up a ltd company if I don't really need it.

Is that all it costs to buy an "off the shelf" Ltd Co nowadays :rolleyes: This shouldn't be one of your deciding factors in whether to incorporate, or not!




Same with VAT registration, should I do this as well?
If your turnover exceeds the threshold, you have no option. Again, assuming you are a single show, this is unlikely to happen, and voluntary registration would probably place you out of pocket, unless the majority of your work is for VAT registered companies/bodies, where simply adding 17½% to your current pricing wouldn't cause any issues or loss of work.


Hope this helps

Tony

[Your Big Event]

A punter calls DJ A and gets a quote of £100 (for ease of calculations !)
then called DJ B and get a quote of £100 plus VAT (£117.50)
Both DJ's offer the same service

Do they book DJ A or DJ B ?

A lot depends on the punter, if a company is paying (that is VAT registered) then it doesn't much matter, if a private person then do they think that because you are VAT regisitered you are 'bigger' than the other DJ.

If you are supplying discos for companies only that registering may be advantageous from day 1, other than that waiting until you hit the £63k TOP LINE, not profit, if you earn £63,000 but spent £64,000 you still need to register for VAT. You will also need to fill out ythe VAT form every quarter.

If you are near the £63,000 threshold, you must keep an eye on it, as it is done on a 12 month rolling basis.

Hope that helps

[CRAZY K]

A punter calls DJ A and gets a quote of £100 (for ease of calculations !)
then called DJ B and get a quote of £100 plus VAT (£117.50)
Both DJ's offer the same service

Do they book DJ A or DJ B ?

A lot depends on the punter, if a company is paying (that is VAT registered) then it doesn't much matter, if a private person then do they think that because you are VAT regisitered you are 'bigger' than the other DJ.

If you are supplying discos for companies only that registering may be advantageous from day 1, other than that waiting until you hit the £63k TOP LINE, not profit, if you earn £63,000 but spent £64,000 you still need to register for VAT. You will also need to fill out ythe VAT form every quarter.

If you are near the £63,000 threshold, you must keep an eye on it, as it is done on a 12 month rolling basis.

Hope that helps

Good point about vat registered companies.

For those of us mainly dealing with private individuals at Parties and Weddings then an extra 17.5 per cent might be an issue --

CRAZY K

[discomobiledj]

Thanks everyone for all your help, you have all been great. Perhaps I won't go down the ltd route yet unless I plan to expand the business and get in other dj's around the country.

[Your Big Event]

Yes

As Soon As Possible

Most DJ's won't be Ltd, just sole trader, much easier, and cheaper in the long run.

[discomobiledj]

How much am I likely to pay, in that case can I claim back mileage and hopefully even it out?

[Solitaire Events Ltd]

.

Should I be declaring the money I am taking, bearing in mind it's cash?

That's a very naive thing to post on a public forum. :rolleyes:

[discomobiledj]

What thing?

[Solitaire Events Ltd]

What thing?

What I quoted above....;)

[Your Big Event]

23%

OK, so you do ten discos in the next 12 months for £100 each

In layman terms your expenses will be taken out etc, so it should look like this

Income

Discos done - £1000

Expenses

Petrol - £200
PLI - £50
PAT - £50
Food and Drink - £10
Use of Office £50

Total = £360

Profit = £640
Tax man will take 23% = £147.20
Nett profit = £492.80

Hector will also take a percentage of the following year too, he will take his share in January and July

The above is for reference ony you will need other expenses like NICO etc

[discomobiledj]

Blimey!

[rob1963]

23%

OK, so you do ten discos in the next 12 months for £100 each

In layman terms your expenses will be taken out etc, so it should look like this

Income

Discos done - £1000

Expenses

Petrol - £200
PLI - £50
PAT - £50
Food and Drink - £10
Use of Office £50

Total = £360

Profit = £640
Tax man will take 23% = £147.20
Nett profit = £492.80

Hector will also take a percentage of the following year too, he will take his share in January and July

The above is for reference ony you will need other expenses like NICO etc

Assuming he has no other income, what about his personal (tax free) allowance, which I believe is about £5,000?

[Penfold42]

You can claim food.....i thought you couldn't?

[rob1963]

I don't really see how you can claim for food.

Wouldn't you still eat even if you WEREN'T running a business?

:confused: :confused: :confused:




There again, I hear Victoria Beckham claims for half a lettuce leaf each month!

[Penfold42]

I don't really see how you can claim for food

Sorry just had a re-read......i'm being a kluts again......:)