I have just registered my first business, but my work means that I can do all sorts of different jobs - from web design to photogrpahy to video editing to software development. Do I need to register each as a different entity or can they all come under the same business? It would be easier to fill out the one tax return and have everything under one entity but I want to be sure this is a legal practice.
you don't say if it's self employment or a limited company?
If self employment, no problem.
If a limited company you define the categories for your business. for example, my business includes
62020 - Information technology consultancy activities 69201 - Accounting and auditing activities 69202 - Bookkeeping activities 70229 - Management consultancy activities other than financial management
Persoanlly I wanted more options as the new codes don't cover as much as the old one's did. Unfortunately you only get four but looking at your you could certainly amalgamate some of yours.
You may find that your bank is more restrictive than companies house as banks like to be able to put your business in a nice little pigeon hole.
Just make sure that yoiu tell your bank everything that your business will be doing and you'll be fine.
Oh, nearly forgot, welcome to the forum,
all the best,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Thanks! I am self employed. I will keep all my business dealings under the same registration then in that case, makes things much easier.
I can see one advantage of making them seperate entities and that is the VAT issue - If I had 1 registration and the seperate businesses made say 40k each then the total would be 80k and VAT payable. However if they were 2 different registrations then VAT would not be payable I assume as the total for each would be 40k. Hope that makes sense.
Also, are there any other advantages to make each business a seperate registration?
Thanks again. I am new to this but looking to do it all properly!
I know next to nothing about this at all, but I do know you have to be careful about this kind of thing as the perception (by HMRC) can be that you are splitting a business into two to avoid paying VAT.
If you search "Related Companies" + VAT you should find some info, and I came across this on another forum :
"There are two separate issues when it comes to disaggregation as follows:
The first is whether both business activities are being carried out by separate entities or one single entity. In this case, HMRC can treat all of the activities as being carried out by a single entity.
The second is that there is a genuine separate legal entity, but the effect of having a separate legal entity means that one or both of them is not required to register for VAT because it's turnover is below the VAT registration limits. It is particularly important to be aware that HMRC don't have to demonstrate that the intention of separating the business activities is to avoid VAT; it's enough that one of the effects of separating the business activities is to avoid VAT registration. So in principle, genuine arrangements can be caught by the legislation just as well as deliberate attempts to avoid VAT registration."
It would appear that this is (yet another) grey area surrounding VAT, and you will get all sorts of different opinions from different people, but if it was me I would err on the side of caution and make sure I am paying VAT on all of my business activities if their combined sales are over the threshold.
Will be interesting to see what other people think ....
In your situation then separating the business for the purpose of avoiding VAT is definitely disaggregation.
Whether you set them up as separate sole traders, separate limited companies a mixture of both or whatever. At the end of the day the intention is to avoid VAT and as you are the controlling party then wouldnt make any difference. The businesses would be treated by HMRC as one.
Thanks, I would not seperate them to avoid VAT, just thinking of why anyone would bother to register seperate entities for each personal business that they run, e.g. the advantages. I think it is much easier to do it all under one registration provided they are not completely unrelated businesses. My work all falls under computers/media.
Reason why people set up separate limited companies is that if one particular business goes under then it wont affect other businesses as they are totally separate. This reason isnt really there being a sole trader as in a sole trader business if the business goes under then the owner is still personally liable for the debts.
Other reason why have separate limited company is that the ownership may be different between the company so easier to structure through separate companies.
If you are running the businesses as a sole trader, then you could consider splitting them into the various businesses.
The reason I would do this is if one side of the business makes a sizable tax loss, then as a sole trader you have flexibility in relieving those losses including carrying them back three years during the first four years of the business.
Have you done a business plan which can help you, and your accountant, to make such a decision?
I will do this by keeping all receipts/invoices both in and out of the business and at the end of the tax year fill out the tax return. I thought that was all there was to it? Am I missing something?
yep, that's about why it takes 1-2 years of study to become a bookkeeper, 2-3 to become an accounting technician and 5-10 years to become an accountant. God we must be a thick bunch.
Like many before you, you are looking to take on a complex business model and also think that you can traverse a minefield of company and tax legislation unaided.
Good luck with that.
A better approach might be that whilst your business is small you keep records as you suggest and then take them to an qualified and experienced accountant or bookkeeper at the yearend to sort them out for you.
If your business grows as we all hope that it will then it would make sense to employ the services of a bookkeeper on a more regular basis and an accountant to sort out matters at the period end.
There are also more advanced bookkeepers who offer the full spectrum of services at a lower cost than many accountants.
All in all I'm sure that you would rather be concentrating on building your business than dealing with the necessary record keeping which can be outsourced to the likes of us.
In many cases saving on properly trained financial help is a cost saving approach right up there with saving on the cost of a car by opting for a model without airbags. One hopes that they will never need them but by the time one realises that they do it's too late!
Sorry, seen it too many times over the past few months where clients come to us after the HMRC investigation rather than being put on the straight and narrow right from the start of their business.
If you are determined to go it alone and I had to give one peice of advice to you it would be that you should not assume anything or try to apply logic or fairness to the tax system. For every situation read and reread all available HMRC guidance before you commit yourself to paper.
Good luck with your businesses,
kind regards,
Shaun.
-- Edited by Shamus on Sunday 22nd of April 2012 02:00:59 PM
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Thank you. I have a business plan but will not be getting an accountant as I can do the books myself. I will do this by keeping all receipts/invoices both in and out of the business and at the end of the tax year fill out the tax return. I thought that was all there was to it? Am I missing something? I really dont want to over complicate things but also want to make sure I am doing it properly.
Thanks Shaun. I did not mean to undermine the work of accountants and if business does go well then I will employ the services of a reputable one for sure. I will go by references as I had a friend who ended up bankrupt due to his accountant "skimming" (think that is the term) money from him for years.
