Posted before and realised that: Alot of people here come from US which isnt really applicable for Uk. Please feel free to close other thread...
Ive recently looked into the hosting business and am planning to venture into it. Over the past week or so ive made myself a business plan; sorted out some reseller hosting and most aspects of the site.
But ive hit a brick wall; Legal Problems.
Ive looked around on various forums and have decided to be a "Sole Proprietor". Now im facing problems of how to register it is a company if i do, income tax, T.O.S professionally written up and stuff like that which would require a lawyer of some kind to sort out and talk me through.
What im asking is; Are there any people that live in England that have registered a Hosting company that i can talk to? (All legal nothing dodgy). This is basically just to learn what i need to do, ive managed to sort out all the business side of things; but nothing on the legal side of things if you get my drift; such as trademarks etc.
If there are any people from England out there that have started a hosting company; or if you know any that are willing to talk i would love to talk to you/them. And i can offer rewards as well (Preferably someone very very very experienced).
Setting yourself up as a sole trader is as easy as writing to the Inland Renue and saying "Hello I've started a business"! It only gets more complex and you should involve an accountant when/if you decide to go limited.
As for contracts, I have used www.netlawman.co.uk on a number of occasions and have always found the advice and legal agreements excellent.
You can register trademarks if you wish but it can get pricey quickly depending how many classes you go for. In most cases the registration of the domain and the fact that you a registered business will help you fight your corner if someone does try to trade and pass themselves off as you.
Best bet is to have a look at the business forum at www.youcangetit.co.uk/forum which is populated by some very experienced business people. Granted thay are not all in the hosting biz but in terms of business advice it can't be beaten...
My sitution is similar, i've had a dedicated server for the past half a year or so and have only provided hosting for a friends web design business. Im utilising only a fraction of the server so i've been considering getting a proper webpage up and throwing myself into the hosting arena properly.
Problem is I have a full time job, IT related though so would easily be able to manage hosting support tickets all day. Would the company I work for be notified somehow if I set up as a sole trader? Can you have a full time job and also be classed as a sole trader on the side? What kind of ramifications are there if you're caught without declaring anything (ie like i've been doing for the past half a year though i've not really been making a big profit).
Would the company I work for be notified somehow if I set up as a sole trader?
No they wouldn't unless you told them.
Can you have a full time job and also be classed as a sole trader on the side?
Yes you can although your employer may object if it interferes with your full time job or they feel there is a conflict of interest. Check your contract of employent carefully...
What kind of ramifications are there if you're caught without declaring anything (ie like i've been doing for the past half a year though i've not really been making a big profit).
Huge fine and they make you listen "Show me the way to Amarillo" every day for 24 hours per day!!
Seriously though, you have to register as self employed within three months of the business starting or get a £100 fine. If the tax man finds out you have been making money but not declaring it, they can and may back date the tax and/or fine you.
Any money you earn over your personal threshold, about £4.6K, be it from a part-time, full-time or self employed work is taxable.
Some great advice here.
What is the cost in registering as a Sole Proprietor, and what advantages/disadvantages does it have?
I understand I have to get in contact with the inland revenue when I start to earn cash, but will i require an account todo this for? I have a rather good friend who offered todo my accounts for free, but I'll only be taking online transactions, so there wont be much for him todo?
Cost is free to register as a sole trader. However I think you have a section about national insurance tax.
Advantages would be if your just starting out, there is not alot to worry about. With minimal forms and not putting lots of effort into it.
But the down side is, that you are personaly liable for all debt etc. Your personal possesions are at risk doing business this way, as its all in your name not the companies.
Another would be, when you are actively trading, there is no real 'proof' to say you are legaly trading in a customers prospective. You do not get any real documentation after registration etc.
You just have to correctly file your income, If your small and starting this wont be hard to keep track of. When things begin to get messy consider liability corp's and accountants so your not so much at risk.
What is the cost in registering as a Sole Proprietor, and what advantages/disadvantages does it have
No cost, simple to set-up and also to close. Downside is you are 100% responsible for all company debt. If you go Limited you can limit your liability as you would be a director so therefore an employee of your own company. Downside is that its slightly more complex to run and is best to involve an accountant.
I understand I have to get in contact with the inland revenue when I start to earn cash, but will i require an account todo this for
No you just downland and send this form to the IR and they will do the rest. You only need to involve ana ccountant if you are not happy about doing tax returns, bookkeeping etc. They are worth the money if you don't want the hassle of book keeping but TBH its not hard, you just have to be organised and keep everything!
If you go the Limited route I would strongly advise talking to an accountant first as it may not be the best thing for you to do.
So whats the actual point of registering, in the first place?
Because you are earning money and not paying the tax on it if you don't, therefore illeagal and increasing the tax burden on others, like me!
Must you do it, or could I just infrom the inland revenue I have an alternate income/job?
If you are running a business that is earning you income, even if its only a couple of quid, then you need to tell them. Beleive me, they will find out eventually and you really don't want to piss the tax man off
Also, is it best to get a seperate savings/business bank account?
Although not 100% neccesary it does make your life a lot easier when it comes to separating personal and business money. Note as well that most personal savings/current accounts will not allow you to use the account for business transactions.
Guys it seems to me as if you think registering as a Limited company is a big huffy,It isnt really. It costs around £35 to register as a LTD company in the UK, Which isnt too much.
If you dont become VAT registered the paperwork is just minimal, You dont have to be VAT registered if your companies turnover is less than 50K which it is likely to be. And so you cant charge VAT either so you dont have to send yearly acccounts (Out of intrest if you dont send accounts they start charging you, even if there just like a week late) If your serious registered as a Limited Company.
Sorry I gotta disagree with a lot of your points there Naz
The VAT threshold is £58k afaik and there are actually benefits to voluntarily registering.
Yes its dead easy to set-up a LTD but its simply is not right for everyone dependent on their business model, how much money they want to take out of the business, employees (if any). Its not a simple decision to make and certainly not one without taking pro advice.
You do not have to be a LTD to be taken seriously at all. We only became a LTD this year and to be totally honest we are still getting taken just as serious as we were when I was a sole trader owning the company.
The reason we incorporated is that from a tax point of view it made sense as our accountant has effectively sold the company to itself giving us a two year corporation tax break.
Talk to an accountant, don't rush into becoming a LTD, make sure the business model works, run it for a year and THEN look at going LTD...