The Wholesale Forums

[Neal]

Hi all.

I've been doing some research into setting up for trading (as per my introduction post last week). I've got a few questions which for clarity I'll split into different posts here to keep the topics separate.

I am a complete novice to the self-employed business world so please go easy if I'm asking anything stupid / making any rookie errors (but please let me know all the same).

So the first decision I need to make seems to be on the form of company. As I understand it there are three obvious choices:

- Sole Trader
- Limited company (non VAT registered)
- Limited Company (VAT registered)

Initially I was looking at setting up a limited company for trading, but after researching it seems that the sole trader route is the most straight forward and carries the least administrative burden. I have no problem with setting up a Limited company (seems like it's cheap as chips to do), but do have concerns over the legal reporting burden this introduces, especially as I don't know if the company would be trading for the first month or so after inception. It seems that if you have a Ltd company set up then you basically need an accountant as well, which is a financial overhead that I do not want at this point.

So firstly, are my conclusions about setting up a Limited company correct?

Secondly, what limitations would acting as a sole trader have on my ability to do business with others? Would wholesalers on this board be happy to trade with someone without a registered business? Can you set up a business banking account without a registered company etc?

Finally, do you have a business name at all with this route? I.e. could you legally call yourself "yyy trading" when selling to the public (as long as you did not infringe on any existing company names), even though there is no official company registere with that name?

Think that's it for this thread. Any thoughts appreciated.

Cheers,
Neal.

[hardwareheroes]

Neal, for most purposes, setting up as a sole trader is the most cost effective route as you have already surmised. If your business fails or loses money though, you will become liable for the debts PERSONALLY which means you could lose your house, car, savings etc.

You can set up a business and a business bank account as a sole trader and have a business name no problem. Officially, it will be termed Neal Whatsisname T/A Scotia Plumbing Supplies for example. The sign above the door only needs to read the name rather than the whole "Neal Whatsisname trading as"... bit.

You WILL be a registered business as a sole trader and you need to notify the authorities within 3 months of trading commencing.

You are correct in saying that a limited company carries with it a heavier burden of reporting and, therefore, costs but it is an effective protection for you in case it doesn't work out (unless you engage in fraudulent activity or run it without due care and attention).

[Neal]

Thanks for the reply HH.

If I were to set up a business bank account online then, any idea how I would actually set it up to say the "Me trading as xxx", or would they ask the questions about my name, business name, company type etc, and from my answers automatically make the account in this form?

I'm not worried about the protection side of the limited company at this point, as I will be funding it with my own money (not debt), and not too much of it initially - probably stake a couple of £k for stock purchases initially and just try to grow it from there. So if it doesn't work I'll lose the stake money either way. No premises unless the business works out either, which I guess would be the point at which I'd definitely look to go Limited.

Either way it sounds like it's worth getting the bank account set up before I make my first sales.

Thanks again,
Neal.

[hardwareheroes]

Yes, defo get the bank account set up - thats a good idea. Dont know if you will be able to set up a business account online. They normally require identification and, depending on the bank and your circumstances, may ask for a business plan either verbally in a meeting or presented in paper format

[Neal]

Ah.....business plan......
I have to say that initially this would be "look out for some wholesale deals that I reckon can make some money from and go for it". The idea being that I might even try some different types of stock to get a feel for the pros and cons before working out a sustainable business model based on both stock type and suppliers.
:-S

Not sure that exactly qualifies.
;-)

[hardwareheroes]

It would be good enough for me my friend but then I am no banker (at least I think thats what they didnt call me) :-)

[Neal]

lol :-)

Thanks for your help mate - appreciate it.

[Joseph h]

When i set up a business account with alliance & leicester i done that all online