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  1. #1
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    Business structure? Advice please.

    Good morning all,

    im after some advice with regards to the setup of our business, we currently operate as a sole trader and are not VAT registered. We only operate on a small scale at the moment but are getting gradually busier as the months pass. I doubt we’ll ever get to the VAT threshold so that’s not an issue at the moment. We’re considering though whether it would be beneficial to register as a limited company or remain as a sole trader, and this is our dilemma, which is best? We are finding some suppliers want a VAT or company registration number so that has prompted us to look at other options, plus PayPal is requesting further company information such as the registration number to avoid having our account limited as we have a steady flow of transaction on the account!

    any advice or experienced would be appreciated

  2. #2
    Senior Member webtrekker's Avatar
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    You can register voluntarily for VAT. There are some pro's and con's to this but, not being registered myself I'd rather leave it to others to explain.

    My daughter turned ove £51,000 last tax year with her home-based business. All incoming payments were through PayPal but she has had no limitations placed on her account. She isn't VAT registered.

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    If you are trading under a company name, then to safeguard that name you can register as a lilited company. If you do you can still trade as normal. I do and even though there is someone else using the Ltd company name I have, they will get a shock if they ever try and register the name, it does mean that I can still trade and leave the name as a dormant company, but the name is safegusrded. It does come in handy when people, for example the Post Office, want a company name.

    Likewise, I have a lot of traffic going through Paypal, and have had no problems. It could just be that youa re new and at first they do restrict the flow of money, but after a while lift the restrictions.

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    Less complication and paper work being a sole trader. I've never come across a supplier requiring you to be a Ltd company. I suppose being a Ltd company is handy if you plan to go bust and want to walk away.

    All I have is a business bank account and do my best to stay under the VAT threshold.

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    They have been stripping away most of the benefits of turning Ltd. Really wouldn't bother and have known a few companies turning over several million to stay sole trader or partnership. No need to change these days other than what Gooner mentioned.... the ability to shaft other companies if you go through.

    Stay away from vat registration for as long as you can.

  6. The Following User Says Thank You to Andrew For This Useful Post:

    Justin (12-10-2017)

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    Suppliers asking for VAT or Ltd Company number are attempting to ascertain you are not just a end user trying to get discount, if you speak to most of the accounts teams and explain you are a sole trader under the VAT threshold they should have processes in place to sign you up. Usually copy of business bank statement, PLI documentation, or invoices from other 'trade-only' suppliers (usually dated within the last 3 months). They may impose minimum spends etc in advance to aid in discouraging end user purchases again.

    Gooner, although in principle you are correct (and it certainly happens a lot), it is not uncommon these days for companies to insist that a director sign personal liability when opening a new account. I think too many copies felt the sting of Ltd companies closing and being unable to recover lost funds.

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    Thanks guys, we're not planning to go over the VAT threshold even though it would be nice to get that busy, but thats further down the road if ever. We've had the PayPal business account for over two and a half years so definitely not new, however we have got much busier recently with the majority of payments now all going through PayPal. I fully get the suppliers trying to make sure we're not end users trying to buy cheaply, that makes a lot of sense.

    I think we'll stay as we are now, happy sole traders not looking to over complicate things :)

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    I can tell you from previous experience, stay away from VAT registration, I had another business that lasted a whole 3 months making homemade stuff etc and selling it in a garden center, we registered for vat via HMRC just to be safe but the place we were selling, folded, we thought no more of it but we still got bills through from HMRC asking for tax returns of which we had none, to date, the sum of 3k in bills has fallen through the letter box and this business died 5-6 years ago! This was partly our fault as we never sent tax returns as we made more or less bugger all, it is a lot of hassle so if you're below the tax threshold then dont bother and stay clear.

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    We are all a bunch of mugs setting up legal businesses when you can just have a 'hobby' lol.

    http://www.ebay.co.uk/itm/Sublimatio...QAAOSwhlZZ2MoT

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    We started as a hobby then as we got busier thought we had better become legit as we were selling to some larger companies and thought it would be more professional, plus we wanted to do things correctly legal wise.

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