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Companies made simple

Home » Be your own boss » Planning to set up your new business » Companies made simple

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Description: As the economy continues to falter due, in part, to the credit crunch, many people are now being made redundant. Some will consider using the lump sum payoff they have received to start their own business so as to be free from the shackles of corporate life or to utilise a skill for their benefit rather than as a salaried worker. Setting up in business is relatively straightforward and can be low cost. The options open to anyone starting up are to start as a sole trader, in a partnership with one or more other people or in a limited company. Sole trader status is the easiest and lowest cost option to undertake. If you believe that your earnings will be below the annual VAT registration threshold then all that is needed is to determine a trading style and start selling your wares or services. Make sure to keep all records of costs and income separate from your daily expenditure as you will have to account for your activities at the end of the year. You cannot claim benefits if working for yourself so make sure that you talk with the local Job Centre to be clear on what training and benefits you will be entitled to claim whilst setting up your business. Next is a partnership. This is more involved since the rules, responsibilities and remuneration basis of the partners need to be agreed. To do this, you will need a partnership agreement and this is best drawn up by a solicitor. You will also need to appoint an accountant to keep track of the books and, as above, register for VAT if appropriate. Sole traders and partners are fully liable for their debts and any actions against either their business or the goods they make or sell. For this reason, you should look to take out an appropriate form of insurance to cover professional indemnity or merchantability actions. The final option open is to form a limited company and use it as a trading shell. This provides some protection for the individuals against debts and actions as the total liability is with the company. The limited company is a separate legal entity and, therefore, will need officers to be appointed to make decisions and authorise actions (directors) and a set of rules that govern how it is to operate, what it can borrow and what it will do (memorandum and articles of association). This is a more involved process and depending upon your experience, can cost from £25 (to set up and register the company) through to £800 for the complete registration process including directorship forms, bank accounts, secretarial services, name plating, VAT registration and accounting and registered office hosting. This may also include the first years bookkeeping service. It is relatively easy to upgrade from a sole trader or partnership to limited company. As an alternative, it is possible to look at Buying a Company rather than setting one up yourself FURTHER INFORMATION FOR REFERENCE ABOUT US Companies Made Simple; companiesmadesimple.com is the UK's leading company formation agent. CMS has led the online revolution of company formation, with a very low cost, (prices now start at £19.99 plus VAT) quick, (companies could be formed just in three hours), online, solution. To date, CMS is selling almost 2,000 companies per month and growing exponentially.Simple and easy to use - intuitive and informative - user is 'hand-held' through the process.Relevant information and advice is provided - helping the user to select the package which is right for their needs. CMS has an ever growing b2b email database