setting up a company

[stender]

Question. When you setup a company do you have to be specific on your business area?

i.e. If you setup multicomp ltd and you then have 5 separate businesses in different areas such as a server hosting business, an online shoe shop, a dating website etc.... can you have all the accounts in one?

Anyone do this or is it not allowed? any pro's con's?

cheers

 

[getmeingetmein is verified member.]

Why not just pick a very general code like 7260 - other related computer activities. At least that's what my accountant has done.

 

[retired_member21]

My advice would be don't set it all up in multiple companies - just keep one company

Buy some accounting software called Quickbooks Pro or if you travel/remote try Xero

You can easily class/categorise your business sectors - apply these classes to each invoice/PO etc, and the perform analysis on each sector

I made the mistake of setting up multiple companies - don't do it!

 

[anthony]

Be very careful to make sure you are not going to treat every single transaction in your life as a business related matter. If for example you go on to sell that old Lotus you have stored in the second garage, it's not classed as your main business activity, so therefore your accountant will be able to allocate the profit you make on it to your personal capital gains tax allowance. It's always best to try and define the business as best you can, even if it covers a number of distinct but unrelated activities.

 

[badger]

Pros and cons, like you say. The multi-company route is best if these entities are likely to be large enough to justify it. Downsides are that you obviously will have VAT implications. With a single company its straightforward, whereas many diddy companies may not make the threshold for registration and depending on what you do and/or what your intentions are with these businesses could be a good or bad thing from a VAT perspective.

Furthermore, your accountant will charge you for every annual return filing he does, which isnt cheap if youre just setting out and you will have to allocate the shared costs (which online companies tend to have) between the companies and pay them individually, unless you create a parent group company. You cannot transfer funds between individual businesses on an ad hoc basis without incurring a tax liability unless these businesses are all be owned by the same group company. To be able to create a group company, the child companies must have the same share ownership structure, otherwise, like I say, transferring money about between companies and paying for one anothers costs when they arise will be frowned upon by HMRC.

The benefits with having multiple companies is that the user experience can be more wholesome when the name on their statement says Online Dating Company Ltd rather than Stender Media Group Ltd. Also, exit strategies and selling off of assets are a little easier if the companies are individual entities in their own right. There are also some nice tax efficiencies to be gained with a multiple company set up (with parent) and, if you intend going UK Ltd, a parent company gives some nice umbrella protection and piece of mind if things go tango down at the child company level.

If you are not going global from day one and not creating too much financial exposure for yourself, my advice would be set up a single company with the most generic of names you could possibly imagine like "Stender Media Ltd" and trade the websites as if they were real companies simply adding the usual "Stender Media Ltd t/a Online Dating Website" on the invoices and "Online Dating Website is owned by Stender Media Ltd" on the website. Shouldnt go too wrong with that approach.

 

[stender]

Thanks for the replies, much appreciated.

 

[whiterabbit]

If you're going the single company route - do make sure your memoranda and articles of association are generic ones that mean you can literally sell/do anything. These are a royal pain in the wotsit to change later. Your accountant or whoever is setting up the company for you should be able to sort this for you.

WR