Starting a Business (Eek!)

[Gin]

Since before I can remember my father ran a firework display company; therefore I have been helping with these shows my whole life.

Over time he became less and less able to carry them on and so the business died down to one show a year.

In the last 3 years I have slowly taken over the gauntlet and now solely run this show with my tiny team; buying new kit and getting our processes in place.

Up to this point we have worked alongside a fellow display team; I attend their shows to help and they supply all of our effects for ours.

Within our team we're pretty well cut out for the shows themselves.

My mum has always edited the music and now we share this task (Much family bickering over whether to use certain songs or not! )

A close friend is extremely good with electricals and so he is our main technician for all audio equipment and firing panel.

I build the show plans and fire as well as general management / talking to client etc..

So, Dilema..

We would like to do this more frequently (Weddings, Birthdays etc), which requires making our tiny enterprise more official.

So far we've been working as a child team of this other display team, but they have enough work on their hands as it as, so it makes more sense for us to set up on our own but still keep the friendly link we have.

I have done some research but I am well aware how novice I am when it comes to the difference between sole trader / ltd..

What advice would you lovely people have for me?

[Hoggs]

What advice would you lovely people have for me?

 

NEVER go back to a lit firework.

I guess start looking at HMRC or Companies House to see what you need to register with them? I think it's "easier" to be a sole trader.... oh god I'm no help... hopefully someone useful will be along soon *panics*

[davefly76]

I am self employed and a sole trader, although that doesn't mean I can't have a partnership with another person (I know, confusing!) The main difference as I understand between sole trader and a Ltd company is that as a ST I am wholly responsible for any debts that may occur if it all went wrong. Therefore, if I had property, shares, etc then they can all be taken to pay off any debts. With a Ltd Co it is only the business that will suffer, not any personal effects.

In my situation my girlfriend has paid off her mortgage, but currently has no part of the business from a financial point of view. If I were to add her as partner to my business and then the worst happened her property can then be used as way to pay off some debt. When the time comes we will set up as a Ltd Co with us both named as directors which will protect her assets.

So, really you need to work out what is best for you and your circumstances. I am lucky that my business doesn't require me to spend a lot on stock, equipment etc but if you need to borrow money or have a large capital lay out it may be better for you to start a Ltd Co from day one.

There are loads of other differences such as Tax etc but the one I've mentioned is the most relevant to me at the moment.

Oh, good luck!

[Joeman]

I would never be a sole trader.. If you mess up and hurt someone its you that gets sued and you lose everything.

If your limited company hurts someone, or messes up, it's the company that gets sued. The company can fold, but you don't lose your home and all your possessions, you just lose your initial investment..

So for fireworks where there is a risk of accidently blowing someone up, limited company would be my preference..

There are lots of online accountancy firms that run good online booking software to make running a Ltd company very easy.

[Joeman]

Also, if you ever want to sell the company, it's best that's its a limited company with properly audited accounts and separate bank accounts etc.

[soll]

imited company... pick a name, check with companies house that its not already taken.

[Mr Fro]

imited company... pick a name, check with companies house that its not already taken.

Then pay £15 and wait for the paperwork to come through.

If (like me) you don't start trading straight away you're company will be dormant so you don't have to file anything with HMRC.

[MarkW]

I would never be a sole trader.. If you mess up and hurt someone its you that gets sued and you lose everything.

If your limited company hurts someone, or messes up, it's the company that gets sued. The company can fold, but you don't lose your home and all your possessions, you just lose your initial investment.

This. As an LTD the legal separation of you and the business means your liabilities in the event of a major cock-up are limited. Setting up as a LTD brings a bit more admin bollox (you have to have properly audited accounts, which any accountant can sort for you) but in my opinion it's the only way to go.

When I became self-employed I started as a sole trader, then became an LTD when we moved into contract research. We now conduct safety testing on biopesticides in support of global registrations, so if we cocked up the consequences could be horrific.

Good luck, and enjoy it! You're unlikely ever to want to go back to working for someone else!

[Mr Fro]

That's why I went LTD too - if something I touch causes painful nastiness that my insurance won't cover then I won't lose the house (and testes once Mrs Fro finished with me).

[rennie]

I have no idea but good luck!

[Six30]

Would potential clients try to avoid a LTD company ?? , sounds like it's a way of getting out of any problems , accidents , fatal burns or death.

[al_stu]

No they wouldn't.

It's not a get out clause you should still have insurance etc etc.

Ltd just protects your personal assets. Basically for most people that means if the company goes bump you don't lose your house as well.

And I doubt many people even notice if a company is Ltd or not when they choose who to trade with.

[littlecat]

my advice would be ... gimme a job.. ill do anything lol

[MrBrightside]

Are accountants ridiculously expensive?

And I've heard things like a lot of personal expenses being put on the books to avoid vat etc, that about right?

I'm interested in this topic too I'd love my own business.

[NeilM]

From a health and safety perspective, especially with explosives involved

Either find yourself a decent trustworthy assessor or start on the NEBOSH route yourself JIN.

I imagine you will be all too aware of the risk assessment and method statement culture? But honestly Jin these nowadays need to be spot on and will in the long term keep you out of a lot of trouble.

If you need any information regarding RAMS etc give us a shout mate.

[Wrenchmonkey]

Given the nature of your new enterprise Jin I would look into a very robust public liability insurance policy.

[Gin]

Aye, Insurance so far we're covered by both the venue and a specifics Fireworks Display policy

Thank you all Soo Soo much for the help!

I definitely have some food for thought now (Though can still see a massive minefield ahead..)

Neil, I will probably be sending you PM's further down the line once I get into all the paperwork!

So far, working with this other display team has been amazing just to see how other people work in the same field (No pun intended) but really keen to start branching out with my little crew.

Would love to do some of the competitions in the next few years but.. that's far down the road

Cat, I would love to hire you hun, but I'll still have my full time job along side this.. It will always be my hobby-job I think..

[NeilM]

No worries Jin.

Send us a PM as and when

[Joeman]

Are accountants ridiculously expensive?

And I've heard things like a lot of personal expenses being put on the books to avoid vat etc, that about right?

I'm interested in this topic too I'd love my own business.

 

Not that expensive. Find one that has good online accounting package so you can instantly see the status of your company.

My accountant provides me with a commercial package called "Iris Openbooks" and it's great.

Also find one that does all the work for a fixed monthly fee. That way there are no nasty surprises.

Think mine costs about £120 per month, but they manage everything for me and my Ltd company so I don't mind.

And yes there are some nice tax efficient perks to being the boss

[al_stu]

Also doing some basic stuff yourself keeps the accountants bill down - organising receipts and keeping your books in order and just using the accounant when it gets more complex.

If you literally just the accountant a pile of unsorted papers then it will get a lot more expensive!

[nicklucey]

A friend of mine recently set up a business and was able to get a free initial session with an accountant to get some advice on which way to go. Well worth looking into, i imagine a number of them do this as a way to get new business.

In terms of if you harm someone, this shouldn't make a difference as you will have public liability in both cases, the difference between sole trader and ltd company is more about your debts, so with a ltd company you won't lose you house if the business can't pay it's debts.

Similarly if you hurt/kill someone and can't show your health and safety processes to be robust you're going to court/jail regardless of the type of company.

Sent from my Nexus 5 using Tapatalk

[Joeman]

In terms of if you harm someone, this shouldn't make a difference as you will have public liability in both cases, the difference between sole trader and ltd company is more about your debts, so with a ltd company you won't lose you house if the business can't pay it's debts.

Similarly if you hurt/kill someone and can't show your health and safety processes to be robust you're going to court/jail regardless of the type of company.

There are some ruthless people out there who will lie through their teeth in court if they think they can make a few quid, and evil law firms who will help them do it. Sole traders are an easy target too as they tend to have less experience and typically have more assets to strip so the "prize" for winning a fraudulent case is much higher.

As a sole trader, it just takes one chancer with a smart-arse lawyer to find a small discrepancy (or simply lie!) and you're finished.

Imagine someone in the audience of a firework display, deliberately burning themselves with a lighter just to say a hot firework landed on them....

Best to have the added protection of a Ltd company to avoid the worry and stress of being sued personally.

[TC1474]

Imagine someone in the audience of a firework display, deliberately burning themselves with a lighter just to say a hot firework landed on them....

 

 

You clearly have little understanding of how personal injury litigation works

[MarkW]

Are accountants ridiculously expensive?

I've just had my wife dig out our last invoice from our accountant. They audit and file our accounts with Companies House, handle our VAT returns and corporation tax, manage our EC sales list, run the payroll and act as our registered office, all for £1,500 a year.

When I was running my consultancy as a sole trader I used to submit my own tax returns, and not having the time or the inclination to go into the nitty gritty of what I could and couldn't claim for I just declared everything on the basis that I'd sleep more soundly knowing that if anything, the tax man owes me money rather then the other way round! When we became a LTD company and appointed our accountant the first thing they did was go through all my previous returns, and reclaim £3,500 of overpaid tax.

Our accountants are worth their weight in gold in my opinion, and free us up to concentrate on running our business.

[Joeman]

Imagine someone in the audience of a firework display, deliberately burning themselves with a lighter just to say a hot firework landed on them....

 

 

You clearly have little understanding of how personal injury litigation works

 

The very reason I trade under a limited company and have all my insurance in place and up to date. I don't fancy finding out!!

But should the worst happen, and my company is taken to court, as soon as the company bank account is emptied by the spiralling legal fees, the company will cease trading, and I will lose my initial £1 stake in the company but retain my own assets.

I much prefer that scenario to the alternative of having to sell my assets to finance legal bills agaiant some idiot who thought they would see if they could make some easy money...