So, have a friend/sometimes colleague that does the same thing as me i.e. wood flooring.

We both get our work from different shops. It's a bit awkward working together as the shops are (almost) direct competitors, in that one is mostly trade and the other is mostly domestic but obviously, there's a large area in the middle where they compete. They get a little tetchy when we help one another out.

Now, we've both got possible contacts where we could get a bit of commercial work…places like dance academies and retail stores…that kind of thing. We would like to take these jobs on occasionally, involving travelling for week a month (involves a lot of staying away from home, which neither of us wants to be doing every week). They're plumb jobs though – hard work but a killing to be made and nobody bothered if you go crazy for a week and finish the job early. Most of it is labour supply only but occasionally we'd supply materials too. It would also enable us to go after bigger jobs which we can't really do at the moment because neither of us is "big" enough to be able to pitch.

So, my question is…can we both keep our separate businesses going doing the domestic jobs to pay the bills provide pocket money etc but also be directors of a limited VAT registered company doing commercial work (we'd require much better insurance, all 110V kit, etc etc)? The idea being that we'd basically take nothing out of the business apart from recouping the first few grand we'd need to invest in kit and insurance but otherwise, the money would be built up to take as a dividend whenever and just put into savings for rainy day/retirement/once in a blue moon big holiday. Also, if it really takes off, we may well end up employing a few people in the long run, but that's another phase of life/business entirely.

What are the tax or legal implications for this? Any ideas or advice from anyone who has done something similar?

Yes, I'll be ringing the accountant tomorrow, but just wanted to kick it out to STW for ideas.

He's a mate, but not a "best" mate. We trust one another completely. Neither of us has as much as even thought of shitting on the other in the last seven or eight years and we've always been completely open with one another when it's come to business. In fact, he's the only guy I'd trust to do this with, and I'm sure he'd say vice versa.

To answer the question in the title, yes.

There are some complexities around the role of a director and duties to the company, but so long you keep the two businesses separate then it ought to work.

However, as always, it's subject to tax – speak to your accountant…!

Admit it, you <heart> him don't you.

@ allthepies, indeed, I do <heart> him

I don't know about the tax implications. Regarding legal, you'd certainly, at the very least, have to disclose the sole trader issue at any board meetings, and minute that you've considered your duty to act in the best interests of the company, etc. You'd also be precluded from entering into certain types of transactions, I think. This is off the top of my head. Check out around s170-177 of the Companies Act 2006 if you want to know more about directors' duties. Sections 190-214 could also be relevant. I'm sure you can get a precis of these if you google.

Thanks jhw…good advice and I shall certainly check out what you advise. Regarding the "duties" etc, it's only him and I that would be directors. The business would only be doing a job or two a month. Everything else would continue as it does now.

Quick thing to consider: what happens if one of you wants to use the company's tools or insurance policy for your own business? Maybe better for each of you to buy GBP2000 (or whatever half of what you need would be worth) of your own tools out of your own money (profits) than for the firm to own them. That would also mean that once you get paid out the profits from a job, the company doesn't have any assets and there's nothing tied up or left on the shelf (even just formally), and either of you can walk away with no further messing about/division questions.

Have I explained WTF I am talking about properly?

Well, we each have public liability insurance as sole traders that covers our domestic work. I haven't checked but I assume we'd need substantially more robust (and expensive) insurance for working on contracts. That policy would be held by the company, no?

The investment in kit is to buy 110V kit where most of what we have is 220/240V….we'd be laughed off site if we turned up with that.