A friend and I are thinking about going into business together. We've the skills and know-how for the day-to-day running of it (lucky that) but the bigger picture is trickier.

Any tips on legal/insurance/tax issues we should know about? Who do we need to register with? Is it best to be a partnership/co-op/self-employed/employed? That sort fo thing…

I'd love to hear from people who've been there and done that. Cheers!

What's the business?

Ask binners….

Phew, where to start? Probably with a good accountant. Get a recommendation. I have one, but not sure how "good" he is. 😐

Thanks, North! I'm hoping not to wind it up before it's started…

Accountant, you say? Hmmm, interesting.

Say you've a premsises with two people working there. Do you need insurance of some sort other than 'contents'?

Anybody recommend entering into a partnership?

*All content approximate and cross check

Understand your liability – with a Limited Co – Liability is limited to the company (ie not you). Self employed – i **think** you are liable (ie house), not sure how partnerships work

With a ltd co you need to register at companies house and require at least 1 director (shelf name cheap, custom 200ish), >60K a year turnover = VAT registration (*understand what VAT flat rate means – you can under cetain conditions makea small profit on it), you need employee and employer Ins, prob liability for your 'product' insurance, books by accountant (750 per year)

There probably are govmt agencies/websites etc offering advive. HMRC are about as much use as a fart at a clean air convention, do not **** with the vat man.

Had a bad experience with a partnership (1 f'ed off, 1 unable to pay) left with large tax bill. BUT think rules have changed and not liable for partners tax now. Don't do stuff on trust. We were all friends when we started.

What insurance to bike shops need regarding liability for faulty repairs etc?

do not **** with the vat man.

+1 He sends you to jail, not passing GO.

If you're going to be a VAT registered business, don't even attempt the books yourself. A good accountant will save you more than he costs and the tax man asks him/her the questions, not you.

You're being vague about what kind of business it is, so no idea whether to advise you to go partnership/sole trader/limited company route…

Work hard, be honest with your suppliers and customers and you'll be fine…wheeling and dealing early on in your days as a self-employed person has a habit of coming back to bite your arse.

EDIT: How hard can it be? Don't underestimate just how hard it can be, but it's never the same "hard" as working for the man. There's nothing quite like being the master of your own destiny – even if it seems you're chasing your arse through last week sometimes.

Avoid partnership if possible unless you can trust your life with him/her/them.

😆

p/s: errmm … just avoid it.

It's easy. Just do one step at a time. I've only been involved in limited companies though.

Set one up online. Get an accountant sorted. Take it from there.

Sole trader – person, on his own, buying and selling stuff in his own name. Anything goes wrong, he is sued, and any assets he owns are capable of being sued against. You pay tacx on your profits. Tax + NI on a self employed basis.

Patnership at will – no written document; just two or more people in business together trying to make a profit. No separate legal entity. Could be 50/50, or if one has contributed more that the other(s), some other percentage. Each partner is jointly and severally liable for the debts/liabilities of the business – the other(s) could run off and leave you holding the baby, or a creditor could sue you only and not bother with the other(s). Tax transparent, so you pay tax + NI (self employed) on your share of the profits. Completely private – financial affairs do not need to be made public.

Partnership (written agreement) – much the same as a partnership at will, but you have a partnership agreement that creates direct contractual obligaitons and rights between the partners. Useful to ensure that you have some way of recovering from the other partner(s) if you're signled out to be sued by a third party.

Limited partnership – don't bother with this. Only really used these days for investment vehicles.

Limited liability partnership – a hybrid of the partnership and a company. Separate legal entity, so it is the person that enters into contracts, is capable of suing and being sued in its own name. However, remains tax transpernt, so members (not partners) pay tax on their share of the profits as if they were partners in a normal partnership. Registered at Companies House, and so subject to filing requirements, and an obligaiton to produce and file accounts. Benefit of limited liability, but more administration.

Company (unlimited) – like limited partnerships, have a very specialised use and so not relevant here.

Company (limited by guarantee) – possible to use, but really best reserved for non-profit making activities.

Company (limited by shares) – easily identified as the name ends in "limited" or "plc", depending if private (limited) or public (plc). Most small businesses if they are to incorporate will be private limited companies. As for LLPs, the company has a legal status separate from its shareholders (aka members), and so has rthe power to sue and be sued in its own name. "Limited" means limited liability, and the members' liability to third parties is limited to the amount paid up (or payable) on their shares. So, you can set up a company with one £1 share. That is the extent of you liability. Tax is different – the company is subject to corporation tax on profits it makes. Extracting money for the members is done by (1) employing them, in which case the company pays employer's NI, the employee pays employee's NI and income tax in the usual way, and/or (2) any profits are paid out as dividends, which are also taxable in the hands of the members. Administration is higher, as it is registered at Companies House and there are various filing requirements. Accounts must be produced and filed and, if they over a certain threshold, must be audited.

Easy, really. 😀

Hardest part of running your own business is getting the orders through the door as there's always some fecker out there trying to under cut you or shaft you sideways but if you can live with that it can be a great thing to do.

To begin with i would go down the LLP route but speak to an accountant who (if they are good) should be able to guide you through the process.

Good Luck

You're being a bit vague, but starting a business is fairly easy.
I can give you some warnings based on my experience.
I was a sole trader and got 'taken' for 65K in total which I've had to pay back from my own pocket.
Partners can get on fine but the areas you haven't been into together could throw up some surprises.
I went limited to reduce my personal risks, but I didn't enjoy working in the confines of a limited business.
Now I'm a sole trader again but I work on a smaller scale and actually do better all round like that.

Yowza, there's some bones to chew on. Thanks for your input, chaps.

Ok, may as well spill the beans: a friend and I work for 'the man' as bicycle mechanics and have often talked, half-seriously, about setting up some sort of bike shop doing mainly repairs and renovations.

The thread about that business for sale in Edinburgh has provoked much conversation about actually doing it, exclamations of "let's do it!", high-fives and all the rest of it.

Nope,. we won't become millionaires, but surely we won't do much worse than we're doing now…?

I've been very sorry to hear and read about your troubles, oldgit, I hope you can pickup the bits.

Partners can get on fine but the areas you haven't been into together could throw up some surprises.

… made me chuckle.

If you must go into a partnership make sure you get a partnership document drawn up at the very beginning. Make sure it details every aspect of your relationship, and especially what that relationship is should the business cease to trade.

Was it James Dyson (Vacuum man) who was in a partnership early in his business life, who went on holiday and came back to find that his partner had sold the business without telling him, and there wasn't a thing he could do about it. What one partner does the other has to accept. Be very careful.

Well good luck with it if you go ahead.
I'm almost sorted, but I won't be dealing with 'Tradesmen' any time too soon. My problem was having to give 30/60/90 days credit and too many of my customers either spent the money in that time or went pop.
Thing with bikes is that people want to pay for them, they hand over the cash and get something shiny in return.
Three of my friends own and run bikes shops and do very well.

Business for sale in Dumfries.

If I could get a redundancy/voluntary retirement package i would go for it…good old fashioned repair jobby

Always Always Always go limited in my opinion. Either Ltd or LLP. Partnerships often go wrong so it's important to have as much legal structure as possible.

I think you're getting the general idea – avoid partnerships. For the business you're setting up, Ltd. company with yourselves as directors, VAT registered is the one to go for. Get a solicitor to draw everything up between you at the beginning – so that if there is a falling-out, it's pretty clear what happens if one side wants to walk away.

I've seen some good friendships destroyed by "business" so take a deep breath, count to ten together…