Originally Posted by pcspirt
I have started a small business providing Learning and novelty products for ages 3 +
The business intends selling products to children
over three years of age. For me the potential liability risk due to faulty parts, mulfunction, dangerous/un-intended use etc are too high. Also if anything happens to children the parents will most probably use litigation. Therefore I think 'ring-fencing' the potential liabilities like these within a limited liability company is a much more safer option.
Yes, I fully understand that the accounting costs would be little higher for a limited company and; also know when it comes to getting funding for the venture from finance companies and suppliers it will make no difference as they will expect personal guarantees anyway. However, a sole trader set-up would be too risky for this venture. One can argue about getting an insurance policy but again there is no guarantee that the insurance policy will pay up or the insurance company will be around to meet the claim if one arises.
From a tax point of view, I think a limited company would be more advantageous too because of the existing employment of the founder and the current corporation tax rules.
I therefore recomend a limited liability company.