starting a new business

[tbitrus]

Hi Everyone,

I would need a little help with my new venture. I have been willilng to set up my online shop for a while. I know it might not be the perfect time ( the economic downturn) to do so but you have to take measured risks in life sometimes.
Lets begin shall we:
- I am interested in starting an online shop that provides cosmetics, accessories etc... for women.( I already have my customer base)

-I have managed to save up capital ( roughly £1000) for my new venture. I have done all necessary reserach regarding the market, suppliers, promotions i have even got a recommendentation for an accountant etc...I know that I would be starting on a small budget and that it will require a lot of work from my part but provided I spot the trendy or must have product I would do well.( I think) I have know which products I would be selling and how I would be marketing my products.

My questions are as follows:
-should I first register as a sole trader or limited company? but I have read on the forum that it could be more costly to be a sole trader when paying tax than being a limited company???

I don't want my personal finances and business to be regarded as a whole, I want to dissociate them, to be two different entities.

- I am on my own in this new venture and if I decided to register as a limited company ( which I am thinking of) then cannot I be a director and a shareholder at the same time? please advice on this matter....

-what about registering for VAT?I know it is not necessary at first if you have not reached £6700 profit. But as I will be buyaing goods with VAT included and selling. Would it be good to voluntary register for VAT to be on the safe side? Or registering for VAT does it not appear to be more professional when dealinf with suppliers?

- I am half way through my business plan,can I still register my company? or do i have to finish the business plan entirely before registering and starting to trade?

I do apologise there are a lot of questions, but I would really appreciate to get feedback.

Many thaks for your help
kind regards
tani

[tkessex]

If you operate as either a sole trader or member of a partnership, you will not exist as a separate entity from your business. Neither option offers any degree of limited liability (other than an LLP, but that's a world away from a regular partnership) so you would be entirely responsible for any debts the business incurrs. That said, incorporating a company which hasn't yet begun trading shouldn't be a concern. You're entering a competitive market during an economic downturn, and have relatively little capital to work with, so all your efforts should be geared toward establishing a presence, creating interest and generating sales (you can run things from a separate bank account to provide some distinction between personal and business interests).

If you remain unsure as to which operating status would suit your particular needs best, talk things through with an accountant. They will use your financial predictions, amongst other things, to suggest which option offers the greatest benefits and advise you accordingly. However, should you decide to incorporate your company (which I would advise against at this stage) then you are indeed able to act as the sole director and shareholder. However, you will need to appoint a company secretary.

I don't think the ability to quote a VAT reference number makes anyone appear more professional; it isn't a status symbol. You are, of course, free to register voluntarily, but given the fact that you haven't begun trading yet it wouldn't seem to be a necessity. You need only register if your trading turnover (that is revenue from the sale of goods or services which would otherwise be subject to VAT) exceeds £67,000, or if you expect your taxable turnover to exceed £67,000.

A business plan isn't a pre-requisite for starting a business. HMRC won't be upset if you don't have one and so, on the basis of convenience at least, you can begin trading at any time (registering a company isn't necessary if you aren't incorporating it - you merely need to declare yourself to be self-employed and you can trade under any name you wish). However, a business plan provides clear benchmarks at which to aim and allows your progress to be compared closely with your original objectives.

It should also be remembered that business plans are, generally, a must for obtaining finance. However, when I took my business plan to a representative of Lloyds a couple of years ago, the man I met with said 'I haven't read it because it's too long and I didn't have time, and I don't understand technology or anything like that'. I then took the same document (which included original copies of my credit report and personal financial statements) to a business manager at Barclays, and he lost it!

[tbitrus]

Thank you tkessex to have taken the time to reply to my questions . You have provided good advice and made it clear and concise.I have a better idea on few things. Thanks again!

[fisicx]

I would point out that £1000 is a tiny budget to set up your new business. There are already hundreds of online shops selling women's products so your slice of the pie is going to be very thin. The website alone is probably going to cost you more than £1000 and you still have hosting and marketing costs on top. You can of course do it on the cheap but you won't get much traffic and even less sales.

You also need to be aware it takes most online shops 2 or more years to see any profit. It's not something that happens overnight.

[tbitrus]

HI Fisicx,

thanks for your reply. Since I have been reading threads on the forum and feedback from my post, I am considering maybe another option. I might start as a sole trader just to test the market with the products while acquiring new skills, experience and building up my business As you said I have tiny budget and this could be very hard to make an impact.
I was wondering if it is possible to still register the ltd company but not trade? As I would like to reserve the business name for later use!!!

[dadesign]

£1000 is not alot.

[Scattman]

buy the name and trade as a sole trader. In the process of registering the name, you will be ask for the structure. Choose, sole trader!. And also, 1000GBP is better than nothing. I started my business with about 1000GBP, (I will reserve my name here), and yet I have made it to Dubai, with distribution in Australia, NZ, Hong Kong and why..the UK. Mind you I started in 2004. People will say that its not a lot, always remember that people dont know your passion and the drive you have to get your business to go...it really depends on you. Web site this days can cost you 200GBP for a flash one...just pop in to rentacoder.com and put your web site project on there. Ask your friends and family to come over for a BBQ and do a few demo. Give them literatures and "educate" them about your business. In this day and age, its about perception, people who dont know you will try and check you out on your web site...(even the ones in your area)...if they like the feel and the look, they will look out for you, some will even come for you...
Remember that this is your business and your dream, noone else knows your passion and the drive you have for it.....1000GBP is a lot of money..use it wisely to make 1001GBP. And it starts from that 1GBP.

Cheers.