Starting our own business - things I need to do?

[Willshine]

HI Guys

Sorry if this was mentioned before.. Me and my friend we would like to start our own joinery firm from scratch. I have read another article and ppl advice but what was not included in the topic was:

1) My friend is experienced carpenter but he doesn't have any paperwork for it. Do we have to finish any course that is necessary for the business to be legal etc.

2) What insurance do we need (it will be just 2 of us working) and what place is the best to get insurance from?

3) Is it better if we both will be Co-owners of this business (as we want to go 50-50) or is it better 1 of us being an employee ??

Please give as much details as possible.

Thanks for all your answers in advance (hammer)

 

[wellywood]

HI Guys

Sorry if this was mentioned before.. Me and my friend we would like to start our own joinery firm from scratch. I have read another article and ppl advice but what was not included in the topic was:

1) My friend is experienced carpenter but he doesn't have any paperwork for it. Do we have to finish any course that is necessary for the business to be legal etc.

2) What insurance do we need (it will be just 2 of us working) and what place is the best to get insurance from?

3) Is it better if we both will be Co-owners of this business (as we want to go 50-50) or is it better 1 of us being an employee ??

Please give as much details as possible.

Thanks for all your answers in advance (hammer)

I know I'm from furrin parts but our system is basically the same as the UK.

1. I would say it isn't necessary to complete a joinery course to be 'legal'. You can employ anyone you feel can do the job - qualified or not. It isn't the same as (say) being a sparky.

2. Can't comment.

3. If you're going to share the profits 50-50 it is only fair you should also share the risks. As an employee, one of you would be free of risk regarding the company. With an employee, you would also presumably be up for meeting regular salary payments, PAYE etc. which might not be practical when getting the operation of the ground and little money might be coming in.

I would say you should at least talk to an accountant who can explain the different options regarding business types (joint-ownership, partnerships, individual liabilities etc.) before making a decision.

 

[paultnl]

I would suggest that you have a look at http://www.ukbusinessforums.co.uk/forum ... linic.144/ plenty of advice on setting up in business.

 

[beech1948]

Hi,

1) Need to finish any courses...NO

2) Avoid becoming a limited company ( Ltd) as this will be more costly. The minimum is that you both inform HMRC that you are going to be self-employed. See an accountant for very detailed discussion. Fiest chat withn accountant should be free and abiout 30 to 45 minutes.

3) If you both simply declare to HMRC that you are self employed then you only need to decide how you will share any income. You simply co-operate with each other to complete jobs and then split the income as well as the costs.

Keep it simple. Do not let accountant or others push you in any one direction.

Remember that a turnover of about £68,000 (check) means you must register for VAT even if you are self-employed.

Alan

 

[Random Orbital Bob]

on the missed points you will need public liability insurance. Check out Hiscox on the web and read their bumph...or do a search on money supermarket. You will only need a modest liability working in private homes and the premiums wont be very expensive. But if you neglect this step and as a consequence of your negligence someone gets injured or worse, you'll be paying for the rest of your working life.

 

[Terry - Somerset]

You need to document the arrangements - when you are starting it may seem easier to simply do things informally job by job. However as time passes, particularly if the business starts to grow, you will both need to understand your working relationship. Ideally such a document should be drafted by a solicitor but at the outset a simple laymans language document signed by each of you may suffice. It should cover, for instance:

- business bank account arrangements
- how much capital are you each putting in - cash and in kind
- profit shares, do you draw wages first (how much, hourly rate, )
- how are common expenses covered - eg: van, equipment, workshop
- what happens if ......... one of you goes long term sick, you want to break up the partnership, who is liable if one of you makes a mistake etc
- agree who does which business management functions - eg: VAT, accounts, insurance, invoicing, debt collection etc etc
- which of you can agree prices for jobs, purchase materials - or do you both agree all items
- mutual understanding - goals, strategies, aspirations etc - type of services, customers, how you would like the business to develop etc.

It may be sensible to blow £10 on a starting your own business book. There are probably a number available in WHS, although I can recommend one (written by a friend of mine) Michael Carter - Take the Plunge. This is written in an engaging common sense way without assuming any formal business knowledge, and covers all the main points you need to think about (+ a few that probably aren't immediately important).

Rgds and good luck,

Terry

 

[Jamesc]

One thing you don't mention is what kind of work you are going for.
I am a one man band writing manuals for the construction industry, I found very early on that I needed to be a limited company for my customers to take me seriously. Do a bit of research, ask around of your ptential customers and see what thaey expect. It seems daft but being a limited company seems to add a degree of credability.

James

 

[Willshine]

Thanks guys for all your help. Will take everything in consideration.

Regarding the public liability insurance.. did quote on money supermarket and depending on the amount I choose below I would pay more or less..

Public / Product Liability ?
Cover if you are responsible for an injury to a member of the public or damage to their property, including through the supply of goods

£1000 / £2000 / £5000 / £10000

For the £5000 one I would pay £179.03 in AXA

Does that sounds ok? Is 5000 enough or too much? Is it 5000 in total for a year if I have 2 or more claims or is it up to 5000 per claim?

Im sorry I didnt read it properly but I thought you guys might know straight away :roll:

 

[Mr_P]

In a word NOOOOOO

Nail through gas pipe/water pipe = Very large bill.

Don't forget Mrs Miggins could trip over your kit and break her leg = kerching for the ambulance chasing solicitors who love to advertise on TV.

 

[Daven]

2) Avoid becoming a limited company ( Ltd) as this will be more costly.

Not a lot difference in cost, I have not long become Ltd and did it myself online with companies house. As Limited it will also protect your own assets if something did go wrong and 'limit' the damage to the company (unless you do something illegal).

Cheers
Dave

 

[riclepp]

I would say your insurance cover should be a minimum of 5mill and up to 10mil for those little hidden extras. This is a box standard construction industry ( trades person of small company) amount. Any less, you could lose everything including your home.

 

[Graham Orm]

2) Avoid becoming a limited company ( Ltd) as this will be more costly.

Not a lot difference in cost, I have not long become Ltd and did it myself online with companies house. As Limited it will also protect your own assets if something did go wrong and 'limit' the damage to the company (unless you do something illegal).

Cheers
Dave

Have you had the accountant's bill yet Dave, or your tax bill?

 

[Graham Orm]

Inform the revenue.

Take out at least £2 million in public liability insurance.

Keep overheads down.

Stay self employed, not Limited unless you intend on dealing with big companies on big jobs.

Good luck.

 

[paultnl]

Have you had the accountant's bill yet Dave, or your tax bill?

The tax bill will depend on a number of things and a Ltd can often be better. Most accountants will give a free initial consultation and a fixed price quote. I would suggest talking to a few of them and see who you get on best with.

Depending on your expected turnover, you may need to consider VAT registration as well.

 

[Willshine]

Guys when I get quote on moneysupermarket I cant choose more than 10000. Am I doing something wrong?

I can see many ppl are split between Ltd and not

 

[Mark Hancock]

Guys when I get quote on moneysupermarket I cant choose more than 10000. Am I doing something wrong?

I can see many ppl are split between Ltd and not

I think you need to check you are actually getting a quote for public liability. I've never heard of such low limits. As has been mentioned it's usual to have around £5 million cover nowadays.

 

[KevM]

Guys when I get quote on moneysupermarket I cant choose more than 10000. Am I doing something wrong?

I can see many ppl are split between Ltd and not

On the quote form are they working in 1000s*; i.e. is your 10,000 actually 10,000,000? £10M sounds like the right order of magnitude for public liability insurance.

If you're comfortable with an online invoicing and accountancy service you might want to look at Crunch (http://www.crunch.co.uk) if you go the Ltd route, they take care of all your accounting, tax return etc.; it worked out cheaper for us than the leech in town. We've had to chase over a couple of issues, but no worse than the leech.

*Edit: meant to prefix with 'Not wishing to teach you how to suck eggs, etc.'

 

[Daven]

Have you had the accountant's bill yet Dave, or your tax bill?

No and No.

Although I'm not an accountant (a book keeper) I worked in finance for many years :wink:

 

[Graham Orm]

Guys when I get quote on moneysupermarket I cant choose more than 10000. Am I doing something wrong?

I can see many ppl are split between Ltd and not

On the quote form are they working in 1000s*; i.e. is your 10,000 actually 10,000,000? £10M sounds like the right order of magnitude for public liability insurance.

If you're comfortable with an online invoicing and accountancy service you might want to look at Crunch (http://www.crunch.co.uk) if you go the Ltd route, they take care of all your accounting, tax return etc.; it worked out cheaper for us than the leech in town. We've had to chase over a couple of issues, but no worse than the leech.

*Edit: meant to prefix with 'Not wishing to teach you how to suck eggs, etc.'

For what it's worth I had a £1million pound a year company for 17 years. It HAD to be Limited because of the size and risk involved. I am now a self employed tradesman again (sole trader). Much happier and have no need whatsoever to be Limited. Look up what it is for, if you ask an accountant most will say do it, simply because they get more £££ for producing the books for a Limited Company than for a sole trader or partnership.

 

[Graham Orm]

Guys when I get quote on moneysupermarket I cant choose more than 10000. Am I doing something wrong?

I can see many ppl are split between Ltd and not

I think you need to check you are actually getting a quote for public liability. I've never heard of such low limits. As has been mentioned it's usual to have around £5 million cover nowadays.

+1 Sounds like you're doing something wrong. Try these folks. They do a good job for me. http://www.towergateinsurance.co.uk/