Forming a UK Limited Company

2ndAccount · 09-25-2009, 06:05 AM

I am about to do this to house my IM activities (product creation, adsense, affiliate sales).

Do any UK marketers have any nuggets of wisdom they'd like to share based on their experiances?

jodib · 09-25-2009, 06:15 AM

Hi 2ndAccount,

I did this myself a few years back for everything you have listed as it is much easier to run, other than through a personal account.

I am not qualified in acoounting and have someone handle that side for me.

Do you have an accountant or someone that knows a bit about accounts? When I made my decision, I contacted one and they were able to advise me on all the avenues available.

Hope that helps a bit!

Any questions, just ask (by the way, I set it all up online, for not too much money either)..

Regards,

Jodi

tyson4 · 09-25-2009, 06:25 AM

Hi, im a Chartered Accountant!!!!

It's easy to set up a Ltd company.

But look into the other factors, namely how you get your money out, and taxation issues. Basically a Ltd Co is an individual on it's own - you need to pay corporation tax for the company on profits, and tax on the money you take out then as an employee (or dividend).

You need to chat with an accountant about this.

Peter Adamson · 09-25-2009, 06:25 AM

I was living in France when I created my first UK limited company, but I got my accountant to do it for me. I suggest you get an accountant first since you will need one anyway, and take advice from them.

Richard Tunnah · 09-25-2009, 06:37 AM

Forming a company in the UK is quick and easy. You can electronically form one via a number of company formation companies (google them) for about £20. However as already said you need professional advice about the implications of forming a company over being a sole trader for things like tax and official paperwork.

Rich

2ndAccount · 09-25-2009, 06:39 AM

as luck would have it myself and my partner are both accountants!

i've decided a ltd company is the way to go (as opposed to sole trader) as I have a full time job at the minute so don't need to draw a wage, i'll many extract the money via dividends.

do any of you guys/gals have any complications f the majority of earnings come from abroad?

GuerrillaIM · 09-25-2009, 09:20 AM

Quote:

Originally Posted by 2ndAccount

do any of you guys/gals have any complications f the majority of earnings come from abroad?

New legislation means you have to record all payments from europe now. There are some VAT issues with over seas payments but I have always just let the accountant worry about it.

John Sullivan · 09-25-2009, 08:45 PM

Speak to any accountant in the UK and they will advise on the best way forward in this matter. Whether you go as a sole trader or LTD will depend on various matters such as your income, expenses VAT payments etc

John

2ndAccount · 09-28-2009, 08:20 AM

thanks for all the info above all.

I have now formed a private Ltd company but have one more question from you all.

On my balance sheet i will presumably need to value my sites, preumably I'll need do this based on something like monthly profit x 12 months?

How do you all value your sites fro accounting purposes and also as they make more money presumably you have to increase their value on the balance sheet and charge appreciation to the p&l account? Is this how you all treat the value of your sites?

tyson4 · 09-28-2009, 03:14 PM

Quote:

Originally Posted by 2ndAccount

as luck would have it myself and my partner are both accountants!

i've decided a ltd company is the way to go (as opposed to sole trader) as I have a full time job at the minute so don't need to draw a wage, i'll many extract the money via dividends.

do any of you guys/gals have any complications f the majority of earnings come from abroad?

Mmmmm as an accountant, should you not know how to deal with this???!!!!!

2ndAccount · 09-29-2009, 05:46 AM

well probably yes. i guess the moral of the story for the rest of you is to not implicitly trust your accountant to do the best thing.

i qualified as an accountant a couple of years ago but despite this I have very little knowledge of accounting techniques from a technical perspective!

btw just incase you are worrying I am not practicing as an accountant!

n7 Studios · 09-29-2009, 06:06 AM

Quote:

Originally Posted by 2ndAccount

well probably yes. i guess the moral of the story for the rest of you is to not implicitly trust your accountant to do the best thing.

i qualified as an accountant a couple of years ago but despite this I have very little knowledge of accounting techniques from a technical perspective!

btw just incase you are worrying I am not practicing as an accountant!

I was worrying, but thankfully you've put my mind at rest

As Mark has said, check out UK Business Forums. They're a friendly bunch who can provide lots of advice - some are qualified accountants, solicitors etc, so can usually help you create a limited company.

Andrew Milburn · 09-29-2009, 06:23 AM

Hi,

As others have said you need to take proper advice from a proper accountant. But remember with IM the risk is very low and if you do not go crazy your overheads are low, no stock etc, so you need to think is it worth the extra costs.
But as said before ask a proper accountant and he or she will put you straight.

Hope this helps
Andrew

2ndAccount · 09-30-2009, 03:46 AM

thanks all.

will head over to UK Bus forums!

I have been amazed by how cheap and quick it is to set up a Ltd company - about £30 and only took about 20 minutes online. i realize the main costs are accountant fee for however after getting some initial advice i intend to put together my own accounts (along with the help of my other half who is a practicing accountant!).

I have already had conversations with someone at the bank and the inland revenue and it is funny how hard it is to grasp the concept of IM. after much explaining from me about what the business will do both turned round and said "ok so sort of like web design thern?"!!! made me chuckle!

tomw · 09-30-2009, 06:23 AM

If you are going to be making income from affiliate sales, which are often based abroad, I would seriously consider a completely different form of incorporation.

Look into setting up an offshore trust company structure as opposed to a limited company - especially one based in the UK.

A popular option is to create a two company structure where each company is based in two separate countries. The "holding" company in one, the other *and the bank accounts* in another.

The reason for this is mainly twofold:

Complete financial privacy and asset protection.
Completely tax free income.

How does this work?

The main company is set up in a stable country, for example the Seychelles.

The second company is set up in somewhere like Cyprus.

The Cyprus company issues a *confidential* trust document stating that the owner of the Seychelles company (you) is the beneficial owner of the Cyprus company. All bank accounts are tied to the Cyprus company. The confidentiality of the trust document is ratified by court apostille.

As you are a citizen of neither country, you are not liable for tax in any form on income that either company makes. As you are a UK citizen and your income is both made and held abroad, the same applies. However, you are liable for large sums that you bring into the UK, for example to your UK bank account.

Because of the court protection, should your affairs come under serious scrutiny, any investigation will only lead to an order against the Cyprus company. Only in *very* extreme cases, such as if you are under investigation for suspected international drug dealing or international money laundering will a deeper investigation lead to the court agreeing to reveal that you are the real owner.

This kind of structure can cost in excess of two thousand pounds as opposed to a couple of hundred for a typical UK Ltd Company structure, but the benefits are obviously worth the initial investment.

Tom

chickenlittle · 10-19-2009, 02:19 PM

Tom,

Can I ask where you found about this, was it from a tax adviser?

I have looked into this structure in the past. What I found out was that as a UK citizen/resident, you have to pay tax on your worldwide earnings. This means that regardless of where your products are sold, or the country you are making profits in, you have to pay tax on them. This applies whether you are a sole trader, or whether you set up a company (anywhere in the world).

The structure you are describing is an attempt to hide earnings from the UK tax authorities, and I would imagine that some years down the line this information could easily come to light, resulting in a jail sentence. The structure you're describing is illegal.

This is not advice to anyone - I am not a solicitor or accountant - but from what I understand from my research, the only way for a UK citizen/resident to stop paying UK tax is to move countries to somewhere with a lower tax rate.

I am quite interested in this, because at an Internet Marketing conference I went to in London, there was a company specialising in this kind of set up doing a presentation. They basically said they can set it up for you, and as long as it is kept secret, no one is the wiser! What they didn't say is when the bank records eventually come to light, it is the individual that gets prosecuted, not the company that set it up for them...

I wonder if many UK marketers are using this structure and if they realise that it is illegal?

09-25-2009, 06:05 AM	#1
2ndAccount Active Warrior Join Date: Jan 2009 Posts: 60 Thanks: 4 Thanked 13 Times in 4 Posts	Forming a UK Limited Company I am about to do this to house my IM activities (product creation, adsense, affiliate sales). Do any UK marketers have any nuggets of wisdom they'd like to share based on their experiances?

09-25-2009, 06:15 AM	#2
jodib Advanced Warrior War Room Member Join Date: Jun 2007 Location: London, United Kingdom. Posts: 878 Thanks: 190 Thanked 121 Times in 81 Posts Social Networking Contact Info	Re: Forming a UK Limited Company Hi 2ndAccount, I did this myself a few years back for everything you have listed as it is much easier to run, other than through a personal account. I am not qualified in acoounting and have someone handle that side for me. Do you have an accountant or someone that knows a bit about accounts? When I made my decision, I contacted one and they were able to advise me on all the avenues available. Hope that helps a bit! Any questions, just ask (by the way, I set it all up online, for not too much money either).. Regards, Jodi
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09-25-2009, 06:25 AM	#3
tyson4 Active Warrior War Room Member Join Date: Aug 2007 Location: , , . Posts: 76 Thanks: 12 Thanked 1 Time in 1 Post	Re: Forming a UK Limited Company Hi, im a Chartered Accountant!!!! It's easy to set up a Ltd company. But look into the other factors, namely how you get your money out, and taxation issues. Basically a Ltd Co is an individual on it's own - you need to pay corporation tax for the company on profits, and tax on the money you take out then as an employee (or dividend). You need to chat with an accountant about this.

09-25-2009, 06:25 AM	#4
Peter Adamson Active Warrior War Room Member Join Date: Jun 2009 Location: United Kingdom Posts: 341 Thanks: 15 Thanked 144 Times in 55 Posts	Re: Forming a UK Limited Company I was living in France when I created my first UK limited company, but I got my accountant to do it for me. I suggest you get an accountant first since you will need one anyway, and take advice from them.
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09-25-2009, 06:37 AM	#5
Richard Tunnah Just hitting the mouse! War Room Member Join Date: Jul 2007 Location: Puerto Calero, Lanzarote, Canary Islands Posts: 1,938 Thanks: 335 Thanked 205 Times in 165 Posts Social Networking	Re: Forming a UK Limited Company Forming a company in the UK is quick and easy. You can electronically form one via a number of company formation companies (google them) for about £20. However as already said you need professional advice about the implications of forming a company over being a sole trader for things like tax and official paperwork. Rich

09-25-2009, 06:39 AM	#6
2ndAccount Active Warrior Join Date: Jan 2009 Posts: 60 Thanks: 4 Thanked 13 Times in 4 Posts	Re: Forming a UK Limited Company as luck would have it myself and my partner are both accountants! i've decided a ltd company is the way to go (as opposed to sole trader) as I have a full time job at the minute so don't need to draw a wage, i'll many extract the money via dividends. do any of you guys/gals have any complications f the majority of earnings come from abroad?

09-25-2009, 08:45 PM	#8
John Sullivan Senior Warrior Member War Room Member Join Date: Jun 2006 Location: London/Brazil Posts: 1,702 Thanks: 51 Thanked 121 Times in 113 Posts	Re: Forming a UK Limited Company Speak to any accountant in the UK and they will advise on the best way forward in this matter. Whether you go as a sole trader or LTD will depend on various matters such as your income, expenses VAT payments etc John

09-28-2009, 08:20 AM	#9
2ndAccount Active Warrior Join Date: Jan 2009 Posts: 60 Thanks: 4 Thanked 13 Times in 4 Posts	Re: Forming a UK Limited Company thanks for all the info above all. I have now formed a private Ltd company but have one more question from you all. On my balance sheet i will presumably need to value my sites, preumably I'll need do this based on something like monthly profit x 12 months? How do you all value your sites fro accounting purposes and also as they make more money presumably you have to increase their value on the balance sheet and charge appreciation to the p&l account? Is this how you all treat the value of your sites?

09-29-2009, 05:46 AM	#11
2ndAccount Active Warrior Join Date: Jan 2009 Posts: 60 Thanks: 4 Thanked 13 Times in 4 Posts	Re: Forming a UK Limited Company well probably yes. i guess the moral of the story for the rest of you is to not implicitly trust your accountant to do the best thing. i qualified as an accountant a couple of years ago but despite this I have very little knowledge of accounting techniques from a technical perspective! btw just incase you are worrying I am not practicing as an accountant!

09-29-2009, 06:23 AM	#13
Andrew Milburn HyperActive Warrior Join Date: Aug 2005 Location: Lichfield UK Posts: 109 Thanks: 1 Thanked 10 Times in 9 Posts Social Networking Contact Info	Re: Forming a UK Limited Company Hi, As others have said you need to take proper advice from a proper accountant. But remember with IM the risk is very low and if you do not go crazy your overheads are low, no stock etc, so you need to think is it worth the extra costs. But as said before ask a proper accountant and he or she will put you straight. Hope this helps Andrew
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09-30-2009, 03:46 AM	#14
2ndAccount Active Warrior Join Date: Jan 2009 Posts: 60 Thanks: 4 Thanked 13 Times in 4 Posts	Re: Forming a UK Limited Company thanks all. will head over to UK Bus forums! I have been amazed by how cheap and quick it is to set up a Ltd company - about £30 and only took about 20 minutes online. i realize the main costs are accountant fee for however after getting some initial advice i intend to put together my own accounts (along with the help of my other half who is a practicing accountant!). I have already had conversations with someone at the bank and the inland revenue and it is funny how hard it is to grasp the concept of IM. after much explaining from me about what the business will do both turned round and said "ok so sort of like web design thern?"!!! made me chuckle!

09-30-2009, 06:23 AM	#15
tomw Advanced Warrior War Room Member Join Date: Sep 2007 Location: Right Here ----> Posts: 973 Blog Entries: 1 Thanks: 511 Thanked 325 Times in 162 Posts	Re: Forming a UK Limited Company If you are going to be making income from affiliate sales, which are often based abroad, I would seriously consider a completely different form of incorporation. Look into setting up an offshore trust company structure as opposed to a limited company - especially one based in the UK. A popular option is to create a two company structure where each company is based in two separate countries. The "holding" company in one, the other *and the bank accounts* in another. The reason for this is mainly twofold: Complete financial privacy and asset protection. Completely tax free income. How does this work? The main company is set up in a stable country, for example the Seychelles. The second company is set up in somewhere like Cyprus. The Cyprus company issues a confidential trust document stating that the owner of the Seychelles company (you) is the beneficial owner of the Cyprus company. All bank accounts are tied to the Cyprus company. The confidentiality of the trust document is ratified by court apostille. As you are a citizen of neither country, you are not liable for tax in any form on income that either company makes. As you are a UK citizen and your income is both made and held abroad, the same applies. However, you are liable for large sums that you bring into the UK, for example to your UK bank account. Because of the court protection, should your affairs come under serious scrutiny, any investigation will only lead to an order against the Cyprus company. Only in very extreme cases, such as if you are under investigation for suspected international drug dealing or international money laundering will a deeper investigation lead to the court agreeing to reveal that you are the real owner. This kind of structure can cost in excess of two thousand pounds as opposed to a couple of hundred for a typical UK Ltd Company structure, but the benefits are obviously worth the initial investment. Tom
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10-19-2009, 02:19 PM	#16
chickenlittle HyperActive Warrior Join Date: Nov 2008 Posts: 120 Thanks: 12 Thanked 10 Times in 8 Posts	Re: Forming a UK Limited Company Tom, Can I ask where you found about this, was it from a tax adviser? I have looked into this structure in the past. What I found out was that as a UK citizen/resident, you have to pay tax on your worldwide earnings. This means that regardless of where your products are sold, or the country you are making profits in, you have to pay tax on them. This applies whether you are a sole trader, or whether you set up a company (anywhere in the world). The structure you are describing is an attempt to hide earnings from the UK tax authorities, and I would imagine that some years down the line this information could easily come to light, resulting in a jail sentence. The structure you're describing is illegal. This is not advice to anyone - I am not a solicitor or accountant - but from what I understand from my research, the only way for a UK citizen/resident to stop paying UK tax is to move countries to somewhere with a lower tax rate. I am quite interested in this, because at an Internet Marketing conference I went to in London, there was a company specialising in this kind of set up doing a presentation. They basically said they can set it up for you, and as long as it is kept secret, no one is the wiser! What they didn't say is when the bank records eventually come to light, it is the individual that gets prosecuted, not the company that set it up for them... I wonder if many UK marketers are using this structure and if they realise that it is illegal?