We are now... a limited company with equal shareholding between all four members.
We initially decided to run as a partnership due to the equal opportunities it offers. However, after looking back at my research and requesting advice from my parents (as my dad has set up his own business), we decided to look at becoming a limited company due to the multiple benefits it offers.
Reasons why:
- Liability is limited, which protects your personal assets from your company's debts, and means that your company can apply for credit, loans and mortgages in its own name.
- Because limited companies have records with Companies House, they are often seen as a more reliable and secure option than non-limited companies.
- The availability of your company's records may help creditors and customers build up a sense of trust and faith in your business.
- Being a limited company also protects your company name so that no other company can use it.
Source: duport.co.uk
Monday, 27 February 2012
Enterprise - LLP's
A limited liability partnership (LLP) is similar to a normal partnership, but it also offers reduced personal responsibility for business debts. Unlike sole traders and partners of ordinary partnerships, the LLP itself - not the individual members - is responsible for any debts that it runs up, unless individual members have personally guaranteed a loan to the business.
LLPs are more complicated to set up and run than ordinary partnerships, as they have to meet many of the same requirements as limited companies. LLPs are designed to be used by profit-making businesses. Non-profit making organisations should not use this business structure.
Differences between general and limited partners
Any individual or legal body - for example a company - may be a partner in a limited partnership, either as a general or as a limited partner. However, you cannot be a general and a limited partner at the same time.
You will have different debts and obligations in a limited partnership, depending on which type of partner you are:
- General partners are liable for all debts and obligations of the partnership
- Limited partners are only liable for the debts or obligations they put into the business
Because limited partners have some form of legal protection from incurring any additional debts, they may not:
- Take out their contribution to the partnership for as long as it exists
- Control or manage the business
- Have the power to make any binding decisions for the firm
LLPs are more complicated to set up and run than ordinary partnerships, as they have to meet many of the same requirements as limited companies. LLPs are designed to be used by profit-making businesses. Non-profit making organisations should not use this business structure.
Differences between general and limited partners
Any individual or legal body - for example a company - may be a partner in a limited partnership, either as a general or as a limited partner. However, you cannot be a general and a limited partner at the same time.
You will have different debts and obligations in a limited partnership, depending on which type of partner you are:
- General partners are liable for all debts and obligations of the partnership
- Limited partners are only liable for the debts or obligations they put into the business
Because limited partners have some form of legal protection from incurring any additional debts, they may not:
- Take out their contribution to the partnership for as long as it exists
- Control or manage the business
- Have the power to make any binding decisions for the firm
Monday, 20 February 2012
Enterprise - Taxes / NIC
As we are an ordinary partnership consisting of 4 individuals, we do not need to pay corporation tax. We need to pay Class 2 National Insurance and if our annual profits are over a certain amount, we also need to pay Class 4 NIC. HMRC sets up the right tax and NI records for individuals (partners) and the partnership themselves.
Income Tax and Capital Gains Tax
The profits and gains of the partnership are shared among the partners. Each is personally responsible for paying tax on their share. The nominated partner needs to register the partnership with HM Revenue & Customs (HMRC). Each partner also needs to register themselves with HMRC. This helps HMRC set up the right tax and National Insurance records for both the partnership and partners. Every year each individual partner will need to complete a Self Assessment tax return to show the profits they get from the partnership.
The partnership should appoint one of its officers - the nominated partner - to fill in the Self Assessment Partnership Tax Return and send it to HMRC. This includes a Partnership Statement, which shows how profits or losses have been divided among the partners. The nominated partner should also ensure that all other officers are given copies of the Partnership Statement to help them complete their own tax returns. Although the nominated officer has responsibility for the Partnership Tax Return, all the partners are jointly liable for any penalties resulting from it being submitted late or incorrectly.
National Insurance contributions
As well as being responsible for their tax, individual partners are also responsible for paying their own National Insurance contributions (NICs). Partners normally have to pay Class 2 National Insurance contributions. If their annual profits are over a certain amount they also pay Class 4 contributions.
Corporation Tax
If partners are companies, they must pay Corporation Tax on their profits from the partnership, and should record the relevant figures on their Corporation Tax return.
VAT
If the partnership has - or expects to have - turnover of more than £73,000, it will need to charge VAT to its customers and pass this on to HMRC.
PAYE (Pay As You Earn) for employers
Partnerships with employees will need to collect and pay income tax and NICs, which will mean operating a PAYE (Pay As You Earn) system.
Source: businesslink.gov.uk
Checklist
In order to set up business as a partnership there are certain things you need to do - some must be done as a group and others as individual partners. You should:
- Display all the partners' names at all your business premises together with the address to which official documents should be sent.
- Display all the partners' names on your business website and stationery, including letters, invoices, receipts and cheques along with your principal place of business.
- If the partnership has more than 20 partners you need only display your principal place of business.
- Register the partnership, and each partner, for Self Assessment with HM Revenue & Customs (HMRC).
- Contact HMRC to register your partnership for VAT if you expect a turnover of more than £73,000 a year.
- Register with HMRC for PAYE (Pay As You Earn) if the partnership employs staff.
- Register with HMRC for the Construction Industry Scheme if the partnership is a contractor or sub-contractor.
Income Tax and Capital Gains Tax
The profits and gains of the partnership are shared among the partners. Each is personally responsible for paying tax on their share. The nominated partner needs to register the partnership with HM Revenue & Customs (HMRC). Each partner also needs to register themselves with HMRC. This helps HMRC set up the right tax and National Insurance records for both the partnership and partners. Every year each individual partner will need to complete a Self Assessment tax return to show the profits they get from the partnership.
The partnership should appoint one of its officers - the nominated partner - to fill in the Self Assessment Partnership Tax Return and send it to HMRC. This includes a Partnership Statement, which shows how profits or losses have been divided among the partners. The nominated partner should also ensure that all other officers are given copies of the Partnership Statement to help them complete their own tax returns. Although the nominated officer has responsibility for the Partnership Tax Return, all the partners are jointly liable for any penalties resulting from it being submitted late or incorrectly.
National Insurance contributions
As well as being responsible for their tax, individual partners are also responsible for paying their own National Insurance contributions (NICs). Partners normally have to pay Class 2 National Insurance contributions. If their annual profits are over a certain amount they also pay Class 4 contributions.
Corporation Tax
If partners are companies, they must pay Corporation Tax on their profits from the partnership, and should record the relevant figures on their Corporation Tax return.
VAT
If the partnership has - or expects to have - turnover of more than £73,000, it will need to charge VAT to its customers and pass this on to HMRC.
PAYE (Pay As You Earn) for employers
Partnerships with employees will need to collect and pay income tax and NICs, which will mean operating a PAYE (Pay As You Earn) system.
Source: businesslink.gov.uk
Checklist
In order to set up business as a partnership there are certain things you need to do - some must be done as a group and others as individual partners. You should:
- Display all the partners' names at all your business premises together with the address to which official documents should be sent.
- Display all the partners' names on your business website and stationery, including letters, invoices, receipts and cheques along with your principal place of business.
- If the partnership has more than 20 partners you need only display your principal place of business.
- Register the partnership, and each partner, for Self Assessment with HM Revenue & Customs (HMRC).
- Contact HMRC to register your partnership for VAT if you expect a turnover of more than £73,000 a year.
- Register with HMRC for PAYE (Pay As You Earn) if the partnership employs staff.
- Register with HMRC for the Construction Industry Scheme if the partnership is a contractor or sub-contractor.
Enterprise - Partnerships
HMRC
If you’re starting or joining a new business partnership, both the partnership and each partner need to be registered for Self Assessment. The partner nominated to receive and send in the partnership tax returns must complete the partnership registration form. It’s quick and easy and can be done online.
You must register as a partner in the business if you’re an individual. HMRC will use the information you send to set up the right National Insurance records for you too. You can do this online. It will help if you have information about the partnership to hand before you start, for example:
- Address and postcode
- Partnership Unique Taxpayer Reference
- Company registration number (if registered with Companies House)
If a company, trust or another partnership becomes a partner in the partnership, it needs to be registered for Self Assessment too. The person responsible for the new partnership, for example, the trustee or company secretary, should complete and sign form SA402.
Source: hmrc.gov.uk
Types of partnership
There are three types of partnership:
1) 'Ordinary' partnerships
2) Limited partnerships
3) Limited liability partnerships (LLPs)
All three types of partnership have the following features in common:
- Two or more persons – ie the partners - share the risks, costs and responsibilities of being in business
a partner can be an individual or another business, eg a limited company or another partnership
- The profits and gains of the partnership are shared among the partners, unless the partnership agreement states otherwise
- Each partner is personally responsible for paying tax on their share of the profits and gains, and for their - National Insurance contributions
- Each partner must register for Self Assessment with HM Revenue & Customs (HMRC) and complete an annual tax return
- A nominated partner must also send HMRC a partnership return
- Partners raise money for the business out of their own assets and/or with loans
- The partners themselves usually manage the business, although they can delegate certain responsibilities to employees
- It's possible to have 'sleeping' partners who contribute money to the business but are not involved in running it from day to day
- The partnership must keep records showing business income and expenses
Ordinary partnership
'Ordinary' partnerships An 'ordinary' partnership has no legal existence distinct from the partners themselves. If one of the partners resigns, dies or goes bankrupt, the partnership must be dissolved - although the business can still continue.
A partnership is a relatively simple and flexible way for two or more people to own and run a business together. Ordinary partnerships also have to be registered with HMRC for tax purposes. The nominated partner does this by registering the partnership for Self Assessment. If the partnership has debts, the partners are jointly liable for any amounts owed and so are equally responsible for paying off the whole debt.
Creditors can claim a partner's personal assets to pay off any debts - even those debts caused by other partners. If a partner leaves the partnership, the remaining partners may be liable for the entire debt of the partnership. Therefore, partners do not enjoy any protection if the business fails.
Source: businesslink.gov.uk
Naming a partnership
A partnership can trade under the names of the partners, 'Wright, Brown and Ali LP', for example, or it can use another business name - such as 'Fantastic Design Solutions Limited Partnership'.
If your trading name does not include the partners' names, you must still make sure that your business website and stationery - such as letters and invoices - display all of their names as well as the trading name - for example, 'Wright, Brown and Ali, trading as Fantastic Design Solutions Limited Partnership'.
If there are more than 20 partners then the business website and stationery do not have to list them, but they must show the address of the partnership's principal place of business.
The trading name should not be the same as, or too similar, to that of any existing business, and it should not contain words that people might find offensive or misleading.
Source: businesslink.gov.uk
If you’re starting or joining a new business partnership, both the partnership and each partner need to be registered for Self Assessment. The partner nominated to receive and send in the partnership tax returns must complete the partnership registration form. It’s quick and easy and can be done online.
You must register as a partner in the business if you’re an individual. HMRC will use the information you send to set up the right National Insurance records for you too. You can do this online. It will help if you have information about the partnership to hand before you start, for example:
- Address and postcode
- Partnership Unique Taxpayer Reference
- Company registration number (if registered with Companies House)
If a company, trust or another partnership becomes a partner in the partnership, it needs to be registered for Self Assessment too. The person responsible for the new partnership, for example, the trustee or company secretary, should complete and sign form SA402.
Source: hmrc.gov.uk
Types of partnership
There are three types of partnership:
1) 'Ordinary' partnerships
2) Limited partnerships
3) Limited liability partnerships (LLPs)
All three types of partnership have the following features in common:
- Two or more persons – ie the partners - share the risks, costs and responsibilities of being in business
a partner can be an individual or another business, eg a limited company or another partnership
- The profits and gains of the partnership are shared among the partners, unless the partnership agreement states otherwise
- Each partner is personally responsible for paying tax on their share of the profits and gains, and for their - National Insurance contributions
- Each partner must register for Self Assessment with HM Revenue & Customs (HMRC) and complete an annual tax return
- A nominated partner must also send HMRC a partnership return
- Partners raise money for the business out of their own assets and/or with loans
- The partners themselves usually manage the business, although they can delegate certain responsibilities to employees
- It's possible to have 'sleeping' partners who contribute money to the business but are not involved in running it from day to day
- The partnership must keep records showing business income and expenses
Ordinary partnership
'Ordinary' partnerships An 'ordinary' partnership has no legal existence distinct from the partners themselves. If one of the partners resigns, dies or goes bankrupt, the partnership must be dissolved - although the business can still continue.
A partnership is a relatively simple and flexible way for two or more people to own and run a business together. Ordinary partnerships also have to be registered with HMRC for tax purposes. The nominated partner does this by registering the partnership for Self Assessment. If the partnership has debts, the partners are jointly liable for any amounts owed and so are equally responsible for paying off the whole debt.
Creditors can claim a partner's personal assets to pay off any debts - even those debts caused by other partners. If a partner leaves the partnership, the remaining partners may be liable for the entire debt of the partnership. Therefore, partners do not enjoy any protection if the business fails.
Source: businesslink.gov.uk
Naming a partnership
A partnership can trade under the names of the partners, 'Wright, Brown and Ali LP', for example, or it can use another business name - such as 'Fantastic Design Solutions Limited Partnership'.
If your trading name does not include the partners' names, you must still make sure that your business website and stationery - such as letters and invoices - display all of their names as well as the trading name - for example, 'Wright, Brown and Ali, trading as Fantastic Design Solutions Limited Partnership'.
If there are more than 20 partners then the business website and stationery do not have to list them, but they must show the address of the partnership's principal place of business.
The trading name should not be the same as, or too similar, to that of any existing business, and it should not contain words that people might find offensive or misleading.
Source: businesslink.gov.uk
Wednesday, 15 February 2012
Enterprise - Business structure
Business structure (from BusinessLink)
If you're self-employed, you pay Income Tax and National Insurance on what is known as 'taxable income'. Taxable income is mainly the profits you make from working for yourself (whether as a sole trader or partner). You pay Income Tax and Class 4 National Insurance through the Self Assessment system. You will need to fill out a tax return following the end of every tax year. As soon as you start in business you will need to register with HMRC so that the correct tax and Class 2 National Insurance contribution records can be set up.
The most popular legal structures for start-ups are sole trader, partnership and private limited companies.
Source: online.businesslink.gov.uk
Partnership
We are a standard partnership of 4 creatives.
Anything that one partner does affect all of the partners, because each partner of the general partnership is personally responsible for all obligations of the partnership deals. Thus, each general partner's exposure to risk is increased by a factor equal to the number of general partners in the business.
Source: ukincorp.co.uk
The profits and gains of the partnership are shared among the partners. Each is personally responsible for paying tax on their share. The nominated partner needs to register the partnership with HM Revenue & Customs (HMRC). Each partner also needs to register themselves with HMRC. This helps HMRC set up the right tax and National Insurance records for both the partnership and partners.
The partnership should appoint one of its officers - the nominated partner - to fill in the Self Assessment Partnership Tax Return and send it to HMRC. This includes a Partnership Statement, which shows how profits or losses have been divided among the partners. The nominated partner should also ensure that all other officers are given copies of the Partnership Statement to help them complete their own tax returns. Although the nominated officer has responsibility for the Partnership Tax Return, all the partners are jointly liable for any penalties resulting from it being submitted late or incorrectly.
If the partnership has - or expects to have - turnover of more than £73,000, it will need to charge VAT to its customers and pass this on to HMRC.
Source: businesslink.gov.uk
Limited company
Aside from the sole trader route, the limited liability company is the most popular business structure in the UK. The liability of company directors is ‘limited’ in that the company’s finances are separate from personal finances, which is not the case for sole traders. Limited company shareholders are not responsible for any debts run up by the business, although directors may need to guarantee loans or credit taken out in the company’s name.
There are some high level requirements which all limited companies must fulfil:
- The company must be registered at Companies House
- The company’s annual accounts must be filed at Companies House
- Annual Return (Form AR01) must be completed each year to ensure Companies House records the most up-to-date information about the company. This is subject to a modest annual fee.
- HMRC must be informed if the company has any profits or taxable income on an annual basis.
- Every limited company must complete an annual corporation tax return. Any liabilities must be paid within 9 months of the company year end.
- All company employees must pay income tax and NICs on any income they receive.
Source: bytestart.co.uk
If you're a sole trader or partnership, there's no better time to convert your business to a limited company. Here are six reasons why:
1. The principal benefit of trading as a limited company has always been the limited liability bestowed upon the company's officers and shareholders. As a sole trader or other non-limited business, personal assets are at risk in the event of failure of the business, but this is not the case for a limited company. As long as ths business is operated legally and within the terms of the Companies Act, directors' or shareholders' personal assets are not at risk in the event of a winding up or receivership. And as often happens on occasion, such events are not always under our own control.
2. The first £10,000 of a limited company's profits are tax free. This is not the case for sole traders and partnerships.
3. Company profits may be distributed as dividends to shareholders. Presently, National Insurance is not applicable to dividend payments, effectively reducing your tax liability still further.
4. Operating as a limited company often gives suppliers and customers a sense of confidence in a business. Quite often, larger organisations in particular will prefer not to deal with non-limited businesses.
5. The costs associated with managing and operating a limited company are not significantly greater than with non-limited businesses. Accountants and other professional advisers may have conflicting views on when they consider the benefits of being limited to outweigh the advantages of being self-employed. In general terms - at least from the perspective of taxation and accountancy - changes to legislation over the last few years have meant much lower costs associated with limited companies.
6. There is no obligation for a limited company to commence trading within any set time period after its incorporation. This means that the formation of a limited company is one simple and low cost method to protect a business name. Whilst this does not in itself give any rights to use of the business name, many clients form companies in anticipation of future development of new businesses or in order to protect the limited company name of an existing non-limited business for the future. No two limited companies can exist with exactly the same name.
Source: talktalk.co.uk
If you're self-employed, you pay Income Tax and National Insurance on what is known as 'taxable income'. Taxable income is mainly the profits you make from working for yourself (whether as a sole trader or partner). You pay Income Tax and Class 4 National Insurance through the Self Assessment system. You will need to fill out a tax return following the end of every tax year. As soon as you start in business you will need to register with HMRC so that the correct tax and Class 2 National Insurance contribution records can be set up.
The most popular legal structures for start-ups are sole trader, partnership and private limited companies.
Source: online.businesslink.gov.uk
Partnership
We are a standard partnership of 4 creatives.
Anything that one partner does affect all of the partners, because each partner of the general partnership is personally responsible for all obligations of the partnership deals. Thus, each general partner's exposure to risk is increased by a factor equal to the number of general partners in the business.
Source: ukincorp.co.uk
The profits and gains of the partnership are shared among the partners. Each is personally responsible for paying tax on their share. The nominated partner needs to register the partnership with HM Revenue & Customs (HMRC). Each partner also needs to register themselves with HMRC. This helps HMRC set up the right tax and National Insurance records for both the partnership and partners.
The partnership should appoint one of its officers - the nominated partner - to fill in the Self Assessment Partnership Tax Return and send it to HMRC. This includes a Partnership Statement, which shows how profits or losses have been divided among the partners. The nominated partner should also ensure that all other officers are given copies of the Partnership Statement to help them complete their own tax returns. Although the nominated officer has responsibility for the Partnership Tax Return, all the partners are jointly liable for any penalties resulting from it being submitted late or incorrectly.
If the partnership has - or expects to have - turnover of more than £73,000, it will need to charge VAT to its customers and pass this on to HMRC.
Source: businesslink.gov.uk
National Insurance contributions
If you're self-employed and your annual profits are over a certain amount you normally have to pay Class 4 National Insurance contributions in addition to Class 2 contributions. The amount of Class 4 National Insurance contributions you have to pay for any tax year is based on your profits for that year. You pay 9 per cent on annual profits between £7,225 and £42,475 (2011-12) and 2 per cent on any profit over that amount.
Limited company
Aside from the sole trader route, the limited liability company is the most popular business structure in the UK. The liability of company directors is ‘limited’ in that the company’s finances are separate from personal finances, which is not the case for sole traders. Limited company shareholders are not responsible for any debts run up by the business, although directors may need to guarantee loans or credit taken out in the company’s name.
There are some high level requirements which all limited companies must fulfil:
- The company must be registered at Companies House
- The company’s annual accounts must be filed at Companies House
- Annual Return (Form AR01) must be completed each year to ensure Companies House records the most up-to-date information about the company. This is subject to a modest annual fee.
- HMRC must be informed if the company has any profits or taxable income on an annual basis.
- Every limited company must complete an annual corporation tax return. Any liabilities must be paid within 9 months of the company year end.
- All company employees must pay income tax and NICs on any income they receive.
Source: bytestart.co.uk
If you're a sole trader or partnership, there's no better time to convert your business to a limited company. Here are six reasons why:
1. The principal benefit of trading as a limited company has always been the limited liability bestowed upon the company's officers and shareholders. As a sole trader or other non-limited business, personal assets are at risk in the event of failure of the business, but this is not the case for a limited company. As long as ths business is operated legally and within the terms of the Companies Act, directors' or shareholders' personal assets are not at risk in the event of a winding up or receivership. And as often happens on occasion, such events are not always under our own control.
2. The first £10,000 of a limited company's profits are tax free. This is not the case for sole traders and partnerships.
3. Company profits may be distributed as dividends to shareholders. Presently, National Insurance is not applicable to dividend payments, effectively reducing your tax liability still further.
4. Operating as a limited company often gives suppliers and customers a sense of confidence in a business. Quite often, larger organisations in particular will prefer not to deal with non-limited businesses.
5. The costs associated with managing and operating a limited company are not significantly greater than with non-limited businesses. Accountants and other professional advisers may have conflicting views on when they consider the benefits of being limited to outweigh the advantages of being self-employed. In general terms - at least from the perspective of taxation and accountancy - changes to legislation over the last few years have meant much lower costs associated with limited companies.
6. There is no obligation for a limited company to commence trading within any set time period after its incorporation. This means that the formation of a limited company is one simple and low cost method to protect a business name. Whilst this does not in itself give any rights to use of the business name, many clients form companies in anticipation of future development of new businesses or in order to protect the limited company name of an existing non-limited business for the future. No two limited companies can exist with exactly the same name.
Source: talktalk.co.uk
Tuesday, 14 February 2012
Enterprise - Duke Studios
Charlotte looked into various studio spaces that would suit us as a practice, primarily those situated in Leeds due to its connections with industry, the fact we will all be situated in Leeds after graduation and the multiplicity of resources it has and we could take advantage of.
About
Duke Studios are, as stated on their site, a multi disciplinary creative space in the heart of Leeds, offering studio spaces, co-working membership and services. It is located in Munro house, above Leeds Gallery and Cafe 164.
We wanted to be surrounded by like-minded professionals therefore we thought Duke Studios was a perfect place to set up our new business. Although not officially opened, this will provide a new and contemporary working space for us. There are plenty of resources, the space is more than adequate and provides 'endless collaboration potential' Business is social, meet, work, collaborate, explore, learn, grow and succeed.
Pricing
Charlotte gathered the following information after the Leeds Print Festival:
Space (2): £399 p/m
Broadband: Included
Electricity / gas: Included
Strengths
- Close travel networks
- Situated in the business capital of Yorkshire
- Surrounded by like-minded creatives therefore there is a potential for collaboration
- New, contemporary and fresh studio space
- Meeting room for client contact
- Bills inclusive - relatively cheap cost
- Resources / workspaces etc
- Gallery below - potential exhibitions?
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