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I have been offered a business

Discussion in 'General Business Forum:' started by pjohnstone, Jan 5, 2012.

  1. pjohnstone

    pjohnstone Member

    I work in a PR agency and over the last 5 years I have been building up the web development side of the company. Stream Media (Stream Media - Creative website design based in Glasgow)

    I had a meeting yesterday and my Director is offering me the business for free to develop on my own. I am also getting my redundancy in March. So basically I have two months to get everything moved over to me.

    Essentially Stream Media is just a name and a website domain - there is no actual company. So I will need to set it all up in my name.

    I have clients and I have got a decent body of work behind me. So just looking for some advice on what to do next and any pitfalls that there might be.
  2. pjohnstone

    pjohnstone Member

    Sorry not sure what your reply is trying to say?
  3. Levi

    Levi Moderator Staff Member

    it's a spam post...

    Johnstone - it's basically the same as going freelance, you don't need to go limited company or anything, you're just trading under a business name instead of your own name, so your cheque book will read xy t/a stream media etc.
  4. pjohnstone

    pjohnstone Member

    Thanks Levi.

    Its all quite a lot to take in but I am looking at it as a great opportunity and going to spend the next month setting everything up.

    Got a meeting with Business Gateway so hopefully they can give me some good advice.

    Also does anyone have any recommendations of client management packages I could use - preferably cheap!
  5. BenJonesDesign

    BenJonesDesign Active Member

    what a fantastic opportunity. Business Gateway will be a great help, as well as that look out for any local business seminars, they can be helpful too. Try and make connections with other business owners and they may well just help too.

    Good luck with it all.
  6. richimgd

    richimgd Member

    The thing to consider is (and I'm no expert at all) you have a choice of being a Sole trader which gives you unlimited liability and is easier to set up and start off as or you can register the company as Limited which is more complicated from a tax point of view which would mean you would probably need to do your homework or get some professional advice. Going down the limited route will give you protection should you ever get into legal or financial trouble / disputes with your clients or suppliers otherwise you will be personally liable and could lose your house etc to pay for the debts your business could generate. There is of course a lot more to it and something I am currently reading up on.
  7. pjohnstone

    pjohnstone Member

    Thanks for the feedback everyone.

    I am just going to have to write a big list of pros and cons and go through it with a fine tooth comb.
  8. Chris Lord

    Chris Lord Senior Member

    What do you gain? Why is he giving it up? Do they have any debts? What are your current clients worth? Does the company employ any staff?

    Seems like a strange situation to me, mainly due to your redundancy, but I'm sure you can judge whether this is a good decision or not. The main pro for me is if you have a current ongoing client base.
  9. pjohnstone

    pjohnstone Member

    The company I work for has three areas to the business. One area is Media Training which makes huge profits and another is Public Relations which makes a huge loss. I also made a loss, but if I worked for myself and stripped the out goings then I would have made a tidy profit last year.

    My director wants to focus on the Media Training and that means losing the other members of staff which in turn drastically reduces his costs.

    There are no debts and there are no staff. Just me and the clients - nothing has really changed apart from ownership.

    The clients provide a small on going cost, but its mainly project based - but my main effort will be to try and get some on going contracts with clients for the future.
  10. Chris Lord

    Chris Lord Senior Member

    Well if you are taking over a company with no debts and existing clients, then you've got a good start. So good luck with it! I would get the correct people to look over the legal documents to be on the safe side with liabilities etc.

    If you need to outsource any work that you can't handle yourself, there are a few Glasgow based designers that frequent on here and I'm moving to Prestwick myself next month. I'm sure we'd all be willing to take on a bit of extra work! haha

    Have you worked for yourself before? And I take it that this will become your company solely, so you're responsible for everything and sole receiver of the companies income? Or does the original Director retain some form of income from this?
  11. four

    four Member

    I set up as a sole trader and am vat registered. As long as you keep tidy books vat is easy to do returns for, but would advise you get some help for end of year accounts.

    If you keep tidy books an accountant will charge approx 200-300 pounds to submit your tax. They will probably save you this amount anyway as they know what can be claimed for etc. Make sure you keep receipts of what you buy. I do a spreadsheet of monthly sales/purchases and then use an interactive pdf for doing invoices that add up all costs and add vat as appropriate.

    As a sole trader you are taxed on your profits. It's about 20% and then 40% after you have reached a threshold of about 40k profit. As a limited company you are taxed a flat rate of 25% I believe but there is a lot more bookwork involved. HMRC has a lot more detailed info in this.

    I'd recommend santander buisness banking. It's free of any charges and the telephone support is great. (although there is no one in bank to talk to) I strongly recommend you keep all business costs within the same bank account so you can track them a lot easier. I just funded my business account with £X and then use that as money that I pay suppliers and business purchases. I then do regular transfers from here into an online savings account to benefit from the higher interest rates and keep the business account floating at a certain level.

    As you say stream media is just a trading name you will have to register a business name. This can either be streammedia or any name and then you can trade under a different name. i.e. streammedia is a trading name of johnstone design. You must inform HMRC that you are now a sole trader and will have to pay NI accordingly.
  12. Russell

    Russell Member

    This isn't correct but is more complicated than sole trader, as you pay a mixture of corporation tax and income tax, though majority payment through company dividends rather than salary keeps income tax, quite legitimately(ish), minimal.

    @johnstone, Prob not wise to go straight to limited company if your new to it, but is often the way forward longer term so worth investigating the pro's and con's. Getting a good accountant from the off is pretty vital but it sounds like you've good relations with the company boss so tap him/ her for contacts/ recommendations on the business running side.

    Is it a straight case of the PR company 'streamlining' it's offering as to why they are giving up the web dev side? I'd just be a little cautious that it's all officially handed over to you, clients and all. As you don't want to be in a situation where after building up the business yourself, they put in a claim for any of it.

    Doubt they would, and don't think they'd have much of a case to do so, but if it we're me I'd check it out just to make sure.
  13. berry

    berry Active Member

    mmmmm..... are you still going to be working for your old boss on a 'retainer basis"

    It sound like a common ploy to keep you doing work for them but with no PAYE liabilties on their behalf. Also you bear the risk of carrying the debt for their work. They will want to pay you on 30 days of invoice which means you may ending getting a £5k burn if they don't pay. Be very wary over just transfering or changing your employment status to continue to do work for old employees. ( I speak from unfortunate experience)

    The best source of help is found here: Business support, information and advice | Business Link

    Good luck but never ever trust people who have let you go..........If they were that nice you would still be working with them
  14. pjohnstone

    pjohnstone Member

    Thanks everyone for the comments.

    Just to confirm Berry. Everything is getting passed to me. I am meeting the accountant next week to transfer Stream Media and all the clients into my name.

    My director has no interest in the web development side. All he wants to do is focus totally on the Media Training as that is where he makes his money.
  15. rossnorthernunion

    rossnorthernunion Senior Member

    This is advice.

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