It's Time to Set Up a Limited Company

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Why You Should Set Up a Company

The average person using online money making methods to supplement their income uses it to fund their lives. It's hard out here, and that extra money comes in handy. If that cash starting to add up, it might be worth setting up as a sole trader, so all of it gets accounted for and taxed properly.

The people a step up from this use their side income to fund other things. They'll reinvest some of the money into another revenue stream and let that build up over time. They might make things more organised – even as a side thing to add to their main job – just so they have potential to grow it in the future. Again, it's worth becoming a sole trader to do this too. Just a little paperwork and you're on your way.

Many think that to have a limited company, you need to step up from the last one. They might think it requires a business plan, investment, staff, an accountant and a commitment to make it your full-time income. Nah. It's a simple process that will cost you £13 to complete.

Once it's done, you now have more credibility for whatever business venture you want to head into. Whether you need to convince wholesalers to trade with you, to make your ecommerce store more trustworthy or otherwise.

Whatever the case may be, if you're serious about whatever extra money you're making, you may as well form a company. Lots of people will ask you to fill out forms and whatnot in the weeks after, but that's the only pain point. All of the rest is just general business admin, which you were going to have to deal with anyway.

It's wise to do plenty of research about your responsibilities as a director beforehand. Consider whether you want to go it alone or partner up with someone. Think long and hard about that name too.

Who Shouldn't Set Up a Limited Company?

If you're brand new to a business model, and you're yet to trial it, or have someone on hand to mentor you through the process, forming a company may not be the best decision. In my case, I was just scaling up something I'd done part time for ages, so knew the potential rewards.

If your company's name forces you to stay in a particular lane – and you soon find out that it's not going to work – bad times. Consider if it's really going to benefit you and if you're truly at a stage where it will benefit you.

FAQs

Why would I want to own a company?

Credibility. Accountability. Prestige.

How do I know if I'm ready to own a company?

You get £1,000 out the blue. What are you doing with it?

How long does it take to set up?

An hour, max.

How much does it cost?

£13. Although my accountant got me to do it through these guys for quite a bit more.

What else will I need to do?

Set up a business bank account. Book in a date and they'll do it all for you.

I'm not sure yet. Should I wait and do it in 6 months or a year?

If you can afford the setup cost and believe you will have enough cash in your business bank account to afford to send an annual Confirmation Statement (£13) in 12 months, just do it today.

How Do You Form a Limited Company?

Three things to do beforehand:

Research your responsibilities
Consider if you're doing this alone or in a partnership
Reconsider being a sole trader
Get a good name, check it on NameChk and secure the .com and .co.uk domains from TSO Host
Talk to an accountant if you're unsure about anything

Now you're good to go. Just follow the steps on gov.uk and it's all yours. I swear you'll be surprised at how straightforward it all is once you're done. The next step is accounting, but let's take things one step at a time.