Ltd Co or Self Employed

[BBG]

Has anybody any views on one or the other of these for Beekeeping.

 

[iball]

Yes, speak to an accountant.

It's like asking should I go tto Spain or France for my holidays, far to many variables that only you know the answer to.

Having said that, start out as a sole trader, you'll still need to speak to an accountant to maximise any tax advantages.

Such as, if you have any children under the age of 18, register for tax credits now, you can't claim after the event.

Ian
(Self employed magician)

 

[RoofTops]

If you are a limited company there are various returns you have to make which will simply add to your costs. I can't see any advantage in becoming a limited company just for beekeeping although a limited company can limit your liability if you go bust although in practice former directors can still get chased through the courts if their former company goes belly up. A limited company can reduce you tax liability but how much money are you going to make? Probably best to start out as a sole trader and swap to a limited company later if it takes off.

The only thing I would suggest, and which has been discussed here before, would be to register for VAT so you can reclaim VAT on all purchases.

 

[drstitson]

neither....

...if you have no bees.

 

[SteveJ]

If you are going to register for VAT also register for the Flat Rate Scheme. Then you only have to pay the goverment 6.5%(Farming or agriculture that is not listed elsewhere) of gross.

So if you invoice someone for services you have performed you add on the 20% (Next Years Rate) to your net and then only pay the government 6% of the gross.

So you charge a client £100 you have to add vat on at 20% therefore your client pays you £120. You then pay the government 6.5% of £120 which is £7.80. So instead of making £100 you actually make £112.20

You also have to consider corporation tax on all profits that you make which is set at 21% although I believe that is coming down for small businessesnext year to 20%

SteveJ

 

[RoofTops]

Interesting tip above but if you are beekeeping there is no VAT to pay on honey or I think bees themselves. The VATable things would only be if you went into candles or cosmetics.

 

[PeteS]

The flat rate scheme is very good for small ltd companies. The main drawback with the ltd route is the amount of paperwork needed. You also need the services of a chartered accountant to finalise the accounts. For my ltd company (main day job, very small company) the accountants bill is £950 a year. That's quite a few jars of honey!

My advice would be to go down the sole trader route to start with.

Regards
Pete

 

[psafloyd]

The only thing I would suggest, and which has been discussed here before, would be to register for VAT so you can reclaim VAT on all purchases.

Provided you have a taxable turnover of a minimum £55k, right?

 

[RoofTops]

No, you can self-register at any time.

 

[For want of a better word]

A limited company registered with you as a director etc in terms of time and costs are not realistic for a self employed sole trader.

The only benefit is as far as I could ever see was that directors could avoid some tax by taking a low but adequate annual salary, allow the limited company to make a profit and pay yourself (themselves) a bonus from the profits at a "efficient" tax rate.

Things have changed in the last few years, the turnover amount for VAT has increased, but registration [for VAT] may be worthwhile, as it enforces you to keep proper bookeeping records, and as you are producing food/ may allow you to recoup some of your outgoings.

Some seem to think that a limited company... ie Joe Bloggs & Co Ltd looks more proffessional than merely with Joe Bloggs Beekeeper on your headed notepaper.
Most do not even notice!

Get proffesional advice.

 

[Chris B]

If you are going to register for VAT also register for the Flat Rate Scheme.

Not a good idea because honey is zero rated so the VAT man will always be paying you in the regular scheme. Flat rate scheme is advantageous for a services company supplying VAT-able services but not incurring huge expenses.

 

[Poly Hive]

Join the FSB and consult them on a good accountant. They are the small business persons best friend. Anyone who runs a small business is very well advised to join.

http://www.fsb.org.uk/

PH

 

[crazy_bull]

Interesting tip above but if you are beekeeping there is no VAT to pay on honey or I think bees themselves. The VATable things would only be if you went into candles or cosmetics.

I am Vat registered and a Ltd company by advise of my accountant, virtually everything i buy is Vat'able, virtually everything i sell is zero rated.

Interestingly i think if you sell an empty hive it's vatable however fill it with bee's and it's non vatable.

My accountant charges £150-200/yr however he also does all my other accounts and regularly saves me a lot more than he charges.

My view is only pay for a service if it gives greater reward than it costs.

C B

 

[Dishmop]

Interestingly i think if you sell an empty hive it's vatable however fill it with bee's and it's non vatable.

A minimum of two bees then?

Do they have to be living?

 

[Silly Bee]

Well, it was full of bees when I sold it Guv, Honest."

 

[EdNewman]

I'm no expert on these things, but the one of major benefits of setting yourself up as a ltd company is that is if you seriously injure someone through your "business" (i.e. bees or honey causing injury or death) then your liabilities are limited, and can be covered by relatively cheap insurance?

I'm not starting my bee adventure until next year, but if I was considering selling honey, or had regular visitors to my hives I would consider protecting my self properly from any legal action.

As I say, I'm no expert, but my wife was advised by her accountant to become a ltd company because, amongst other reasons her work as a mural artist could potential put members of the public at risk, although the chance is very slim. And by being a ltd. company her public liability insurance premiums were roughly halved.

Ed.

 

[drstitson]

Public liability

you get Public liability insurance as part of your BBKA membership.

no need for expense of setting up a company just for that aspect of beekeeping.

 

[Hivemaker.]

So the advice is every beekeeper in the country becomes a Ltd company then.

 

[drstitson]

"So the advice is every beekeeper in the country becomes a Ltd company then."

perhaps whilst they are at it they could start taking deposits for bees with non-refundable handling fees!

 

[rolande]

Hi,

I think that it goes deeper than the insurance issue, it's about trying to distance yourself as an individual from potential lawsuits. If it works out that way or not may be another matter altogether.

Best,
Roland