Developing a software product, create a new company or use my existing company?

[woohoo]

I'm going to ask a stupid question and get told to seek legal advice but...

I'm in the early stages of developing plan b - a software product that I hope to sell via a website.

I've actually done something similar in the past but along with a business partner I created a new ltd. The product was sold under this company name.

So what are the actual draw backs/risks if I use a trademark name for the product but it was sold under my software consultancy ltd?

[Bee]

Congratulations, good luck for your product.

[doconline]

I'm going to ask a stupid question and get told to seek legal advice but...

I'm in the early stages of developing plan b - a software product that I hope to sell via a website.

I've actually done something similar in the past but along with a business partner I created a new ltd. The product was sold under this company name.

So what are the actual draw backs/risks if I use a trademark name for the product but it was sold under my software consultancy ltd?

Really not sure on this one, but IP will be owned by your LTD company. Is that an issue going forward regarding exit plans / selling to another player in the market if that's possible? How is it from a VAT point of view? Are you currently on the flat rate scheme? If so, might be a different code / rate. May have to withdraw from that and just be standard registered creating more work / potentially higher costs from accountant.

[VectraMan]

It means the two are one business, so if your plan B made a loss you'd be propping it up from your plan A and so effectively have no limited liability. But selling software on the web isn't likely to cause a loss beyond the cost of hosting.

Also you couldn't shutdown your contracting business and claim ER, or whatever it is these days.

But one thing about contracting is that you can easily switch to a new company. So on that basis I'd say do it, and then you can always make a decision later once you have something to sell.

I was going to do similar a few months back, but the opportunity to buy some IP fell apart.

[Willapp]

I've been in this situation before (and in fact currently have two LTDs for a similar reason), but my advice would be don't bother setting up a second LTD until you've got something tangible to sell, and even potentially not until you've got a customer. Although setting up a LTD is quick and cheap, you still have to consider doing the annual filing and closing it down again if the venture isn't successful.

If you delay setting up the company until you know you need it, you'll save this hassle. From an IP perspective it doesn't really matter since you control the company anyway so there's no reason you can't transfer the IP over.

[vwdan]

So I'm in this position - I sell it all via my Ltd Co, and the software itself (Code signing etc) all reflects that.

It's not a problem operationally, but my Ltd Co name isn't particularly inventive as it was designed for consulting and not selling software.

[woohoo]

Good advice all - very early days!

I am on the flat rate vat scheme and good point about ER, will look into it - though I have no plans for this.

Will also take a look at tax rate, well speak to my accountant.

My biggest concern at the moment is liability, so if my software did cause some kind of problem what if they sue my company. My company has a fair bit in the bank. So I guess this is one area I will need legal advice on.

Will also take a look at tax rate, well speak to my accountant.

[Maslins]

I've been in this situation before (and in fact currently have two LTDs for a similar reason), but my advice would be don't bother setting up a second LTD until you've got something tangible to sell, and even potentially not until you've got a customer. Although setting up a LTD is quick and cheap, you still have to consider doing the annual filing and closing it down again if the venture isn't successful.

This would be my view generally. However I note your comments about your existing company having a hefty wodge of cash and risk of lawsuit against this new venture...that would be a risk if you didn't formally separate them.

[Fred Bloggs]

And on the other hand, liability insurance for a MyCo Ltd tends to be dirt cheap too, another consideration. You may already be fully covered if your MyCo Ltd carries insurance as many do.