Different business activities using ame ltd co?

[Lewis]

... just go with one company having two trades ...

Sorry I seemed to have missed this post which is extremely helpful. Thanks for taking the time to reply. Sounds like it would be ok to re-use my Ltd co., I have one more question ... what about flat rate VAT? IT consultancy has flat rate of 13% and children's clothing 2%. But my wife would be selling clothes for young children therefore VAT would be 0%. So does that mean (a) she sells with no VAT and Ltd co pays no VAT on those sales or (b) she sells with no VAT and Ltd co pays 2% on those sales? I assume the 13% VAT rate only applies to income from my IT consulting. Cheers, Lewis.

[SurfJunkie]

Amazing how things go round in circles. I started here looking for advice on pretty much the same thing, got diverted via Google to Companies House, HMRC and any number of others, before ending up at this forum.

I like the advice given above about keeping one company - makes sense to me, particularly given that both enterprises are run by people supporting each other.

My twopence worth would be to consider a name change at Companies House though - I dont think it costs much and can be done in a few days.

That way Nappy Rash Inc. and Compsoft. Inc. can become divisions / trading names of a nice generic sounding company like NRC Ltd.

See this FAQ at Companies House site
http://www.companieshouse.gov.uk/inf...pNameRes.shtml

[Sockpuppet]

Sorry I seemed to have missed this post which is extremely helpful. Thanks for taking the time to reply. Sounds like it would be ok to re-use my Ltd co., I have one more question ... what about flat rate VAT? IT consultancy has flat rate of 13% and children's clothing 2%. But my wife would be selling clothes for young children therefore VAT would be 0%. So does that mean (a) she sells with no VAT and Ltd co pays no VAT on those sales or (b) she sells with no VAT and Ltd co pays 2% on those sales? I assume the 13% VAT rate only applies to income from my IT consulting. Cheers, Lewis.

If you are selling zero rated items you cannot reclaim the vat on what you use to produce them (afaik).

Best idea would to speak to an accountant.

[oraclesmith]

Sorry I seemed to have missed this post which is extremely helpful. Thanks for taking the time to reply. Sounds like it would be ok to re-use my Ltd co., I have one more question ... what about flat rate VAT? IT consultancy has flat rate of 13% and children's clothing 2%. But my wife would be selling clothes for young children therefore VAT would be 0%. So does that mean (a) she sells with no VAT and Ltd co pays no VAT on those sales or (b) she sells with no VAT and Ltd co pays 2% on those sales? I assume the 13% VAT rate only applies to income from my IT consulting. Cheers, Lewis.

In my opinion, I think that the flat rate scheme category applies to the main trade of your business. Which means if you have one firm, you'll effectively lose quite a bit of VAT because you'll have to purchase stock and pay VAT on it but be unable to reclaim it in the normal way.

You have to consider that one business is B2B (IT consultant - unless of course you do fixes and install for Joe Public) and another is B2C (flogging baby stuff, presumably to consumers and not to businesses). This means the VAT objectives would be different for you and you wife. She would benefit from not be VAT registered unless she has to be (to keep customer prices down), whereas most IT contractors like being VAT registered to get a bit back on the flat rate scheme.

If the baby gear business is small scale then your wife could always consider being a sole trader to start with. This means the admin is less and she pays tax like most other people. Providing she doesn't get involved with racking up big debts, then I would say this is the norm for this type of operation. It's worth considering, but you need an accountant to help you decide.

Remember that the VAT people may end up grouping your trading entitities/companies if they consider them close enough. They don't like people starting up new firms just to avoid VAT. This means your wife may be best doing business completely seperately from you. In my opinion.