Plan B

[thelace]

I'm looking at starting a Plan B enterprise in the coming weeks, just in the process of setting the ball rolling now, and would welcome some advice from those out there that are currently running Plan B's (and plan C's, D's, etc).

I know there are many options out there but what would you reccommend for the following?

• What are the advantages and disadvantages to running the plan B through your existing MyCo?
• Similarly, would you set up a seperate bank account for the plan B if you run it through your Ltd?

I'm not interested in the IR35 angle as I currently fall outside anyway.

I doubt this will rake me in £Millions (though it would be nice if it did), it's just a little something to stretch myself outside of my normal sphere of work.

TIA

[Robot]

I'm looking at starting a Plan B enterprise in the coming weeks, just in the process of setting the ball rolling now, and would welcome some advice from those out there that are currently running Plan B's (and plan C's, D's, etc).

I know there are many options out there but what would you reccommend for the following?

• What are the advantages and disadvantages to running the plan B through your existing MyCo?
• Similarly, would you set up a seperate bank account for the plan B if you run it through your Ltd?

I'm not interested in the IR35 angle as I currently fall outside anyway.

I doubt this will rake me in £Millions (though it would be nice if it did), it's just a little something to stretch myself outside of my normal sphere of work.

TIA

Quick points

Is plan B going to rake in £68K per year, are you selling to Joe Public? You need to think about VAT, as Joe public cannot reclaim VAT, so your prices are now 15% higher or your turnover is cut by 3/23rds.

The company needs to prepare one set of accounts, but two trading profit and loss accounts if Plan B, is a completely different trade.

No need to set up a separate bank account, but you need to put narrative on each receipt so that your accountant can easily prepare two P&L accounts.

Robot

[thelace]

Thanks Robot,

My plan B will have a very low cost base, with low unit costs that will be VAT able. If it makes the £68k I'll be a happy bunny, but if not no great shakes.

I'm already registered for VAT under the FRS, but that will have to change if I go over the £150k mark, therefore is it worth setting up a 2nd LtdCo for this, with separate bank account.

I suppose what I'm asking is, is it worth running them as two separate entities for clarity and ease of Tax or should I just run them as 2 income streams through my existing LtdCo?

[VectraMan]

If your plan B operates at a loss, or even goes bust, then if they're the same company you'll have to cover that from your plan A income.

Better to keep them seperate. It doesn't take much to set up a new Ltd. company and bank account. If you don't register for VAT, and don't do PAYE, then all you need to worry about is the year end stuff.

[PhilAtBFCA]

One of Two Companies ?

thelace

Its a question that comes up quit often this one, but really it depends on your personal circumstances.

For instance if you have a spouse shareholder the second income would probably be better in the ltd co.

If the second incoime has potential liabilities ( risk ) or reputation damage you may want to keep it separate.

If you think that in first year it may make a loss, then keep it in the first company as it will reduce your overall tax.

For both tax and vat if you are the controlling party in the company you will not avoid vat registration by setting up another company. ( a bit of generalisation there to make the post shorter !)

In general terms its probably easier to keep it in the same company with the same bank account, you may be able to separate it out later if you needed too, and I would always start with keeping it simple and cost effective.

Phil

[thelace]

Hi Phil,

Some good advice I think.

I'm the only shareholder in my company.

The Plan B is pretty risk averse, at most I might lose the start up money which will ammount to a few hundred pounds.

I'm not looking to avoid VAT, tax or anything else. It's more of an interest that might make a few £££, if it pays for a holiday each year, i'd be more than happy. I'm obviously just looking to keep the costs down.

So, taking on board the advice given above, it'd be simpler to run the Plan B from within my LtdCo using it's bank account?

If that presents no problem to an accountant, then it presents no problems to me . I just thought an additional bank account, separating out Plan B's finances might make the sums easier.

Right, just a few Legals to sort out and it's tally ho! Off in persuit of my millions

[PhilAtBFCA]

the lace

I think what you have clarified would suggest its wise to keep it simple and in the same Ltd Co for now.

As part of that I would identify and sales from this source of income separately within the accounts, and any direct costs. Its not a requirement but it may help your accountant with advice in the future.

Good Luck with it, you just never know........

Phil