Plan B - new company?

[Gaz_M]

For my Plan B, I'm currently building a new ecommerce site and I've put the web hosting through my existing hosting co which I'm using for my current IT consultancy business website.

My question is, should I continue to run the new website sales (and in future, inventory purchases) through the same company or should I split them? My big concern is paying for two sets of accounts and if I take salaries/dividends out of both companies etc then how do I manage this during the very early stages (turnover will be minimal during the setup period)?

If the Plan B takes off then I will quit my consultancy or easily manage both but I have a three year plan in place and it's that period that I'm concerned about.

Does anybody have a similar set up and how do you go about it?

[BolshieBastard]

There's no problem having two different income streams into the one company. I did it for a number of years so dont believe anyone who says it will cause problems. with VAT and the like.

However, only you know whether you want to pay for 2 sets of accounts and different companies.

[oliverson]

There's no problem having two different income streams into the one company. I did it for a number of years so dont believe anyone who says it will cause problems. with VAT and the like.

However, only you know whether you want to pay for 2 sets of accounts and different companies.

I have a separate Limited company set up for my plan B. Some accountants only do 'fixed price' accounting on contracting companies, like my account does. I also really wanted to keep the two companies separately as I don't plan on contracting forever and would like to fold that company at some point in time when, hopefully, the other company becomes my plan A. As for accounts, I'm not making money just yet (it's not gone live) so I submitted a DCA to Companies House.

[Alan @ BroomeAffinity]

As for accounts, I'm not making money just yet (it's not gone live) so I submitted a DCA to Companies House.

Just as a small aside, not making money is different from dormant. To be dormant the company needs never to have had any transactions. So if the company has incurred costs, it's not dormant. If I have inferred wrongly, sorry in advance.

[Gaz_M]

I have a separate Limited company set up for my plan B. Some accountants only do 'fixed price' accounting on contracting companies, like my account does. I also really wanted to keep the two companies separately as I don't plan on contracting forever and would like to fold that company at some point in time when, hopefully, the other company becomes my plan A. As for accounts, I'm not making money just yet (it's not gone live) so I submitted a DCA to Companies House.

Excuse my ignorance, but what's a DCA?

Also, if you don't mind answering, have you self-funded your sepearte Ltd company or have you loaned from your consultancy business to set things up?

[Alan @ BroomeAffinity]

DCA = Dormant Company Accounts

[oliverson]

Excuse my ignorance, but what's a DCA?

Also, if you don't mind answering, have you self-funded your sepearte Ltd company or have you loaned from your consultancy business to set things up?

Self-funded.

Dormant Company - https://www.gov.uk/corporation-tax-t...nd-non-trading

[Alan @ BroomeAffinity]

Self-funded.

Dormant Company - https://www.gov.uk/corporation-tax-t...nd-non-trading

Dormant for HMRC and Dormant for CH are, unfortunately and confusingly, different. Dormant for CH (and therefore OK to file DCA) means that it has had no significant accounting transactions. If your company was, as you say, self-funded, this would suggest that there have been transactions requiring funding - in fact the funding itself would qualify - and therefore the company is not dormant.

[Lewis]

I have some personal experience of this. My thoughts are:

It is perfectly valid to use the same company for both contacting and (IT related) Plan B; both to save on accounting costs and because the two sit nicely together, e.g. both are based around software development. Chose the name wisely though, so as it has meaning to both businesses; or the one that needs an appropriate name more, e.g. a contracting company can be anything really, the agencies won't care, so it maybe better to use a name more closely linked to your Plan B. If you already have a ltd company but want a more appropriate name for Plan B side you can have a trading name, e.g. "XYZ trading as ABC".

I think this is a good option if you are not sure how successful Plan B will be and you don't want to over complicate things.

However as your Plan B's income grows you may want to consider opening a new company for future contracts (or Plan B) for a few reasons: (a) You might want to sell Plan B (or shares in it), (b) Plan B might be sued, or some other similar issue might rear its ugly head (IR35?), having two companies offers some extra protection for the income from different streams, finally (c) at some point you may want to close Plan B and take entrepreneurs relief on profits - separate companies allow you to continue contracting with no fear of being accused of Phoenix-ing. Separate companies also makes it easier for you (and others) to see the true value of each business.

IR35 is an interesting one for contractors, people always say that contracts are looked at in isolation, but if the company as a whole is much more like a software house (multiple concurrent contracts, licensed products, multiple staff etc.) even though the bulk of the income comes from contracting (likely in the early days of Plan B), I've always thought that it looks much better from an IR35 perspective. But perhaps it makes no difference, I don't know on this point.

[Gaz_M]

I have some personal experience of this. My thoughts are:

It is perfectly valid to use the same company for both contacting and (IT related) Plan B; both to save on accounting costs and because the two sit nicely together, e.g. both are based around software development. Chose the name wisely though, so as it has meaning to both businesses; or the one that needs an appropriate name more, e.g. a contracting company can be anything really, the agencies won't care, so it maybe better to use a name more closely linked to your Plan B. If you already have a ltd company but want a more appropriate name for Plan B side you can have a trading name, e.g. "XYZ trading as ABC".

I think this is a good option if you are not sure how successful Plan B will be and you don't want to over complicate things.
However as your Plan B's income grows you may want to consider opening a new company for future contracts (or Plan B) for a few reasons: (a) You might want to sell Plan B (or shares in it), (b) Plan B might be sued, or some other similar issue might rear its ugly head (IR35?), having two companies offers some extra protection for the income from different streams, finally (c) at some point you may want to close Plan B and take entrepreneurs relief on profits - separate companies allow you to continue contracting with no fear of being accused of Phoenix-ing. Separate companies also makes it easier for you (and others) to see the true value of each business.

IR35 is an interesting one for contractors, people always say that contracts are looked at in isolation, but if the company as a whole is much more like a software house (multiple concurrent contracts, licensed products, multiple staff etc.) even though the bulk of the income comes from contracting (likely in the early days of Plan B), I've always thought that it looks much better from an IR35 perspective. But perhaps it makes no difference, I don't know on this point.

This is what I thought, both ideas are related to an IT business. If PLan B takes off then I always intended to seperate the two and hopefully eventually close down the conultancy side of things.

However, I use SJD and their book keeping software is not geared up to anything other than contracting. My problem is that I'm very happy with SJD and if my Plan B doesn't take off I have no reason to leave them but how/where do I keep accounts until such time?