self employed, partnership or ltd company?

[amidaiwish]

hi, hoping someone can advise me
my sister and I have some new products almost ready to launch so need to set up a company sharpish.
we don't expect to make earn much money for the first couple of years as our costs will be high until we have scale
i was going to set us up as a limited company, but is this OTT? is there a simpler, easier way?
TIA

Sorry no help but watching with interest!

I recently posted on another thread about this. For a partnership it is even worse: you and your sister would be putting your houses on the line for everything each of you does, potentially for seven years after you do it.

Get a fixed fee quote from a good accountant and get a good shareholders agreement in place so if you fall out (either over the buisiness or anything else) you don't spend years and £1,000s sorting out who gets what (key words to avoid in a shareholders agreement: "arbitration", "expert", "valuation"...)

thank you!

The only thing to mention against a limited company straight away is if you've got other income and you expect to be making losses in the first year. There are tax reliefs available if working as a sole trader / partnership that aren't available for a limited company. Only worth considering if you pay (or have paid) tax in the last couple of years. And you have to balance the risk to your personal assets mentioned above against the possible tax relief. So have a word with an accountant to decide what the best position for you is.

I'd agree with Mr Anchovy (funny that) - Limited is definitely the way to go.

Not quite sure what riksti is getting at as any losses would carry forward and if in business with her sister, OP is not a sole trader.

Talkin, opening year losses can be carried back - up to three years I think. For tax loss it is irrelevant whether it arises from sole trade or is her share of the partnership loss. She can carry it back, forward or offset against other income regardless of what her sister does with her share. As mentioned - carry back is only worth doing if tax was paid in previous years.

indeed, but the risk is still on their houses - which it is not with a limited company.

Yes, and that's what I said - it depends on the level of risk which is something that cannot be assessed by you or me based on information given on a chatboard.

ok thanks all, no way am i risking everything we own so limited company is the way to go this time.

sorry just coming back to this, what about a limited liability partnership? does that have any drawbacks over a limited company?

Yes. It costs more to get an accountant to prepare accounts and tax returns for an LLP and there are none of the tax advantages.

ok thank you very much
one last question, is there a benefit to calling your company the same name as your product, or should it be a different name? any drawbacks?

The benefit is that it prevents anyone else registering a company with the same name: same applies to internet domains so register myproduct.co.uk and .com (unless they are already registered in which case things might get tricky).

No real drawbacks as you can change the name for a tenner.

fab