Could you please advise me of the steps to take to protect my name without having to go through all the costly procedures of setting up a limited company?

My profession is as a management consultancy business, so if someone was to register a limited company using my name it would not be totally disastrous as it would put my personal reputation at stake.

Even though the company would be dormant, as it is registered in my name would the financial exposure liability be limited to the assets, even though there are none?  You see I am also planning to take out Professional Liability insurance as protection, and hence the question that I have now raised. If the Limited Company even though dormant can protect my personal assets against courts from seizing them in the event of trading problems, then this would be great news and save me the annual expense of paying insurance premiums which are not cheap.

The means available to a long standing business to combat the potential threats to its success might vary from doing nothing to engaging in a variety of actions designed to either change itself or to make the industry generally less attractive to new entrants.

There are essentially three stages involved in cases where the competitive environment changes for the worst: The first of these involves the realisation that the event has occurred.

One day, without warning the entrepreneur sees a new advert or promotion which signifies the arrival of a new entrant. The initial feeling may be that of shock, dismay and the acknowledgement that the status quo is about to change. The planned events for the day are immediately superseded by the need to analyse and possibly respond to these new threats to business.

Whilst information gathering is of obvious importance, the need for rational, seasoned and logical thought is even more paramount. Too often a knee-jerk reaction results in further trouble and commits the organisation down a path from which it might be difficult to extract itself at a later date.

Action should ideally form the second part of a response to new competition. This may indeed involve doing nothing at all if this is judged to be the best course of action. A non response also has the advantage of leaving a variety of actions open for the future.

Whatever means of pursuing this new competitor is decided upon, it should as previously stated by based on a rational and comprehensive analysis of the situation, both the good and bad.

Consider for a moment that a new competitor is not just the problem for one particular business but for all of the organisations in a specific sector. Armed with this realisation, the entrepreneur can then view the problem as one that they alone must solve.

The third stage in a response is reflection and continued analysis. For a competitor to have come out of nowhere it obviously points to a certain lack of information within the business. This concern must be addressed so that the next entrant does not present such a surprise to the organisation.

Actions undertaken should be monitored and reviewed with limits set on how far the business can afford to pursue a specific course of action. Some would say that it is better not to fight and lose as once the competition begins the sense weaknesses in the business’ resolve; they then begin to turn up the pressure hoping to finish the job.

The moral of the story is the need to have response scenarios in place and not just plans based on the present set of circumstances. Budgets and planning which introduces extremely hard trading conditions are likely to allow a business to respond better compared to one which has not considered that the industry could undergo fundamental changes.

The text of the correspondence is outlined below with certain non salient details changed to protect any sensitive or personal information.

Question 1: The first area where I need advice is regarding signing up for an accountancy service. Do you act as a financial agent for the company, handling all VAT and other business tax matters on my behalf?

Response 1: In most cases we would act of the intermediary between H M Revenue and Customs and the company. This ensures that all tax related correspondence relation to the business is seen by us so that we can advise you of any required actions which need to be taken.

We should point out that the responsibility for ensuring that all matters are dealt in a timely manner and with the correct treatment remains with the company except where we have received correspondence and failed to provide notification to you.

Question 2: I have received a letter and form from HMRC which was titled “new company details for corporation tax”. I have various queries relating to this form such as the business start date I should enter (it is a dormant company at the moment and for the foreseeable future).

It will be some time before my online site has been set-up with ecommerce facilities and is ready to start business. I have however already begun ordering some products from suppliers and so am confused whether the first date I begun sourcing supplies should be entered or the date which I intend to start trading.

Response 2: The business trading date may not necessary be the same date as the company’s accounting period. Generally, either the date of the first sales invoice, or date of the bank account being activated are being used as the business starting date. You may alternatively provide a future start date as the one where you are reasonably confidence that the website will be ready to commence business operations.

As guidance the following may help you: Question number 1 question - fill in the date on which the company’s first accounting period began. Your Company’s first accounting period is from 23/09/2008 to 30/09/2009.

Question 3: Do I also require financial reports at next fiscal period to the end of March? At this time the company will be less than one year old. I think I read somewhere that I will not be required to prepare accounts until the company has been trading for at least a year, is this correct?

Response 3: The Company is not required to prepare financial statements to March 2009. The first financial statements of the company are for the accounting period from 23/09/2008 to 30/09/2009 unless a Form 225 is used to extend or shorten it.

The financial accounts are then required to be submitted to Companies House nine months after the financial year end which would be 23/06/2010.

Question 4: Regarding expenditure of the company, from what date would ant payments be treated as recordable in the accounting records of the business? Also, at the moment both the company director and shareholder is my wife, but I will be organising suppliers and making payments to them from my own pocket. Will this type of expenditure be acceptably as costs to the business?

At the moment I do not have any official involvement in the business and am considering putting my name down as the company secretary, otherwise, I can not prove that I am related to or working for the business. If I do not do this would it cause any difficulty to prove that the expenditure I make is related solely to the company?

Response 4: For VAT purposes, the company is eligible to claim input VAT on expenditure or invoices issued under the company name. Your wife or your name can still be on the bills as long as the company name also present and that it is reasonable that a particular expense would be incurred by your business.

There is no requirement or obvious need to appoint yourself as company secretary although this would not do any obvious harm. It is important that you keep a record of all payments you make and the invoices and bank statement which support them.

Question 5: I am considering purchasing a company car and am wondering whether I can reclaim the VAT which the company will be charged. Is this permissible?

Response 5: You may only claim input VAT on a company car that is for sole use of the business. Any private use which is planned for the car would disallow any claim.

Revenue and Customs are likely to view the nature of the vehicle which is purchased. The purchase of a Mercedez Benz M-class car for example is likely to be judged as contain some personal use or enjoyment and therefore likely to be disputed as a purely commercial vehicle.

A delivery van, on the other hand would not pose such an obvious risk.

Question 6: If either myself or my wife were to draw some money from the company bank account, do these sums then become subject to PAYE?

Response 6: If you or your wife draws out a monthly salary then you would have to pay PAYE. Alternatively, she may opt to pay herself dividend instead of salary provided she is also the shareholder and the company earns enough profit for the year to cover the dividend payment.

Money which have been paid to the company from private funds which essentially serve as a loan to the company can be withdrawn without the need to apply tax. Such amounts should be included on a P11D submission for that tax year.

Question 7: I recently opened an account at HSBC but have a problem. The bank will not open up an internet merchant account which would enable us to accept the credit card payments via internet. Even though I explained that my business would be internet based and so the credit card payment functionality is essential, they still would not move.

Anyway do you think it would be worth trying with another bank e.g. Barclays?

Response 7: An alternative means of accepting internet based payments is through either WorldPay (www.worldpay.com) or Paypal (www.paypal.co.uk). They provide online payments processing services and are widely used by internet merchants.

Please do not hesitate to contact me should you have any question.

1. If I form a company over the weekend, would the agent be able to register the company that day and send all relevant documents to me on that same day.

2. I would want to have £1000 authorised share capital for the new company. When I apply for an electronic formation, do the application forms generally include a facility for these details to be specified before the application is sent for incorporation? What is the limit of authorised share capital?

3. I would like to use my own registered office address for the company. It is common for online application forms include these details?

4. What are the requirements to open a UK company bank account? Do I need electric copy of incorporation certificate or fully printed one in order to satisfy the bank’s code of practice?

Thank you for the information, I would be grateful to receive a reply and any suggestion you have of which company formation agent I should select.

I am running a single member company of which I am the sole director.

Do I need to submit form 88(2)? I haven’t issued anymore shares to other people. I was the initial subscriber of the shares.

The Stock Transfer Form J30 is only used when I as a subscriber sell my shares to other persons, is that correct? I don’t need to complete this now to register my subscription.

What about the forms notifying Companies House of where the Registers are kept, e.g. Register of Charges/Directors/Members etc. Do I need to submit these?

Do I need to let Companies House know about the dormant status of the company? If so, how do I go about this? I read on a website that a company is dormant by default but according to the record at Companies House it says that the company is active.

Sorry for all the questions, I don’t want to get fined and I am sure there is something I am meant to do that I haven’t.

Incidentally, I must say that I was most impressed by the service received and how easy the incorporation system was to use. I will recommend the service I used to others looking for a Formation Agent.

Many thanks and I look forward to hearing from you.

A ringing phone and communication from a perspective customer becomes an annoyance as they were just about to slay the dragon and kiss the princess on their computer screens.

Not so at my office, we are busier than ever, not with customers but with preparing the groundwork for when business picks up. Accepting the current economic climate and seeing a recession drawing ever closer prevents opportunities to do all the things that in the past which you could not do because you were too busy servicing clients.

Not everything costs a lot of money either. The launching or redesign of a new or existing website, the physical reorganisation of the office or even just throwing out the old box of paper you thought you might use three years ago but are still sitting their.

The motivational aspects of using quiet trading periods for constructive projects are enormous. When we can not to bed happy because we have had good days sales, we can retire instead knowing that we are not wasting time and that the business has moved forward in some way.

One factor about quieter business periods which does waste time and energy is when other companies panic and phone up every person they have access to. Talking phone calls where the person offers you something you have absolutely no interest in is frustrating.

This is particularly so when their suggested product or service involves spending large amounts of money which nobody has in a recession or embarking on discretionary expenditure which everyone is cutting back on.

Memory can not provide an occasion in the last three weeks where the person on the other end of the phone offered a cheaper version of what they were normally selling for.

In essence, caring for a business, one for which the owner has taken risks, made sacrifices and has seen grow from nothing to something does not afford the luxury of wasting time.

Having a mature outlook does entail taking the rough with the smooth and accepting that outside influences can cause slow periods of trade. There are those who will use this as an excuse to waste time and procrastinate and there are those who will plough on and continue to fill their days with measureable accomplishments.

The FTSE 100 index follows the up and downs of the Dow Jones market like the preverbal sheep and rarely, if even does the influence actually work the other way around.

And so there is the choice between the Republican candidate who believes that by initiating a spending freeze on public finances and tax incentives to larger businesses, the American giants of commercial enterprise will lift the ailing economy and provide prosperity to everyone.

The Democratic ticket on the other hand believes that these larger businesses and their corporate managers who have enjoyed record profits until recently can afford to pay more in tax.

This would enable the newly elected President (if this happens) to provide tax cuts to over 95% of working families.

There is rarely such a clear cut distinction separating two economic policies and the voters in the presidential election, particularly those who own a small business have to decide which of these contrasting policies they believe will work.

The Republican Small Business Policy

An important point that should be borne in mind is that during presidential elections, it is quite possible for candidate to say one thing and whether deliberately or due to unforeseen circumstances, veer from their stated commitments.

For the moment at least, each candidate will be taken at their word.

American big businesses are among the most talented in the world and in pursuit of their own self interest, can create jobs, compete effectively and increase the wealth of the country through innovation and commercial marketing.

It could be argued therefore that the Republican plan provides nourishment to the experts and charges them with doing what they do best.

Those against point to the evidence that smaller businesses enjoy little of the gains bigger corporations make and therefore many in the country and the economy as a whole does not benefit.

The lessons currently being learned from the manner in which big businesses crippled the global markets does not lend itself to a further endorsement of the laissez-faire doctrine.

It may be the self interest that creates an insurmountable conflict whereby large American corporations can not serve both themselves and the wider economy at the same time.

This leaves small businesses to fend for themselves and accept that at any time, the actions of big corporations can render their attempts to trade and be profitable absolutely useless.

The Democratic Policy

Tax breaks for 95% of Americans is the claim, but what will these people do with their allocation of money. Should they decide to save it then the economic kick start the Government would hope for may never materialise.

In fact, saving will provide additional coffers for the big businesses who can then carry on as normal. However in this case, given that small businesses would then have some or increase savings, their levels of anxiety should decrease and their confidence about trading should rise.

Spending some or all of the tax gains would help the entire economy and realise the elusive feel good factors which is current absence from many if not all of the global consumer markets.

Economics aside for a moment, doesn’t this plan seem fairer? More humane? At least if it does not work, then the American people have had a stake in its destination.

In the presidential election, the essence of which party’s antidote will work might be best defined by the fact that the Democrats appear to have had a consistent plan from the start. The Republicans did not even want to talk about the economy and after personal attacks fails, and the Palin affect became a regret, they launched their plans to help small business.

The Democratic plan seems a fairer, more thought out proposal and most of all, it is not Bush Republican.

These are as follows:

• How does the dormant company option work?
• Would I still be able to continue working as a sole trader under the same name?
• Would I need to start paying company taxes?
• How easy would it be to make it active and would there be a cost involved?

It sounds like a viable option but I would like to know a few more details.

I have a question concerning a joint venture between two UK limited companies and I would be grateful if you could provide some information on both the formation aspects, shareholding and the eventual dissolution of the business.

1. In a limited company - can companies own shares rather than individuals? We are thinking of having two people as act as directors but then two companies as shareholders.

2. If we set up a company we would aim to have very limited or zero dividends - but if there were any, would they just divide between the shareholders (or the Directors?)

3. How do you wind up a limited company - is it messier than dissolving a partnership or easier? What happens to the trading name if the company is folded?

4. Would a buy out of shares be available so we could allow a third Director to join and buy some of our shares so he could also be a shareholder at a later date?

We visited multiple websites and also made contact with the UK Law Society and spoke to three solicitors’ practices that are said to be conversant in gambling, lottery and licensing regulations in the UK.

The information and views received from the above on the subject matter were consistent and therefore I feel that the information is correct.

By running a lottery/competition but making entry subject to successfully answering or completing a skills based question or challenge, the activity would not fall within the scope of a lottery and therefore a licence would not be required.

The definition of what constitutes a skills based question or task is that the challenge must be such that it could reasonably be expected that some entrants would not succeed in correctly answering or completing the challenge.

There is no statutory or legal rule which defines what percentage of or how many people should normally fail the test in order for it to be deeded to be a skills based challenge.

I was advised that by seeking the advice of a Solicitor it would demonstrate in itself that legal advice had been sought and this would bode well for the company if the competition was even challenged.

If a Solicitor was used to discuss the matter and the specific proposals of a venture, they would be able to advise on the details in the light of their knowledge and current regulations.

The following websites provide additional information:

• http://www.gamblingcommission.gov.uk
• http://www.lacors.gov.uk/lacors/home.aspx
• http://www.culture.gov.uk
• http://www.out-law.com/
• http://lotteriescouncil.org.uk/
• http://www.independent.co.uk/news/uk/politics/lottery-laws-face-sweeping-reforms-to-open-up-chances-for-competitors-702937.html

I hope that the information proves useful to a future decision.