Corporate Structures - September 2010

Peacock Carter Limited
Company Introduction for Kings Academy

Who we are
Michael Peacock – Director
Richard Carter – Director

About Peacock Carter
Digital Agency based in the North East
Web design
Web development
E-Commerce
Search Engine Optimisation
Hosting / Email provisions

Our beginnings
Both directors previously ran separate businesses as Sole Traders
Formed Peacock, Carter & Associates as a partnership
Incorporated as Peacock Carter Limited

Sole Traders
Before forming Peacock Carter, we both owned our own independent businesses
No employees
Part time
Low turnover / low risk (high personal risk if something were to go wrong)
“Freelance”
Setup and accounting free (DIY!)

... As sole traders
The business = the sole trader (though can have employees)
Unlimited liability
Personal drawings and salary = profit
Income tax payable on profit above personal allowance (incomes over ~£6,000)

Forming the partnership
For dual ownership – needed either Partnership or Limited Company (or Limited Liability Partnership)
Business was still part-time, low-turnover with low risks – partnership quickest and easiest
Setup and accounting still free (DIY!)

... As a partnership
The business = the partners
Unlimited liability
Jointly and severally
Each partner is liable within the partnership, regardless of partner at fault
Personal drawings and salary = profit
Income tax payable on profit above personal allowance (incomes over ~£6,000)

Why incorporate?
Became a full time business
Higher turnover, more clients, more services, employees, and more risk
Plans to take on employees
Profit sharing / share ownership scheme for employees?
Partnership was no longer appropriate

Incorporating
Costs to setup (Registration with companies house)
Costs to file documents (Annual Returns)
Compliance – accounting more in-depth
Profit taxed directly (corporation tax)
Shareholders can take salary as “dividend loan” out of profits – without the need to pay tax personally on such incomes under ~£30,000
Accountant!

Limited Company Cheatsheet

Other Options?
Charities
Unincorporated
Incorporated
Trustees can’t take money from charities!
Community Interest Companies: Limited companies
Limited Liability Partnership: Similar to Limited Companies with some attributes from partnership carried over

How to decide?
Look at Risk vs Reward
How many people are involved
How does ownership need to work

Our risks
Client emails go down
Use third party email service
Website goes down
Contracts with clients / suppliers
E-Commerce website stops processing orders
Contract with client / Insurance policy

What other risks?
What other risks do you think we have?
How can we mitigate the risks

Corporate Structures - September 2010

by Michael Peacock on Apr 02, 2011

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Corporate Structures - September 2010 — Presentation Transcript