Is anyone a cpmpany or just a Partnership

[Chatterbox Childcare]

As the title says I am after information.

I work with my DH and we are registered as a partnership and we want to "trade as".

I have been told that to keep a trading name I need to become a registered Company.

Is this true???????? or can I stay as a partnership.

What are the tax implications on both options? Would I have to do more and will it cost more?

Mr A could you explain the difference between taking dividends and wages and just having all the profit or loss at the end of the year please?

That is it for tonight but I am sure there will be more :thumbsup:

[MrAnchovy]

... guess who :D

A company cannot be a childminder, this becomes Childcare on Domestic Premises (http://www.ofsted.gov.uk/resources/factsheet-childcare-childcare-domestic-premises) to which a whole load of different registration requirements apply, principally the requirement for two suitable people to be on the premises at all times, one of which must have an NVQ 3.

You can operate under a business name as a partnership (or as a sole trader) - nearly all partnerships do. There is no registration process and you only have to tell HMRC. You cannot stop anyone else using that name though, unless they are passing themselves off as your business, or you register the name as a trade mark (which is not simple).

It is now almost impossible to run a company without the services of an accountant, which will probably cost from £720 a year, twice as much for a high street firm and four times as much for a national firm. The tax savings are substantial though - or rather the National Insurance savings: you don't have to pay Class 4 NI so I usually reckon that £15,000 profit is the 'break even' point for a sole trader with £25,000 and up making company registration highly desireable from a tax point of view. For two people in partnership the break even point is more like £22,500. But Childcare on Domestic Premises is a big (and costly) leap.

To answer your question, instead of the partnership's profit being split between the partners and each of them paying Class 4 NI and Income Tax, each 'partner' takes a salary from the company equal to the personal allowance. There is no income tax to pay, and only a small amount of national insurance. The whole of the cost of the salaries is an allowable expense for the company. The company's profits are now taxed at 20%, the same as the basic rate of income tax but with no Class 4 NI. The company pays dividends from its profits to the 'partners' which are effectively free of basic rate tax.

There are a few other wrinkles - household expenses become more complicated (you have to bill the company), you can't claim the 10% wear and tear that is available only for childminders, cars more-or-less have to be claimed using mileage which might leave you worse off with an expensive to run car, insurance can be more expensive...

[Helcatt]

That has thrown up some food for thought

I was discussing this with the accountant only yesterday

The 10% wear and tear and the car costs are an incentive to stay as we are - me plus 2 x assistants - one full time, one part time

But there is nothing legally to stop us being registered as a ltd company? This was the accountants query

I have been a sole trader so far and was wondering if I should change it to a partnership now that dh is fully on board or go the whole hog and do the company thing

HX

[Penny1959]

Partnership worked for me - although DD now moved on so partnership will be closing and I will be returning to sole trader.

Luckily as advised in HMRC website info - we did record what each of us brought into the partnership and divided the % share of profit accordingly.

I had 70% and she 30%. I brought into partnership all resources, use of the premises, goodwill, the name etc. She brought in her teaching degree. We will take out what we put in.

I am glad I did not go down the company route as from what MR A says a whole lot more complicated and I guess a whole lot more complicated if decide to close company - especially as the partnership did not last that long.

I did use my settings name Penny's Place as our Partnership name

Debbie - I think you are a brave womandealing with all this stuff:D


Penny:)

[Chatterbox Childcare]

That has thrown up some food for thought

I was discussing this with the accountant only yesterday

The 10% wear and tear and the car costs are an incentive to stay as we are - me plus 2 x assistants - one full time, one part time

But there is nothing legally to stop us being registered as a ltd company? This was the accountants query

I have been a sole trader so far and was wondering if I should change it to a partnership now that dh is fully on board or go the whole hog and do the company thing

HX

I was told by the HMRC that as soon as DH and I starting working together we both had to register as a partnership as well as individually but what they didn't tell me was that the partnership return needs to be in by 31st October in paper form or you have to pay another company for software to register online by 31st Jan (only cost £12 though) and the most important for me was that we had to close the accounts of sole trader and start new ones for partnership, this was 6 months in for me and I didn't do it.

[Chatterbox Childcare]

Partnership worked for me - although DD now moved on so partnership will be closing and I will be returning to sole trader.

Luckily as advised in HMRC website info - we did record what each of us brought into the partnership and divided the % share of profit accordingly.

I had 70% and she 30%. I brought into partnership all resources, use of the premises, goodwill, the name etc. She brought in her teaching degree. We will take out what we put in.

I am glad I did not go down the company route as from what MR A says a whole lot more complicated and I guess a whole lot more complicated if decide to close company - especially as the partnership did not last that long.

I did use my settings name Penny's Place as our Partnership name

Debbie - I think you are a brave womandealing with all this stuff:D


Penny:)

I love it and inquisitive by nature wanting to know how and why. I worked for a forklift company once and I knew nearly as much as the technicians in the end, although I couldn't strip one down! :D

[MrAnchovy]

But there is nothing legally to stop us being registered as a ltd company

The Childcare (General Childcare Register) Regulations 2008 provide that only an individual (and therefore not a company or other body corporate) may register as a childminder. A company that is providing regulated child care based in your home would therefore have to register as a provider of Childcare on Domestic Premises.

If you are happy that you can comply with the different requirements of this registration as mentioned and linked to below then no, there is nothing to stop a Limited Company operating a home-based child care business - it just won't be childminding.