Ltd or Trading as

Hi,
I currently have a business and due to the growth of my business we have developed into other markets. All invoicing, admin, payments, invoicing is carried out under my first business, but we use a new company name when we are sourcing business in this new market. The existing business name and clients will alway exist, but should we set up a new Ltd company for the second business or just do a trading name.

Thanks for Help.

There are pros and cons of both. Here are a few considerations to think of. I assume that you will personally own the shares in both companies as distinct from the existing company setting up the new company as a subsidiary.

One company - two names
Much simpler administration - one bank account, one set of accounts, one audit, etc.
Less confusion - creditors will pay the right company.
The losses of one division can be set against the profits of the other division.
The cash flow of one division can be used to fund another. Sometimes you see two separate companies, where one has cash in the the current account and the other has an overdraft on which interest is being charged.
Probably easier for an existing company to get credit.
Some customers prefer dealing with larger companies with a longer track record rather than with new companies with no assets.

Separate companies
If one business loses money and needs to be put into liquidation, you can keep the other company going.
If the combined company gets large enough, you will need an audit. It will take longer for two companies to reach that stage.
If at some later stage you want to give employees or other investors a stake in the company, it is easier to give them a stake in the bit that they are involved in rather than a stake in the whole empire.
If at some later stage, you want to sell part of the business, it's much easier to do it if you have separate companies.

Unless the advantages of separate companies are overwhelming, I would tend to go for the one company

Other options to consider
Existing company sets up new company as a subsidiary.

New business is operated as self-employed person and not as company

Is the matter of personal liability an issue here to be considered. I have in mind that if the business is done through a Limited Company the owner is not personally liable unless he/she has signed a guarantee or such document. In thecase of a business name trading as the person is fully liable.

dewdrop said:

Is the matter of personal liability an issue here to be considered. I have in mind that if the business is done through a Limited Company the owner is not personally liable unless he/she has signed a guarantee or such document. In thecase of a business name trading as the person is fully liable.

Click to expand...

Your OP implied that you are already trading as a Ltd company, and Brendan appears to have replied on that basis...

From Brendan's response the Trading As looks the option we are going to go with.

In regards to other questions, yes we are already trading as LTD. As the bank always required both Directors to sign off all Loans, Overdraf, being LTD is no real protection.

In order to set up a Trading As company, who can do this for us. Accountant or Solicitor or can i do it ?

thanks

cojm said:

From Brendan's response the Trading As looks the option we are going to go with.

In regards to other questions, yes we are already trading as LTD. As the bank always required both Directors to sign off all Loans, Overdraf, being LTD is no real protection.

In order to set up a Trading As company, who can do this for us. Accountant or Solicitor or can i do it ?

thanks

Click to expand...

Ltd Co. status is some protection - from trade creditors for example.

I think you should read some of the info on the topic, the relevant part of the CRO website is here:
[broken link removed] and you absolutely can register the business name yourself; the RBN1B form is linked from that page.

I can't tell whether or not you understand what a "Trading As company" is - so just to clarify, you're not setting up a "Trading As company" as a separate legal entity - you will still only have one Ltd Co., all you're doing is registering a particular business name to that company. You could register 100 different business names to the same Ltd company if you wanted, but they would all be part of a single entity for legal / taxation purposes.

cojm said:

From Brendan's response the Trading As looks the option we are going to go with.

thanks

Click to expand...

Hi cojm

If you mean that, based on my considerations, you intend to have the existing company trading under a separate name for the export business, that is fine.

But my post did not deal with the merits of sole trader (trading as) vs. limited company.

I dealt with the benefits of two separate limited companies vs. one limited company.



For completeness, I did mention that operating part of the business as a sole trader is also an option to be considered.

If you are running a sole trader business alongside a limited company business, you will need to make sure that the two businesses are run completely separately, as otherwise you may face the same potential problems that Brendan outlined in relation to operating separate companies.

This will be a lot easier to achieve if the two businesses are totally separate in character (eg pub and farm), but next to impossible if the nature of the businesses means that there invariably will be a lot of links between them (eg pub and disco).