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    1. johnosw84 is offline

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      #1

      How to register as a trader in the UK - Sole trader or Ltd company

      I would like to start a small business, trading on e-bay, car boot sales and local markets. I have been looking at several wholesale suppliers and noted that they only deal with 'traders'. So the question is how and where do I register as a trader? Also having registered do I have to contact HMRC for tax purposes? Most e-bayers and car booters would not bother, but I imagine that once I have registered as a trader the situation is different. Look forward to receiving your advice. Thanks
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      #2
      Hi John,

      Here are your options:

      Option 1 Register as a sole-trader: you must register as a sole-trader with HMRC within 30 days from the date you start reselling for profit (here is the form you need to register as a self-employed trader in the UK: http://www.hmrc.gov.uk/forms/cwf1.pdf). Order from wholesalers who accept sole-traders, and then use their invoices to persuade stricter wholesalers to supply you. If this doesn't work, and you really want to use the supplier, consider option 2.

      Option 2 Register a Ltd company. You can register a company in the UK by visiting Information & Guidance - Starting a company. Many traders dread the idea of registering a Ltd company, yet it costs very little to do, offers you limited personal liability, often comes with the added benefit of having an accountant as your right hand man, helps your business benefit from corporate taxation rates, and there are legal ways to reduce the tax you pay on withdrawals without paying full personal income tax (a good accountant will be able to assist you with this).

      VAT Registration: you can register for UK VAT by visiting HM Revenue & Customs: VAT. VAT registration in the UK is at the time of this post compulsory for any business exceeding £70,000 in turnover over a 12 months period. The standard rate of VAT in the UK at the moment is 17.5%, going up to 20% in Jan 2011, but if your turnover if less than £150,000 you can apply for the fixed VAT rate scheme (HM Revenue & Customs: Flat Rate Scheme for VAT - once you apply, you remain eligible for a fixed rate of VAT for as long as your turnover doesn't exceed £225,000 over the accounting year). You can also register voluntarily for VAT, however some suppliers will accept you as a ltd company even if you are not VAT registered. The advantages of being voluntarily VAT registered is that you convey the idea that you are a business with a turnover above £70,000, and therefore a more dependable trading partner.

      We strongly advise you register as a limited company, because the benefits far outweigh the costs. Registering for VAT is only compulsory if your business exceeds the current VAT threshold, however there are advantages to being VAT registered, you will need to evaluate them specifically to your business and with the aid of your accountant to determine whether voluntary registration offers your business a competitive advantage.
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    3. Thank you for this post:

      lapilly (31 Dec 2010), eros (20 Mar 2012)

    4. Stewie is offline

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      Hi
      Great Info, I believe there is a website out there that for a small fee can help you set up for the first time online is that correct?

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      #4
      Hi Stewie,

      Yes there are many sites that offer such a service, however they are not always immediately comparable because some will include more services in their basic price plan.

      When you set up a new UK Ltd company, in addition to sending your company registration form (IN01 form, which is what the services you refer to include in their basic package), you have a number of additional responsibilities. You will find the following article from Business Links useful: Registration documents and forms | Business Link . It lists the documents you need produce to complete registration of your UK Ltd company.

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      #5
      In case you want to create the documents yourself, there are some free samples available at Companies Act 2006 - Model Articles

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