KC - Timing the setup of a web based company

[chowdek]

Hi All, scratching my head over this one - am considering setting up a business based purely on the Internet - I am going to have the website setup by a developer - say costing £20k as an example. Do I need to set the company up before I kickoff development or only when it goes live and starts to trade? I'd prefer the latter - but something makes me think that I need to set the company up before I kickoff development so that I can claim the £20k as a business expense. Please let me know which option is better and why. Thanks in advance!!! K

[Ian Wright]

If you are looking to receive relief for the intial costs you may consider trading under self employment rather than a company and then when you really get going you incorporate.

The advantage of this is you should be able to offset any losses against your income elsewhere in the current and previous three year under opening year of trade rules.

You would only be able to start the accounts of the business as soon as the business is available for trade. All expenses prior to this point roll up under pre trading expenses rules.

The problem with companies [early one that is] is that the losses are generally locked into that company and can only go to future profits of that business. There is far more scope in a self employed capacity early on when losses may be incurred.

The onlt point I would really add with self employed v company is limited liability. If there are real risks in the business then a Ltd company should be the way forward.

Ian