Find The Perfect Business Type For A Blogger
If you have a blog and have not set yourself up as a business then you may be flushing your money down the toilet. In this post I will be discussing setting up your blogging business as a sole trader or limited company along with the advantages and disadvantages.
There are other business types such as partnerships, franchise etc but I will purely be focusing on sole traders and limited companies as I see these appear to be the two most common business types as a blogger.
If you set up your business as a limited company, you would initially need to set up your company with the Companies House. If you set the company up in just your name then you would more than likely be the company director. The minimum amount of directors is 1 and as far as I’m aware there is no maximum. If you are setting up the business with another person then you may have 2 directors but you may not be a 50/50 split in terms of ownership. It is possible to be 40/60, 30/70 or even 99/1 in terms of company ownership depending on your agreement with the individual. It really depends on how you want to set up the ownership of your business. You can also appoint additional directors or remove directors at any time.
1. Limited Liability – A limited liability is set up as a separate legal entity. What this means is that your personal belongings are not at risk if you stumble upon any financial difficulty. Business possession would be at risk though. Touch wood this doesn’t happen to you but if it did stumble upon hard times, keep proof of ownership to identify personal from business assets.
2. Taxable Efficiency – There are taxable advantages associated with a limited company. An example of this is if you pay yourself in the form of salary and dividends. This can be a more tax efficient method but discussing your options with an accountant is always recommended as you do not want to avoid tax illegally.
1. You may require an accountant to audit your accounts which can be costly.
2. If you are a discharged director or un-discharged from bankruptcy then you cannot set your self up as a company director of another business.
3. There may be higher set up costs in comparison to other business types.
4. Administration can seem quite complex.
Another option is to set your business blogging journey up as a sole trader. This is a much simpler process to set up but one thing to remember is that sole responsibilities and accountability relies on the sole trader alone (including financially).
1. There are no registration fees for setting your business up as a sole trader.
2. There appears to be less complex administration duties involved.
3. There are generally lower accountancy costs (if any) due to the level of complexity involved.
4. It is simple to set up as a sole trader with HMRC.
• You have personal unlimited liability and is not set up as a separate legal entity.
• Income tax is payable on all profits.
• Money cannot be retained within the business to save tax because all money is taxable in that financial year.
As you will see, there are various advantages and disadvantages to both business structure types. If I’m honest, I don’t feel there is a right and wrong way of deciding what you feel is best for you (if any business structure at all – maybe you are happy with no legal business structure at all). It’s just personal preference of what you feel works best for you. I would also recommend spending some time researching other business structures in case they are more suitable for you but as far as a blog, these seem to be the most popular.
Just remember, this isn’t financial advice just something you may want to bare in mind. If you want to know more information then I would recommend speaking to an expert such as an accountant.
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