This introductory article discusses about Branding and all it implications. How important is your brand name and what it represent to you and your customers. It shapes your business direction and seal your vision.
Your brand name is your business entity and identity which incorporate your business concept, vision and mission statement more importantly your reputation.
Your brand name represent your business your products or services therefore you should love it, nurture it, build upon it, develop it has big as you want because your brand name represent who you are and what your business stand for. It shapes your ethos, seal your belief, your wants and dream.
Building your personal brand to victory
You have decided on your brand name and tasted your market, achieved a few sales it is now time to register your brand name as you become serious about your business and noticed that you have a place in your chosen market therefore you want your brand name to be a legal entity and recognised as such with a legal identity. It is the first step to build your brand name and to be a business to be reckoned with.
You can start small and register as a Sole Trader with your brand name or a Partnership two of you or more with your brand name as an Unlimited Company (UNLTD).
As a Sole Trader or a Partnership your brand name and you are not dissociated meaning you are your brand name and any profit made belong to you as well as any debt belong to you there is no notable distinction between you the owner or owners and your brand name.
Therefore if you register as a Partnership you are collectively responsible and accountable for any negligence or misconduct that happen in your business as well any profit or debt.
A smart insight to branding
You can decide on the type of company you want your brand name to be associated with and the smart insight you want your brand name to be known for but it does not depend on the type of limited company status you chose but the type of company structure you decide on come with notable difference and implications.
In the UK companies do not operate the same way and they're is notable distinction and ramification to the Limited status which is discuss below:
Limited simply means a corporation in which an individual financial liability for the company is restricted to a fixed sum and this sum is the value of their investment.
Types of limited company status
Public Limited Company (PLC) is a corporation whose ownership is open to the public meaning anyone can buy shares in the company stock and shareholders are responsible for the company financial liabilities to the extent of their investment only.
It's important to note that if you want to start a PLC you must have allocated shares to the total value of at least £50 000.
Private Company Limited By Shares (LTD) is a corporation which cannot be owned by the public. It will instead be owned by an NGO (non-government organisation) or a relatively small number of shareholders and the sale of the share is handled privately.
It's important to note that as a LTD the same implication prevail for private company and public company therefore an individual is only responsible for the business's financial liabilities to the extent of their investment in the company.
LTD are the most common company type in the UK
Company Limited by Guarantee this type of company is notably different than a PLC or LTD. The main difference is the corporation is not responsible for fixed sum based on their investment as this company status is reserved for companies that do not have shareholders, like smaller non-profit organisations.
It's important to note this company have members who act as guarantors and agree to contribute a nominal sum toward the winding up of the company in the case of such event occurring.
However, as per UK law these company have to include "Limited status" in their brand name, but exception can be made for instance in the case of company that are not distributing their profits to its members.
In all company types mentioned above the shareholders have to vote to elect a board of directors and the board employs other people to manage the company.
Limited Liabilities Partnership (LLP) they are not treated as partnership in the UK instead they are treated as incorporated bodies that are more similar to the other types of company looked at so far.
It's important to note if you want a LLP some or all the partners have to have limited liabilities which means that they are only responsible for their own misconduct or negligence, rather than being responsible as a collective (Which is a more traditional Partnership model).
Another important point an LLP unlike other corporations the partners are allowed to directly manage the business.
Community interest company This type of company structure is for company that are not driven by the objective of maximising profits for their shareholders, but with the intention of using their assets and profits for the good of the communities that they are in.
These companies are thought to be easy to set up, and they runs on the basis that any money they make is not distributed to shareholders but goes to improving the area around them.
Many community interest company will still put profits back into the company, but that will be done with the intention of improving the community services that they offer.
Industrial and Provident Society are a major company type for many years, which name has been changed in 2014 everywhere in the UK except in Northern Ireland by newer types like the Community Interest Company and other names such as Cooperatives and Community Benefit Societies.
Royal Charter (RC) If a company or organisation has been created by Royal Charter, it means that it has been granted power or right by the monarch.
Historically all companies have had the Royal Seal of Approval by the Royal Charter but those days are long gone.
Today other methods of starting a company have become more prevalent and here are notable Chartered organisations which include the BBC, the Bank of England and the Royal Opera House. These companies exist but have no bearing on your day to day business.
Pros & Cons to both the Unlimited and Limited company routes
You decide which road you want your company and brand name to travel on depending on your circumstances and what it best to suit your needs hence it is important to look at both business structure in term of advantages and disadvantages.
Setting up your business and administration: Running your business as a sole trader is how simple it is to start and run your business which the main advantage.
A Limited company, and its directors, have more legal responsibilities, accountability and duties than someone who is operating their business as a Sole Trader.
When you start your business as a Sole Trader, you’re in full control. That means you won’t have to worry about some of the regulations Limited companies have to comply with, such as:
Filing documents when a new Director is appointed or dismissed
Holding an AGM and keeping meeting minutes
Having a registered office displayed
Opening certain records to public inspection
Completing a Corporation Tax Return and paying Corporation Tax
Filing an annual Confirmation Statement & PSC Register
Complying with all requirements of the Companies Act.
Apart from being VAT compliant, and deducting and paying to HMRC PAYE/NI. If you have employees, the main filing requirement for a Sole Trader currently is to complete and file an annual Self Assessment Tax Return with HMRC.
More flexible payment and earning: Sole Traders can simply take money out of the business as and when it’s needed. These ‘drawings’ will be treated as a salary on the Self Assessment Tax Return.
The reason for this is that there is no legal difference between the owner and the business when you are a Sole Trader.
This makes things much simpler than when you are the Director of a Limited company as the company is an entity on it own as you are dissociated from your brand name your company.
If you withdraw money for you as the director from the Limited company it is called a director loan and not a salary therefore has to be repay to the company within 9 months 1 day of the company year end and the HMRC will charge interest on the loan and this will accumulate until the S455 corporation tax or the DLA is repaid on overdrawn director loan account.
A director's loan is not considered to be a payment in the same way as salary or dividends and tax may not need to be paid depending on the arrangements.
Caution must be exercised to ensure that funds are available to pay whatever tax is due when the Self Assessment form is submitted.
In addition, it’s advised that formal advice is taken at least initially from a registered accountant to understand the cash flow and tax variables or a competent registered company who hold this knowledge and experience.
Privacy: The overriding advantage of being a Limited company is that company owners and assets are considered separate to the owner’s privately owned assets. The owners (shareholders) of a Limited company, therefore, can only lose a maximum of their investment in the business should things go wrong.
However, trade creditors, commercial landlords and lenders need some indication that there is enough capital in the company to absorb losses and meet commitments to them.
They may also want to gauge if the company directors are trustworthy. That is why certain information pertaining to the Limited company has to be made publicly available.
Being a Sole Trader is different. As a Sole Trader, all the details of your business are kept private.
So if you value your anonymity, then the self-employed route is the option for you.
Sole Traders will, in most circumstances, use the services of an Accountant to prepare annual accounts in order to calculate a taxable profit or loss (the link to use our profit and loss calculator located at the bottom of the page). Or use the services of competent register company who hold this knowledge and experience.
This figure is then included on the annual Self Assessment Tax Return, but this information is not publicly disclosed.
Insurance to cover personal asset: There are many insurance policies that will cover the ‘unlimited liability’ risks for business owners. Insurance companies who specialise in business risks such as Professional Indemnity Insurance and Director’s Insurance should be able to provide you with cover as a Sole Trader that would bring your risk status in line with business owners who have Limited liability.
An additional consideration is long term illness cover. You must consider what would happen to your business interests should you become too unwell to run the business, and insurance cover can be put in place to protect against such eventuality.
Trading losses could cut personal tax bill: It’s highly likely that a new business will battle to make profits. A business owner might have a healthily capitalised start-up and have little or no living expenses but this is rarely the case.
Should business losses be incurred, there are options for a Sole Trader to set these against other income streams (current, past or future), using those losses to reduce the amount of tax they pay.
For some new business owners this ability to offset business losses could save a significant amount of tax. This is an area where specific professional advice should be sought.
The current income tax allowance for tax year 2018/2019 is £11 850 which mean if you trade under this amount you are tax free and the Government has stated its intention to raise it to £12 500 for tax year 2019/2020
Tax: The main advantage of running your business as a Limited company is that you are more likely to pay less personal tax than a Sole Trader.
Limited company profits are subject to corporate tax, which for the current tax year 2018/2019 it is set at 19% and the Government has stated its intention to cut corporate tax to 17% from the tax year starting in April 2020.
As a director and shareholder of a Limited company, you may chose to take a small salary and draw most of your income in the form of dividends.
By doing this you can minimise the amount of NICs you must pay because Limited company dividends are tax separately and are not subject to NICs.
As a Sole Trader your entire income is subject to NIC rules. Therefore running your business as a Limited company could help you take home more of your earning.
Distinct Entity: A Limited company is completely separated from it owners everything is done under your brand name your company and separated from the interest of the company's shareholders.
Limited Liabilities: As a Limited company you have the reassurance of Limited liability, assuming there is no fraud your Limited liability for any financial losses made by the business you will not be personally liable. Hence, giving you an added protection should things go wrong.
As self-employed you are responsible for your own financial liability and if things go wrong your are personally liable.
Professionalism: Being a Limited Company can provide a more professional image and if you want to conduct business with larger business they prefer trading with Limited companies.
Funding: Funding can be difficult to obtain for any business start-up or new business. Because Limited company are a different entity from it owners it a bit more easier to secure finances than being a Sole Traders.
Naming: Once you register your brand name at The Company House your brand name is deemed protected by law and no-one can use your name or have a similar name.
As a Sole Trader no protection is given so someone could be using your brand name and there is little you could do about it. This could damage your business, and in some case resulting in you having to go through the costly and time-consuming effort of changing your brand name or fighting in court for it with very little chance of winning.
Shareholders: A Limited company could have various classes of shareholders and can easily sale share in the company or transfer ownership and shares.
As a sole traders you do not have shareholders and you do not have share coming with your company status but you can purchase share when you get big and invest as a Sole Traders.
If your Limited company has more than one shareholder you should get a Shareholders’ Agreement.
Costs: Many people prefer to operate as a Sole Trader rather than a Limited company because the start-up and running costs are perceived to be significantly lower.
However, you can form a Limited company from as little as £15, so the price of setting up a company really is minimal.
Most accountants will charge more for preparing annual accounts for a Limited company than they would for a Sole Trader. The differential varies so ask your accountant what both options would cost you. Or you could request the service of a registered competent company knowledgeable and experience to do this for as a much cheaper cost than an account.
Historically, you would pay your accountant to handle all of the administration involved with a Limited company, but most of these tasks can now be done fairly easily and painlessly online or with the help of a registered competent company with the relevant knowledge and experience.
If you’re reasonably competent with a computer, you can easily handle limited company administration paperwork such as submitting your Confirmation Statement (what used to be the Annual Return) to Companies House every year yourself.
Pension: A limited company can fund its employees’ executive pensions as a legitimate business expense. This can offer a tax advantage over those who are running their business as self-employed if they do not have staff.
Staff: If has Self-Employed or Limited company you have staffs you can pass your staffs bill as a legitimate business expense.
Closing down your business: Where a Limited company will need to get officially de-registered from Companies House, have resignations from all directors and a shareholder willing to take assets owned by the company, a Sole Trader doesn’t have to worry about any of this.
Winding down and closing your business as a Sole Trader is a relatively simple affair. A Sole Trader business can be wound down by settling any liabilities, collecting monies due, keeping or selling any physical or proprietary assets and distributing any residual monies to the owner and finally notifying HMRC.
There are specifics to be considered if the business does not have sufficient money to satisfy debts, though, so if this is the case, seeking consultation from a Debt Advice Charity is advisable.
Summary
Whether it is better to work as a Sole Trader or set up a Limited company comes down to your own personal situation and which of the various advantages and disadvantages these two different business structures offer are more important to you.
Girlfridayz can support you make the right decision on whether to run your new business as a Sole Trader or form a Limited company depending on your personal circumstance discuss at our business support consultation.
We can support you with market research and start up strategies such as content strategies and various startup analysis which are incorporated in your business plan.
We also can support you with drafting your business plan and marketing plan to help you startup the right way and complete them for your to ensure that you get funding should you need to access a reputable financial establishment for startup fund or growing fund.
We can support you with other plans when you grow bigger such as contingency planning and various analysis should you want to take your business nationally or global.
We can support you starting your legal obligation for registered business which are record keeping which help you with the preparation of your tax return for tax purposes when due.
We can support you starting an online business or brick and Mortar business and build your website for you depending on your online business structure, which include your on-page SEO, social media integration and mobile view.
We can support you with your startup business administration meaning your letters and invoices and more...
We can support you with marketing promotional material and online marketing ensuring your are visible and accessible that include advertising opportunity on our website and online business card style directory.
We can support you with Social Media Marketing starting up with the right platform for your business with a social media plan which include social media strategies and help you start up your profile plus targeted two posts to your niche.
We can also update your social media platforms for you with our two popular plans the Pay As Go50 and the Rolling Contract30 also we have a yearly website update subscription really useful if you doing what you do best in your business, we ensure that your website is updated regularly to remain relevant.
Recommendation
Girlfridayz highly recommend due to past business personal experience with my brand name Girlfriday, Girlfridayz® and some unscrupulous person copycat my website and stolen my brand name when we were not a Limited company but a registered Unlimited company that you trademark your brand name as soon as you can to ensure the highest protection for your brand name.
Basically your brand name does not have to have a business registration structure to register it has a trademark. Because a registered trademark does not have a proprietor until an application to register it has been made. The owner will be the person named in the application and an individual, a company or a partnership may be registered as the owner.
you can trademark something with joint ownership. A trademark can have multiple owners. If two or more parties wish to acquire joint ownership, they may file jointly for the trademark. Typically, a joint filing denotes co-ownership of the actual trademark.
There is a notable difference between Trademark and Copyright. A Copyright protects literary and artistic works, while a Trademark is more focused on protecting items that define and identify a company's brand, such as a logo, brand name, services or products.
For instance Girlfriday, Girlfridayz is a register trademark which include our services and logo. A trademark last for 10 years and need to renew a few month before it expiry date otherwise your trademark registration expire.
However, we are only using one part of our brand name Girlfridayz but our whole business name Girlfriday, Girlfridayz® is a register trademark hence we can use the symbol ® for registered trademark legally and copyright for our website content which is also trademark.
Copyright and Trademark provide you with that kind of protection, so it is imperative that you register for both and make sure you protect your brand. Also trademarking your brand your asset is a worthy investment.
Conclusion
Hopefully you enjoy reading this blog post which inform you about what is a brand and the route your company can take with two business structures that you can decide on and how you can protect your business name to the highest level as you are on your journey to business success and achieving profitability in your business.
if you become mighty big your share can be traded on the stock market and people who believe in your brand and become your advocate can purchase some share to acquire financial autonomy and freedom hence a form of giving back to the community who brought up your business success by you providing excellent value for money to your customers and a solution toward their needs.
Girlfridayz Limited is an Award-Winning company which has been recognised as the most influential and inspirational black business in Britain.
Please feel free to share this post amongst your peer especially the one who want to startup or grow their business as at Girlfridayz we can help you startup or grow your business with various tasks and business support and advice.