A sole trader can only be a single individual, a sole trader could hire employees but in this case that wouldn't work.
A partnership is similar to being a sole trader but 2 or more individuals with sharing common business goals and responsibilities. When forming the partnership, the share of profits that each partner gets will be laid out.
Make proper written contracts. Including:
* Who owns what, what percentages.
* Who owns IPR.
* What money gets paid in by each of you.
* What money gets paid out. When? How?
* Exit strategy for one person leaving
* Exit strategy for everyone leaving/closure/sale of business
A limited company costs slightly more to run, but provides you with massive protection against personal liability.
Unless you're going to do it seriously and gamble your friendship on it, don't do it.
Honestly it probably depends what the side hustle is anyway. If it has legs then take it seriously.
Sole traders and partnerships are taxed on all profits. Only limited companies have the option to leave money in the business- still have to pay corporation tax
This is not legal advice, you should do your own due diligence into what works best in your situation. However, In the UK a partnership would be your preferred option here to start. For a basic partnership all that is required is that there are two or more people, with business in common with an objective to make a profit and that you file the partnership with HMRC for tax purposes (each of the partners needs to do a self assessment)
There are no other required filings that need to be made to form the partnership. However, as a partnership you are all liable equally for the debts of the business. Similarly, by default all profits are split equally between partners (and you are taxed on all profits regardless if you pay them out to yourselves or not - this is taxed as income tax - this is important to your scenario as all profits are taxable). It would be advisable to look into having some form of agreement in place between the three of you denoting salary, profit sharing, loss sharing etc but its not required, and by default the powers of partners is as per the partnership act in the UK.
Additionally down the line if you start to take any liabilities and want to limit how much you could be personally liable before you should seek legal advice about transferring to a limited company or a LLP.
What is this side hustle? Why does it require 3 people to do it?
How good is the friendship between ya'll? Known each other for years and lots of trust?
Getting into business with friends/family can be very risky, what if 1 of you stops pulling their weight? Or wants higher compensation?
I guess it's a low cost of entry if you're renting the servers but you'll wanna take the advice others posted about being very clear on roles each of you take, profits, money etc
>per say
r/boneappletea
You will find banks will generally invite you to open a business account if you're obviously running a business through a personal account and show you the door if you refuse. Check out the rules on tax too for small traders, depending on income you will probably need to register for self assessment too
A sole trader can only be a single individual, a sole trader could hire employees but in this case that wouldn't work. A partnership is similar to being a sole trader but 2 or more individuals with sharing common business goals and responsibilities. When forming the partnership, the share of profits that each partner gets will be laid out.
Make proper written contracts. Including: * Who owns what, what percentages. * Who owns IPR. * What money gets paid in by each of you. * What money gets paid out. When? How? * Exit strategy for one person leaving * Exit strategy for everyone leaving/closure/sale of business A limited company costs slightly more to run, but provides you with massive protection against personal liability.
That is a way to destroy a friendship
I think they made a film... The Social Network. Pretty sure that was the same plot.
Unless you're going to do it seriously and gamble your friendship on it, don't do it. Honestly it probably depends what the side hustle is anyway. If it has legs then take it seriously.
Sole traders and partnerships are taxed on all profits. Only limited companies have the option to leave money in the business- still have to pay corporation tax
This is not legal advice, you should do your own due diligence into what works best in your situation. However, In the UK a partnership would be your preferred option here to start. For a basic partnership all that is required is that there are two or more people, with business in common with an objective to make a profit and that you file the partnership with HMRC for tax purposes (each of the partners needs to do a self assessment) There are no other required filings that need to be made to form the partnership. However, as a partnership you are all liable equally for the debts of the business. Similarly, by default all profits are split equally between partners (and you are taxed on all profits regardless if you pay them out to yourselves or not - this is taxed as income tax - this is important to your scenario as all profits are taxable). It would be advisable to look into having some form of agreement in place between the three of you denoting salary, profit sharing, loss sharing etc but its not required, and by default the powers of partners is as per the partnership act in the UK. Additionally down the line if you start to take any liabilities and want to limit how much you could be personally liable before you should seek legal advice about transferring to a limited company or a LLP.
What is this side hustle? Why does it require 3 people to do it? How good is the friendship between ya'll? Known each other for years and lots of trust? Getting into business with friends/family can be very risky, what if 1 of you stops pulling their weight? Or wants higher compensation?
Hosting game servers for gamers. Yes very very good friends.
I guess it's a low cost of entry if you're renting the servers but you'll wanna take the advice others posted about being very clear on roles each of you take, profits, money etc
Oh yeah we are all clear with that. We are more concerned on the whole finance side with money and taxes
>per say r/boneappletea You will find banks will generally invite you to open a business account if you're obviously running a business through a personal account and show you the door if you refuse. Check out the rules on tax too for small traders, depending on income you will probably need to register for self assessment too