Can a 17 year old become a sole trader?

J

jbrana

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The title is pretty self-explanatory, I'd like to have an LTD but I believe I have to be 18 to own the shares (please correct me if I'm wrong as this would be ideal) and if I use a proxy I'll have to pay 33% of the companies worth in CGT. I believe I can register as a sole trader but I'm not sure about having a business bank account. Any help/advice is appreciated.
Thank you.
 
Yes, you can become a sole trader at any age.

I presume you can open a bank account, but so what if you can't?

User your normal bank account and keep good records so you can separate your business from your personal transactions.

Alternatively, open a separate personal bank account and use it only for your business transactions.

Brendan
 
You could get a LTD company set up but make family members the directors until you turn 18.
Those directors can maybe take zero/nominal salary in the meantime.
 
Sole trader yes, but you must be 18 to be director or secretary of a limited company. They're two different things.
 
So can he set up a limited company and be the only shareholder? Can't children own shares in their own name?

His mother could be the director until he comes of age and takes over?

Brendan
 
A limited company should only be formed with the benefit of appropriate and independent professional advice. I'm struggling to think of a situation where it would be wise for a young person to use a limited company as a vehicle to establish their first business as opposed to setting up as a sole trader and incorporating later on once the business is on its feet.
 
Brendan Burgess said:
Yes, you can become a sole trader at any age.

I presume you can open a bank account, but so what if you can't?

User your normal bank account and keep good records so you can separate your business from your personal transactions.

Alternatively, open a separate personal bank account and use it only for your business transactions.

Brendan
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I have been using my personal account for these transactions and the bank closed (I'm permitted to open a new one with the same bank) the account for the reason of it was being used as a business account. If I tell them first and they charge me accordingly do you think that I'd be able to continue with these transactions?
Thanks
 
Brendan Burgess said:
On reflection, agree with Tommy.

Forget about the hassles of a limited company.

Brendan
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A Limited company is more suited for the business I want to start/have started. If I can set up an LTD owning 100% of shares and have family members be the director and secretary that's perfect. Provided I can take over tax/cost free.
Thanks
 
You cannot enter a legally binding contract until you are 18.
heck, you cannot book a holiday or a flight until you are 18.
so how actually are you going to run a business, be it as a sole trader or using an ltd?
 
Have been running the business but need to move it to sole trader/Ltd. Worse case scenario, I use the Ltd that I set up in my brothers name and pay the 33% CGT on the company's worth when I turn 18.
Thanks
 
jbrana said:
Have been running the business but need to move it to sole trader/Ltd. Worse case scenario, I use the Ltd that I set up in my brothers name and pay the 33% CGT on the company's worth when I turn 18.
Thanks
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you have not shared the type of business, but I sincerely hope none of your customers has a problem that might require insurance cover, legal support, or end up before the courts - or create any problem that can’t be easily ‘sorted out’. Your brother and parents will not thank you. And you will also not be happy, as you risk being banned from acting as a company director.
Never mind if a bill isn’t being paid…
 
The business is purchasing second hand cars off of done deal and doing modifications to them (only cosmetic mods, nothing that would even need to be declared on insurance) and selling them on. I have no bills and have the cars inspected by a mechanic before I buy them. I also keep enough money to be able to cover any potentially unexpected cost that may come up. I understand that every business has risks and so do my family. Its all out in the open and they know what they are agreeing to. I just want a way to own my business without having to wait another year/paying a ridiculous amount of tax on something that's mine.
Thanks
 
I applaud anyone's entrepreneurial spirit.

I assume you are selling the modified cars after modding them - if you do so as a business, the buyer of those cars has significant rights under consumer protection legislation. Until you are 18 (and of course thereafter), make sure you understand what that means.

And regarding taxes: if you are expecting to earn a living from it, you will pay taxes. This is unavoidable.

And talk to an accountant on what type of legal entity might be the right one for you.
 
jbrana said:
Have been running the business but need to move it to sole trader/Ltd. Worse case scenario, I use the Ltd that I set up in my brothers name and pay the 33% CGT on the company's worth when I turn 18.
Thanks
Click to expand...
There is no reason why the company should be worth anything from a tax point of view. If you pay out profits as salary, the only asset will be goodwill, which realistically will not be worth much in a year's time.
 
cremeegg said:
There is no reason why the company should be worth anything from a tax point of view. If you pay out profits as salary, the only asset will be goodwill, which realistically will not be worth much in a year's time.
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I have no intention of drawing any sort of salary for the next year or two as I'm fortunate enough to be a dependent and want to grow the business before using it to pay for living expenses. So anything I make + any money I put in will all have to be taxed.
 
jbrana said:
The business is purchasing second hand cars off of done deal and doing modifications to them (only cosmetic mods, nothing that would even need to be declared on insurance) and selling them on
Click to expand...
I too applaud your entrepreneurial spirit.

However I'm twice your age and have seen big shifts in the prices of second-hand cars over the years. Ireland is prone to big swings due to being a small market with RHD and the cost of importing and exporting when there is deficit/surplus. In 2008-2010 prices fell 30%.

The last year has seen huge increase in value in used cars that is unusual and unsustainable. I'm sure you are adding value with the modifications but I suspect the rising market is doing more of the work.


Beware the market could turn on you, and fast!
 
newirishman said:
I applaud anyone's entrepreneurial spirit.

I assume you are selling the modified cars after modding them - if you do so as a business, the buyer of those cars has significant rights under consumer protection legislation. Until you are 18 (and of course thereafter), make sure you understand what that means.

And regarding taxes: if you are expecting to earn a living from it, you will pay taxes. This is unavoidable.

And talk to an accountant on what type of legal entity might be the right one for you.
Click to expand...
I'm fully aware that I must pay taxes. My gripe is that when I turn 18 and want to put the shares into my name. I will have to pay 33% tax on those shares (I believe) which I do not want to do as this would be a substantial enough amount. (and it would be "my" business anyway)
 
There really is no tax advantage to you in having a company. The bureaucracy involved in returns is terrible.

I suspect that people might baulk at buying a car from a company rather than from an individual.

The only advantage might be in limiting your liability if you are sued. But if you are a young lad without much assets I wouldn't worry about that too much.

Brendan
 
At the moment I'd owe 33% tax on any profits using the margin scheme. Regardless of that my bank has closed my account due to it being used as a business account. At this point I'm just trying to figure out if I can own shares in a limited company/be a sole trader.
Thanks
 
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