Business Link advice completely wrong …
Understanding the differences between sole trading, limited companies, self employment can be confusing - but Business Link has made a right mess of a case study that, in trying to explain how easy it is to set up in business, has broken the law ... by pretending to have set up as a limited company when it isn't.
Business Link is the government website that advises on setting up a business.
It's supposed to help people understand that, if they want to set up in business, they can choose to do so as a sole trader (in which case they must register as self employed, but don't need to register with Companies House) or they can set up a limited company (in which case they register with Companies House).
Rules on company names for sole traders
People operating as sole traders can choose to use a business name to trade - if they do, they MUST NOT include the words limited, plc, limited liability partnership, LLP or equivalent in the business name, as Business Link explains here.
Where the case study goes wrong ...
The case study starts simply enough "Ray Barker set up his .. . business ... in early 2008 ... As a sole trader, Ray needed to register his business and set himself up as self-employed from the outset."
The bit about business registering is rubbish. And the 'creating a company identity' heading is wrong, too - he's not a company, he's a sole trader.
Anyway, he then says "Once I decided to become self-employed, I spent a bit of time thinking about a name for the business. I wanted it to include my name, because a lot of potential clients might recognise it, but I also wanted something that sounded businesslike and corporate. I decided on Barker Associates Ltd." (My emphasis).
Unfortunately, this means he's pretending to be a limited company, when he's actually a sole trader. He goes on to say "Especially when you're a sole trader, you want potential clients to take you seriously, and a professional public image is all part of the process."
Lying about being a limited company shouldn't be part of the process ... I'm sure this is all Business Link's fault, not his.
No wonder it's all so confusing for the rest of us, however, if the government can't even understand its own rules.