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Business Link advice completely wrong …

May 5, 2009 2 Comments

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: wrong advice

Business Link: wrong advice. You can't call yourself limited if you're not.

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.

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  • Shera says:

    Hi, this is really interesting, but i thought i should point out that the GOVERNMENT didn't say this, the guy in the case study did.

    Not that i spend a lot of time defending the gov but fairs fair, the guy messed up telling his own story. And if he tried to register the company or anything as 'limited', it wouldn't be allowed (i tried, you can't)

    • You might be right - but it's Business Link that edited and published it, so I suspect it's their mistake not his. (I'm sure he wouldn't have put the sub headings in for instance).

      Anyway, whoever made the initial mistake, you'd think Business Link would check it - it's supposed to help us understand, not completely confuse us!!

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