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.

The flat rate VAT scheme is brilliant. Multiply your VATable income by the flat-rate amount. And that's it. You may even turn a small profit ...

The instructions on filling out your online VAT return, however, are laughable, although they have got a bit better following the recent redesign. Oh my god, they've redesigned it AGAIN and removed the flat rate vat instructions!! Here's the new form:

Flat rate vat online return

How to fill out your online VAT return if you're in the flat-rate scheme

Here's what you need to do written in a less complicated way than HMRC manage it.

For most people, you still only enter two numbers:

• In box 1, you enter the amount of VAT you owe. So that's your income, including VAT, mutiplied by your FRVS rate. So if you had income of £12,000 INCLUDING VAT, and your FRVS rate was 10%, you would enter £1,200 here.
• In box 6, you enter your income INCLUDING VAT. So that's £12,000 in this example. I know it says excluding VAT but this is WRONG. So enter the amount INCLUDING VAT. I'm not kidding - the form is wrong - it's aimed at normal VAT people. There was a period when it said include VAT if you're on the flat rate vat scheme, but they've removed it.

In the other boxes, I enter a zero.

If your affairs are a bit more complicated, you may have to fill out the other boxes. This is explained here. But, essentially:

• You fill out box 2 only if you bought goods or services from other EU countries.
• Box 3 is calculated for you.
• Box 4 is usually 0 as you can't reclaim VAT you've paid under the FRVS. There are exceptions for capital expenditure over £2,000, VAT you've paid at initial registration, and reverse-charge purchases from abroad. For most people, none of this applies.
• Box 5 is calculated for you.
• Box 7 is usually 0, unless you've bought goods from another EU country or made a £2,000+ capital purchase.
• Box 8 and box 9 are applicable only if you've traded with other EU countries.

That's it, though. For most people, fill out box 1 and 6, and remember to enter your income INCLUDING VAT.