sole trader liability

marineman

I am setting up as a sole trader selling car parts online. I have tried 15 insuance companies/brokers and cannot get insurance..

My question is : if i purchase my products from a supplier in the UK(with whom i have no formal agreement) , and something i sell is defective, am i liable or is the company i purchased off or the manufactuer liable?

Thanks

mrawkward

Effectively all three, user comes after you, you go after wholesaler and wholesaler goes up the line to distributor/manufacturer. With so many dodgy/fake brand replacement parts coming out of China in particular, it is an area for real concern. If you are selling genuine aftermarket parts from a reputable producer, you are probably safe!

marineman

thanks..all my products are branded and are made to EU standards, and source from within the EU. if i was to get sued as a sole trader, can my house etc be taken, or what can be? I would prefer to set up as a company, but the costs and paperwork seem extreme!

mrawkward

Yes, just like any other sole trader, if you lose a court case all your assets are at risk if you do not have proper insurance cover. It would be normal that the manufacturer would be joined as a defendant as thery made the defective part. Just because they meet EU standards doe not mean they are EU companies, check!

ironclaw

marineman wrote: »

but the costs and paperwork seem extreme!

I used think this, but then we took the dive and really, its not that big an expense. All in, we spent less than 1000EUR to get it all set up. Granted, accounts at the end of the year will add to that and if you need more than basic accounting support, you'll pay more, but if you are not seeing turnover that covers these types of numbers, I'd re-evaluate why you are entering the market in the first place.

drunkmonkey

Do you need separate insurance to sell online, I've never heard of it?

mrawkward

drunkmonkey wrote: »

Do you need separate insurance to sell online, I've never heard of it?

Online or offline is the same in terms of possible liability.

scwazrh

marineman wrote: »

thanks..all my products are branded and are made to EU standards, and source from within the EU. if i was to get sued as a sole trader, can my house etc be taken, or what can be? I would prefer to set up as a company, but the costs and paperwork seem extreme!

I made the mistake of having my first business as a sole trader and when it went wrong it took me 3 years to pay off the losses .
You should definitely set up as a company .You can register a business for a few hundred euro and annual accounts for a small business shouldn't run more than 1k .