Going limited

[Dave Shaw]

 
Never say never with regards employing, frustrating it is though.
 
Commercial, I do prefer residential but if the right one came along...
 
What I would do in future is like yourself have zero hour contracts or at least some form of a few months trial period before putting guys on the books.
 
There are other reasons why I prefer to be ltd, non business ones...
 
It's no trouble at all, I have an account now, I never had one when I was a sole trader.
 
 
 
 

Sound. Hope I wasn’t being too intrusive, just trying to build a picture as for your reasons. Like you say, never say never[emoji106]


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Wish I was in your boat getting good lads is rocking horse around here as there’s just so many at it!


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I made that sound too easy didn’t I? Don’t forget that I’ve only one employee and he’s with me 90% of the time so I can keep an eye on him. Maybe if I was in your position on a grander scale sending lads out on their own things would be a lot harder.


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[Iron Giant]

https://www.telegraph.co.uk/business/becoming-self-employed/limited-company-benefits/ this article is almost 2 years old so things may have changed a bit and I am sure everyone's circumstances are different. But from this article I can see the benefits if you end up paying less to the taxman. 

 

[Dave Shaw]

https://www.telegraph.co.uk/business/becoming-self-employed/limited-company-benefits/ this article is almost 2 years old so things may have changed a bit and I am sure everyone's circumstances are different. But from this article I can see the benefits if you end up paying less to the taxman. 

Good article this and deffo food for thought. I read a similar one whilst researching the subject. I’m still sat on the fence on what to do tbh although I’d certainly benefit from the tax relief there are other ways that a sole trader can reduce a tax bill. One being get the misses a vehicle such as a pick up that can be used as a family car but can also be used for work so can be chucked through the books. Some say this is morally wrong as your cheating the system but I assure you that done correctly it s 100% legal.
One thing that puzzles me though is that everyone knows that hmrc doesn’t like losing money and if it’s so easy to potentially save thousands on you tax bill just by going ltd there must be some sort of catch somewhere along the line?


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[Part Timer]

Good article this and deffo food for thought. I read a similar one whilst researching the subject. I’m still sat on the fence on what to do tbh although I’d certainly benefit from the tax relief there are other ways that a sole trader can reduce a tax bill. One being get the misses a vehicle such as a pick up that can be used as a family car but can also be used for work so can be chucked through the books. Some say this is morally wrong as your cheating the system but I assure you that done correctly it s 100% legal.
One thing that puzzles me though is that everyone knows that hmrc doesn’t like losing money and if it’s so easy to potentially save thousands on you tax bill just by going ltd there must be some sort of catch somewhere along the line?


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Firstly the article is sponsored by an Accountant and Accountants charge a lot more for Limited Companies compared to sole traders. Secondly the below is a passage I've cut and pasted out of it and this part shouldn't be overlooked.

"There's also more responsibility and paperwork to consider but much of this can be outsourced to an accountancy firm that specialises in supporting limited companies. By plugging into this expertise, you can focus on the success of your business."

This costs you time and money, been there, done that. What they don't tell you is that for the first year you're supposed to live on your £120 a week. If you take dividends during the trading year, and get inspected, HMRC can class this as tax avoidance and reclassify it as wages, so you then have NI etc to pay back. As I always say, speak to an Accountant, but one glove doesn't fit all.  

 

[Iron Giant]

Firstly the article is sponsored by an Accountant and Accountants charge a lot more for Limited Companies compared to sole traders. Secondly the below is a passage I've cut and pasted out of it and this part shouldn't be overlooked.
 
"There's also more responsibility and paperwork to consider but much of this can be outsourced to an accountancy firm that specialises in supporting limited companies. By plugging into this expertise, you can focus on the success of your business."
 
This costs you time and money, been there, done that. What they don't tell you is that for the first year you're supposed to live on your £120 a week. If you take dividends during the trading year, and get inspected, HMRC can class this as tax avoidance and reclassify it as wages, so you then have NI etc to pay back. As I always say, speak to an Accountant, but one glove doesn't fit all.  

Maybe that's why my accountant has recommended it after 18+ years of trading their's is no way I could manage on a £120 a week.

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[Dave Shaw]

Firstly the article is sponsored by an Accountant and Accountants charge a lot more for Limited Companies compared to sole traders. Secondly the below is a passage I've cut and pasted out of it and this part shouldn't be overlooked.
 
"There's also more responsibility and paperwork to consider but much of this can be outsourced to an accountancy firm that specialises in supporting limited companies. By plugging into this expertise, you can focus on the success of your business."
 
This costs you time and money, been there, done that. What they don't tell you is that for the first year you're supposed to live on your £120 a week. If you take dividends during the trading year, and get inspected, HMRC can class this as tax avoidance and reclassify it as wages, so you then have NI etc to pay back. As I always say, speak to an Accountant, but one glove doesn't fit all.  

So there is a catch. From doing a bit of research I’ve kind of come to the conclusion that it’s more aimed at the bigger company’s. Tbh I think it’s just another way for the government to keep tabs on everything you do.


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[Part Timer]

Maybe that's why my accountant has recommended it after 18+ years of trading their's is no way I could manage on a £120 a week.

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These rules might have changed, my Accountants advice was from 9 years ago.

 

[Iron Giant]

Now someone correct it me if I am wrong the reason their is no mad dash for everyone to go Ltd is if you have mortgage.

So for example if you go Ltd and pay yourself a minimum wage and have to use that wage as proof of earnings to obtain a new mortgage or new deal, then the mortgage lender isn't likely to look too favourable if you're on minimum wage.

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[Part Timer]

Now someone correct it me if I am wrong the reason their is no mad dash for everyone to go Ltd is if you have mortgage.

So for example if you go Ltd and pay yourself a minimum wage and have to use that wage as proof of earnings to obtain a new mortgage or new deal, then the mortgage lender isn't likely to look too favourable if you're on minimum wage.

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They ask you for your annual income, which after year 2 will include dividends, if anything as you're "employed" it would in all likely be slightly easier. 

 

[Teaboy]

Firstly the article is sponsored by an Accountant and Accountants charge a lot more for Limited Companies compared to sole traders. Secondly the below is a passage I've cut and pasted out of it and this part shouldn't be overlooked.
 
"There's also more responsibility and paperwork to consider but much of this can be outsourced to an accountancy firm that specialises in supporting limited companies. By plugging into this expertise, you can focus on the success of your business."
 
This costs you time and money, been there, done that. What they don't tell you is that for the first year you're supposed to live on your £120 a week. If you take dividends during the trading year, and get inspected, HMRC can class this as tax avoidance and reclassify it as wages, so you then have NI etc to pay back. As I always say, speak to an Accountant, but one glove doesn't fit all.  

When you move to Ltd and transfer goodwill use this to pay yourself along with any other asset values transferes into business


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Now someone correct it me if I am wrong the reason their is no mad dash for everyone to go Ltd is if you have mortgage.

So for example if you go Ltd and pay yourself a minimum wage and have to use that wage as proof of earnings to obtain a new mortgage or new deal, then the mortgage lender isn't likely to look too favourable if you're on minimum wage.

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Neither here nor there if your the sole employee


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[adamangler]

Where's £120 a week come from?

As for mortgage it matters not whether you take a salary plus dividends as a ltd or declare a sole trader profit. Its the same personal income. 

 

[PureShine]

Im not sure exactly about this but i always though if registered as a ltd company then you as the person can be employed by the company, whereas a sole trader is classed as self-employed rather than employed. Which would make some difference when going for a mortgage id have thought?

 

[Part Timer]

Im not sure exactly about this but i always though if registered as a ltd company then you as the person can be employed by the company, whereas a sole trader is classed as self-employed rather than employed. Which would make some difference when going for a mortgage id have thought?

Yes if you've been employed in your Ltd Company for more than 2 years, longer is far better. I believe you are asked how long you have been at your current job when making an application. 

 

[Iron Giant]

Spoke to my accountant yesterday and as some tax rules have changed as of this tax year he said it ain't worth going ltd and in terms of tax liability it's 6 and 2/3's plus factor in payroll etc he said as a sole trader I should just stay as I am. Of course, everyone's own circumstances are different so what might work for one won't work another. 

 

[Dane]

I’ve spoke to mine yesterday funnily enough and he’s told me to stay as I am (that’s me personally, I’m not knocking limited companies on here) - we all are at different levels and it was good to get peoples feedback. Thanks


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[Part Timer]

Spoke to my accountant yesterday and as some tax rules have changed as of this tax year he said it ain't worth going ltd and in terms of tax liability it's 6 and 2/3's plus factor in payroll etc he said as a sole trader I should just stay as I am. Of course, everyone's own circumstances are different so what might work for one won't work another. 

When I set a Limited Company up, 10 years ago and not window-cleaning related, I had my Wife as a shareholder. This meant any dividends were tax free, as long as we kept below the 40% threshold. This doesn't apply now and if I was setting up again, with the current tax rules, I wouldn't. 

One thing you need to consider, hopefully won't apply, if you separate from your Wife, she owns half the business. 

 

[Iron Giant]

After 18 years of marriage I am the only one who will put up with her ?, Everyone who knows us both says I deserve a medal ??

County Durham Lad

 

[Part Timer]

After 18 years of marriage I am the only one who will put up with her ?, Everyone who knows us both says I deserve a medal ??

County Durham Lad
 

Not aimed at you in general, just info for anyone thinking of doing it. I know it's not a nice thing to mention but something people need to consider.