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Dane

Going limited



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Part Timer
1 minute ago, Iron Giant said:

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. 

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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.

Sent using the Window Cleaning Forums mobile app



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. 

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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?

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Part Timer
13 minutes ago, PureShine said:

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. 

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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. 

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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
1 hour ago, Iron Giant said:

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. 

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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

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Part Timer
8 minutes ago, Iron Giant said:

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. 

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