Registered a Ltd company for sole trader?

[lame plumber]

By being ltd you can pay dividends in order to help keep you below 40%. Stop scaremongering If you don't fully understand the benefits.

As I said, best thing is for the person to talk to an accountant not that they 100% should go ltd.

Your missing the point with the credit account, it wasn't about tje credit limit. I personally wouldn't have got credit. However the LTD is a separate legal 'person' an can get credit.

funny thing is I know an awful lot about it as having been the company secretary for business with multi (thats lots to you) million pound turnover ltd co. As the financial officer in charge of all aspects of the company I know the in and out of when you need to be ltd or not, so some who knows a little and shouts a lot shouldnt call others scaremongerers. If you read what I said, you dont get start up companies hitting the tax levels required to make it worthwhile going for ltd status esp if you are a bloke on your own. As far as getting credit, in my opinion, people who dont qualify for credit personally shouldnt be able to get it as a ltd co either, as the same people are running the accounts and it only leads to misery for all involved.

 

[MOSSEP]

Accountants strand to earn a lot from you becoming Ltd, so choose who gives you advice carefully.

 

[BLOD]

I work and pay tax as a sole trader, but have had my company name registered as limited for a few years mainly to stop anyone else using it - all this takes is a couple of easy online returns each year costing less than £30 to keep the name dormant
As far as I'm aware at present it becomes beneficial (tax wise) to trade as a ltd co when your taxable income is more than about 16000
As a ltd co You pay yourself the minimum wage on which you pay full rate income tax.
The rest are your wages is paid in dividends on which a reduced rate of tax is paid.

 

[Sag]

Start ups can very easily hit VAT and 40% personal tax thresholds.

And there is the financial protection of personal assets if your ltd.

I used to balance a £40m (that's many many multiples to you) account daily for a finance company so am well aware of what I'm talking about thanks.

 

[lame plumber]

oooooooooooooooooooh get her 🙂

dont forget the financial protection of ltd companies isnt what it used to be despite what some people think.

 

[Sag]

Lol, what a muppet.

 

[stratplus]

What effect does being a sole trader have on your home being at risk?

 

[Sag]

As a sole trader you are personally liable for ALL the financial implications of your company as your company is essentially you trading as xxxx plumbing & heating etc.

Taxes, fines, supplier accounts, salary to any staff etc. The only 'protection' would be your PL insurance which is not going to protect you from everything anyway (ltd or not).

So short answer, your home, car, savings and all assets are at risk when a sole trader.

 

[lame plumber]

as they are if your a director of a ltd company and haven't conducted your trading responsibly and with due care.

 

[Sag]

You don't have to run a business without due care and responsibly for it to fail. Just look at what the recession did to businesses across the UK.

 

[lame plumber]

You don't have to run a business without due care and responsibly for it to fail. Just look at what the recession did to businesses across the UK.

not an excuse in the eyes of the law though is it.

 

[Nostrum]

Lame, I do get the feeling you see things as having the 'if I'm not doing it, it's not right' type attitude in this thread.

Thousands of companies are incorporated every year and as many also go to the wall. Unless you've been completely irresponsible then you have no reason to worry although as already said, most lenders of credit will require a personal guarantee these days. Also, banks will lend money but expect the director to take liability of the repayments.

There are tax gains, and increased accountancy charges.

My business is not limited, but I hold the ltd name declared as dormant to protect it from being used by someone else. It may be that I go ltd this year as I am taking on some more ambitious projects, and would not want to risk my house etc but that doesn't make me irresponsible. Many business decisions carry risk otherwise everyone would be doing it already with nothing to loose. Banks etc recognise this, but obviously don't want all the risk dropped on their lap, hence the personal guarantees.

Someone mentioned choosing the name carefully, in reality it's not a major issue. You can be XYZ ltd trade as ABC plumbing if you like.

There has to be a logical reason for going limited though, simply wanting the 3 letters after your name is silly. You'll get no kudos for it, some tax benefit if you are earning enough, and some hassle from lenders and increased overheads. At the early stages I would concentrate more on your route to market, secure the trading name if you feel necessary and make the business profitable.

 

[lame plumber]

Not it the least mate, but I have seen a fair few people convert to ltd for all the wrong reasons and they sought advice some of the time.

the main reason is to attempt to protect your private assets and distance yourself from your trading company as well as getting a different set of tax liabilities to work with. As Ive tried to make clear, if your trading with a profit of around £40k, you could save some £2900 or so in tax if your ltd. But then you need to take into account the additional costs that youll incur running the ltd co and at this level theres probably no point in going ltd for tax purpouses. Also the ltd side has been watered down, and if your creditors believe youve been complicit in the failure of your co then you can be hounded by them still for monies owed. so defeats the point of being ltd somewhat. Finally none of my comments were aimed at you personally, I was responding more to another op, so back in the arms and buy me a pint 🙂

 

[Chalked]

Good profit and high turnover with risky clients..... Go ltd

average profit, average turnover and good credit control. Don't bother.

 

[Sag]

Also, there are tax benefit of getting 'key man' insurance which can act as a kind of life insurance policy. A good IFA can guide you on that too.

 

[lame plumber]

Also, there are tax benefit of getting 'key man' insurance which can act as a kind of life insurance policy. A good IFA can guide you on that too.

can tell your background, 🙂

 

[Sag]

Really, what's my background then?

 

[Nostrum]

You've only got to look at the way some companies are wound up or liquidated in very questionable ways to assume that proving foul play is harder than it would seem.

As a director you must act in a way that is of most benefit to the company. I would imagine that paying yourself an unsustainable wage intentionally, or selling assets to yourself at ridiculously low prices would account to some form of misconduct and could land you in the poo.

Generally though most directors run the business with all good intent and purpose. Whether they make the right business decisions is another matter but I think you would be hard pushed to be liable for a mistake or bad judgement action to put you in a position of personal liability. I'm sure this is why administrators are brought in for PLC's, to check the companies accounts up to that point and ensure the damage is somewhat reduced. After all, shareholders will want to be sure they haven't been shafted by the directors?

Your right though setting up a Ltd company should not be done without careful consideration and weighing put he pros and cons, of which there are both.

That said, in your example you've proven the financial gain to be had in being limited, even if the accountancy bill added £1500 you'd still be £1400 p/a better off, that's a whole 8hrs work for us gas engineers.

 

[lame plumber]

you got a cheap accountant there 🙂

 

[Nostrum]

Or maybe yours is expensive? :sultan:

For some reason I can only choose smileys from racial minorities on my ipad.. This is the only one that seems to work.