Self employed at risk of losing home?

(8 Posts)
Want2BSelfemployed Sun 26-Jan-14 11:39:00

I read somewhere that going Self employed you are at more risk of losing your home and that is why Limited company is better?

Is this true?

Does insurance cover risk of being sued though?

Dromedary Sun 26-Jan-14 18:52:23

If you set up a business as a sole proprietor you are responsible for everything. If you do a bad job and are sued for the loss your customer thereby suffers then, unless you have insurance that covers it, you have to pay out of your own money, and if you don't have the money upfront this might mean having to sell your home?
If you're seriously thinking of setting up a business, you need to look into all this stuff properly - I would get hold of a book and read professional guidance online (not just on Mumsnet obviously), and then if appropriate get some professional advice.

Want2BSelfemployed Sun 26-Jan-14 23:43:55

thanks Drime. I am going on a GOV course in weeks time but am impatient as a long wait! Any books you an recommend on starting up own buisness?

Want2BSelfemployed Sun 26-Jan-14 23:44:31

sorry Drome

Numbers123 Mon 27-Jan-14 12:46:58

Please make sure you realise that the limited company route is very expensive in terms of accountancy fees and rightly so as there is a lot of work involved in running even the smallest of companies...

Dromedary is correct...for most small businesses though, adequate insurance should cover most risks of being sued...remember you can always start off as a sole trader, see how it goes and then convert to limited company if you believe it is the correct structure for you...

Geoff0409 Thu 06-Feb-14 19:27:18

Hi, hope I can help here.
Yes you are right, being self employed as a sole trader does mean that everything is tied together money-wise. Eg, your business monies, personal monies, mortgage, debts etc are all classed together - if you are sued you could lose the lot. With a limited company your personal monies, house etc are treated entirely seperately so if you were sued only assetts (business monies, equpiment etc), are liable. However with a limited company you have to have your accounts audited by a proper accountant, and pay wages as you are an employee, declare dividends from profit etc, whereas if you are a sole trader you can keep it simpler and do it yourself. I would say it would depend on what your business is - if you are selling goods, have a business premises, do expensive work like plumbing, electric work etc or are a consultant for advice etc it might be best to be a limited company, then if you end in in debt to anyone or give bad advice only your business is liable. However if you are a builder, gardener, cleaner etc - anything that means you won't owe much money to anyone, then sole trader might be best. Hope I have explaine it ok.

Geoff0409 Thu 06-Feb-14 19:29:30

Sorry, end should say "explained" and as long as you've got the right insurance that will help immensely. Good luck.

Want2BSelfemployed Sun 09-Feb-14 22:12:34

thanks Geoff that has really helped me know what position I need to be.

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