Any accountants about??? re, Ltd companies

[myermay]

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?? Surely if he is at the limit he would have to charge in the limited company anyway?
I would charge about £3-500 to set up company and register for VAT/PAYE etc.
Does the £100 per month include year end accounts and tax? If so that sounds reasonable.

oh - limited company won't be more work really.
ALSO is he is at the VAT threshold he is presumably paying higher rate tax, with a company you can (at the moment - but this is likely to change soon) split the shares between you, take a nominal salary (£5,000pa) which is below the personal allowance - so isn't taxed, and take the rest as dividends - which attract no further tax until you become higher rate.
Of course the company is taxed, but depending on the figures there can be an overall benefit.

you can set up a limited company yourself on the web - £40 i think. i had one and my acc charged £200 a year to audit and send off everything needed for tax. there was no monthly fee as i did all my own returns and invoicing. you shouldnt really be paying for that. i employed my ex as secretary and she saved me on expenses.

Myer -squirrels is right. Setting up a ltd company is one thing but if you're at the VAT limit you've got to charge anyway.

I am no expert but i think you will find the VAT registration limit applies whether you are a limited company or self employed - as it is a turnover test and nothing else. If your turnover exceeds (or looks like it is going to exceed) £64k in a 12 month period then you should be registered for VAT. See here.

I don't think there is anything fancy you can do about the VAT by becoming a ltd company - my understanding is that incorporation is more to do with income tax and NICs and way over my head!

If you do incorporate then you have extra paperwork for:

1. company administration work - annual returns, accounts etc.
2. payroll - the director is an employee of the company
3. keeping personal and company finances separate and accounting for money moving in and out of the business.

myer if you follow squirrels advice re splitting the shares , speak to your accountant first- there has been a lot of attention to this kind of arrangement and a change in practice lately from the taxman on this type of thing and therefore it can mean that you can end up with queries into your tax affairs.

When we ran our own business our accountant told us there was less work for him to do if we went limited.
You will need to register for VAT whether self employed or Limited as soon as your company reaches the VAT limit.
£100 extra a month seems excessive as your turnover can't be that much,or you would already be registered for VAT. (mind you I did my own day to day etc. accounts using SAGE and only had a yearly bill of £400 to £600). The only thing my accountant did on a regular basis was the monthly salaries for our staff at £18 per month.
Having to do the VAT was helpful as I made sure my accounts were kept in an up to date condition so that I only had to press the VAT button once a quarter and all the paperwork was done.

oh definitly take advise - as I said it may change soon, and is certainly being looked at. Depending on the set up there is nothing they can do - but a recent case cost the tax payer (and the HMR&C - ie US!) ALOT of money in legal fees.
BUT even if you don't income split there can still be tax savings.

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Oh I think I see what you mean.

So he would still be self employed for the stuff he does currently, but would also be employed by his own limited company which would deal with materials.

Yes, I can see why he has the choice now. Would the company part definitely remain low enough turnover (turnover, NOT profit) to be below the VAT threshold?

I would be concerned that this breaches the "artificial separation of business entities" legislation. Ask your accountant to confirm that you would not be breaching it part 13.