Are you a Limited Company or sole trader? Why?

[nrv0us]

Pretty much what the header says, really.

I just set up a limited company. My ex-husband, who is an accountant and a darling man, has agreed to do my accounts.

A sole trader has unlimited liability so that any debts that the business accumulates can be settled out of the personal assets of the trader ie house, savings etc.

A limited company has limited liability so that any debts that the business accumulates can only be settled out of the company's assets. therefore the liability of the owner of the company is only limited to what he/she has put into the company.

I believe many set up a limited company so they pay themselves a salary at the minimum wage and pay themselves dividends aswell to reduce tax/national insurance liability

I'm a sole trader because that's how people tend to operate in the business I work in and anything else would probably be viewed with suspicion! Found a calculator here about the savings to be made - based on the costs of accountancy, filing etc I think you'd need to be looking at a saving of at least £1250 a year to make it worth it.

Sole Trader but will go ltd when the company grows as my t/o is less than £50k but when the children are older and I can devote more time I will go ltd.

I'm thinking along similar lines -- I'm guessing my annual income will be under £40K, at least in the beginning, so my understanding is that it doesn't really make sense to go Ltd. I know the accounting requirements are more onerous for Ltd than for sole, but are there advantages to Ltd that I'll be missing out on?

We are ltd.

I do all the day to day accounting- if you're a small co. its not too onerous.

I log and pay expenses, and maintain a incomings/outgoings spreadsheet. The spreadsheet goes to an accountant once a year to prepare annual accounts for hmrc.

The Hmrc payroll software is easy enough so I plug in the numbers once a month.

ni/PAYE and payroll goes by dd so all automatically.

Then just yearly submission to companies house and p60's etc which are all done by the hmrc software.

I actually find it easier than sole trader as everything comes into and goes out of one bank account so harder for stuff to get forgotten or mislaid...

Hi nrv0us, seems to entirely depend on what you want to do. I will be going part-time self employed shortly hopefully and will either stay as that or be a partnership with my Wife. Simply because turnover is likely to be small and we won't be taking any risks. I have one friend who has a limited company (he owns a large lorry and contracted the work when his old boss sold up and moved to Australia), does the same, a wage, a dividend and the lts company also employs his wife. It is a good idea if you wan't to keep things separate. On the other hand another good friend of mine it caused him a lot of hassle and expense and he is now self employed. Both my Dad and brother are also self employed also.

If you look about online there are some calculators that can show you what savings you can make being either or. Consider any accountancy fees and the time it takes to do the paperwork also.

Plus the ltd company was an absolute bugger to wind up

Ltd.

And I do my own accounts, including corporation tax returns etc.

Not an accountant but am very numerate.

DH has a limited company for his self-employed work. I do the admin (invoicing, expenses, PAYE stuff, record-keeping, book-keeping, annual returns etc) and some other self-employed work. DH and I are both shareholders - he is the director and I am the company secretary. The advantage is that corporation tax (on the profits of the company) is 20% and DH earns well into the 40% bracket. I am paid by the company under PAYE as is he and there are also dividends. We never go into higher rate tax as the income is split and the profits of the company aren't taxed at a higher rate. We save about £6000 or more a year. We also avoid the rubbish thing whereby you not only have to pay this year's tax but some on account for next year as corporation tax doesn't work like that. But there is an administrative burden so I don't think it's worth doing if you are earning under £40,000.

OP, this sets out the differences between sole trader, partner and limited company.

www.gov.uk/business-legal-structures/overview