cost of going Ltd?

[Wolfie]

Been thinking of going limit for a while so i'll be talking to an accountant in the next few weeks.

 

Apart from the increased accountancy fees and possible Corporation tax, does going Ltd increase any other overheads?

Insurance companies always ask if your Ltd or sole trader so has anyone noticed a change in premiums after switching?

 

Thanks

Ed

[skyhuck]

Corporation tax is not an increased overhead, you will find you pay less than you did as a sole trader, so it will actually be a saving.

[Johnsond]

Hi

No doubt it seems a bit daunting at first (Well it did for me anyway ) but once you have you head around it things start to make sense, The probability is your wage you will pay yourself will be less than what you earn now but factor in the other elements of running as a ltd company and all of a sudden it starts to make sense. Mind you as is always the case the HMRC are looking to squeeze people with a graduated scale of taxation on dividends coming in this year. The best thing you can do is get a good local accountant whom you can sit down and talk plain English to, Avoid these firms promising to do it all for you including taking off your tax etc at source for them to manage and pay as required.

End of day put your 20% away on any earnings and you cant go far wrong. It will keep you honest/sensible with money far better than the old sole trader self employed game will ( Again it did for me ).

Hope it goes ok

[Stephen Blair]

I can only go on my experience, it was a pita! I was doing it simply to try and reduce my tax bill, no other reason due to the chancellor changing the tax offset on machinery for 2012-21013 I think it was .

All it did was give me no access to my funds unless I wanted to pay 40%, a huge NI bill every month compared to about £12 sole trader, it gave my suppliers an element of doubt when giving me credit on materials and borrowing was starting from scratch with no books!

I ditched it after 6 months due to an end of a contract, it didn't save me any tax and just cost me a lot of accounting fees and a delayed tax bill!

[Johnsond]

I can only go on my experience, it was a pita! I was doing it simply to try and reduce my tax bill, no other reason due to the chancellor changing the tax offset on machinery for 2012-21013 I think it was .

All it did was give me no access to my funds unless I wanted to pay 40%, a huge NI bill every month compared to about £12 sole trader, it gave my suppliers an element of doubt when giving me credit on materials and borrowing was starting from scratch with no books!

I ditched it after 6 months due to an end of a contract, it didn't save me any tax and just cost me a lot of accounting fees and a delayed tax bill!

 

Yeah undoubtedly its not for everyone and yes if your trying to pull substantial amounts of money out from the company then the tax liabilities will add up as they will as a sole trader once you go above the 40% earnings ceiling.

Initially it was hard going but in the long term especially if your purchasing eqpt regularly or you want to put funds away pensions etc then there is ways and means to get the most out of it. To be honest its such an individual choice type of thing only you with the advice of a good accountant can make the call as to which is best for you.

My decision was made after a nightmare 13 month tax investigation by HMRC caused by listening to bad advice (And naivety )from my then accountant this was years ago on the old 714 scheme.

[Steve Bullman]

I can only go on my experience, it was a pita! I was doing it simply to try and reduce my tax bill, no other reason due to the chancellor changing the tax offset on machinery for 2012-21013 I think it was .

All it did was give me no access to my funds unless I wanted to pay 40%, a huge NI bill every month compared to about £12 sole trader, it gave my suppliers an element of doubt when giving me credit on materials and borrowing was starting from scratch with no books!

I ditched it after 6 months due to an end of a contract, it didn't save me any tax and just cost me a lot of accounting fees and a delayed tax bill!

You pay more than £12 a month as a sole trader. Thats just the monthly charge. You pay another whack along with your income tax. I forget how it works as my accountant takes care of all that, but I think the monthly charge is class 1 deductions then you pay the class 2 deductions seperately, or something like that. I don't know, thats why i have an accountant

 

Thinking about going Ltd myself, seems such a lot of work though and to make it worse my accounts and general business set up are all over the place. Perhaps I need something like this to help me get organised though?

[skyhuck]

I can only go on my experience, it was a pita! I was doing it simply to try and reduce my tax bill, no other reason due to the chancellor changing the tax offset on machinery for 2012-21013 I think it was .

All it did was give me no access to my funds unless I wanted to pay 40%, a huge NI bill every month compared to about £12 sole trader, it gave my suppliers an element of doubt when giving me credit on materials and borrowing was starting from scratch with no books!

I ditched it after 6 months due to an end of a contract, it didn't save me any tax and just cost me a lot of accounting fees and a delayed tax bill!

 

I think you had pants accountant mate.

 

My wife and I pay no NI monthly, we are both on the lowest salary you can that still gives you advantages of employment, the rest we take as dividends.

[Johnsond]

I think you had pants accountant mate.

 

My wife and I pay no NI monthly, we are both on the lowest salary you can that still gives you advantages of employment, the rest we take as dividends.

 

There are so many variables but if your Mrs is at home with the kids etc and can do your company admin and take a wage then the above post pretty much sums it up, Look into pensions, company transport especially commercial ie pick ups plus purchase of eqpt. The numbers start to add up if you work the system correctly. Correctly doesn't mean wrongly or illegally I remember my accountant telling me you can do this that and the other and sitting there thinking is this legal??. As a sole trader there are few advantages like those mentioned above. Regarding credit ratings I found that after the first years books were in and tax paid people were fairly ok in regards to dealing with you.

[Johnsond]

You pay more than £12 a month as a sole trader. Thats just the monthly charge. You pay another whack along with your income tax. I forget how it works as my accountant takes care of all that, but I think the monthly charge is class 1 deductions then you pay the class 2 deductions seperately, or something like that. I don't know, thats why i have an accountant

 

Thinking about going Ltd myself, seems such a lot of work though and to make it worse my accounts and general business set up are all over the place. Perhaps I need something like this to help me get organised though?

 

Hi Steve

As I said on an earlier post on this thread it does seem like its a pain but once the initial bollocks are out the way the advantages in my opinion outweigh everything else. Most men hate the paperwork side of things I know id rather go outside and swing a splitting axe for the afternoon than sit down and do my books. We've all been there as a sole trader surrounded by 12 months worth of paper scattered all over the place trying to make sense of it. Me after every time I promised id be more organised next time which never happened. My books are done every 3 months now for VAT purposes which is far less hassle than 12 months worth. Sole trader taxation give very little back in my experience as for NI contributions its worth noting that paying the lowest class you can get away with at the time will not tick all of HMRC,s boxes at the end of the year. There are a lot of variables but I think if your up and on your feet with a mortgage and mrs/kids there is a lot to be said for it.

[Stephen Blair]

I think you had pants accountant mate.

 

My wife and I pay no NI monthly, we are both on the lowest salary you can that still gives you advantages of employment, the rest we take as dividends.

 

I was taking the maximum I could take as was my wife, that's why we paid a lot of NI but it was about 13% I think.

I just wanted my cake and to eat it and I thought you could by going ltd, but you can't:laugh1:

 

Steve I've never known anything about the other NI:confused1: