Ltd or not

[aph257]

I weighing up starting business and to which way to go self employed. Limited Company or Sole trader? your comments please.
Thanks

[mikethetile]

if its just you working direct as a contractor then its sole trader and your self employed
if your subbing off others its self employed

later on you can become limited, you are then employed by your company

there are a lot of rules with ltd companies and it can be expensive. the best way to decide is to work back from retirement.
do you want to work for yourself and retire , retiiring the business or do you want to build something you can sell on and that will stand alone and go on after your retirement, if you do decide the latter its best to give yourself a company name rather than trade under your own

a lot of businesses on here could be sold as going concerns, wether they are limited or not as the owners have chosen names for their businesses

[mikethetile]

ive just realised the above reply doesnt really answer your question

if its just you, van, tools and marketing then its sole trader

the tax rules are a lot easier and you dont need to get audited and registered at companies house
ltd companies are more for those that have heavy borrowings for their business and being limited limits their liability, if things go belly up their business takes the hit not them personally

but think about your trading name as it makes your business more saleable if the good name and market awareness that has built up over the years can be carried on by a change of management
using your own name limits this as the buyer is only buying tools and a customer list and will then have to remarket as a new business

[aph257]

Thanks for advise, it confirms what i thought, i needed some second opinions.

[Colour Republic]

to start off with I would suggest you go self employed it's a hell of a lot easier on the accounting

But if you wanted you can also set up a limited company (cost you about £30) and then instantly make the company dormant by not trading, meaning you don't have to submit full accounts as it's not trading but what it does do is protect the name so you can start trading under it at a later date.

[TF Ed]

agree with colour rep.....

i set up a astontilingltd 2 years ago so that when the time is right , its ready to go..you also have to be careful not to use ltd on any of your advertising etc!!
it cost around the amount cr mentioned. its dormant but i do have to fill in a annual return and dormant accounts form. i think the return is due again in april and there was a fee of around £14....its all a bit of a faff but as cr mentioned, it protects the name and its there when you need it....

go as a sole trader for a few years and then consider the jump..
all the best
ed

[Richard Edwards]

I would not go Sole Trader - There are still good tax advantages by being Ltd. You do not need to be audited by accountant a small company - Companies Act 2006 refers. I do not pay PAYE / NI as a director. I went Ltd in 2003 and I do all my our accounts right up and including balance sheet - literally everything in house, yes its takes time, but lets be honest we are not working every day in this business, so take those quieter days to keep up with your paperwork. That said, to do this level of accounts, you need to be fairly good with office / paperwork and figures, its not for everyone.

It a decision driven by you. Mikethetile is right, that if you want to build up your business, go for a proper Name and if you want to sell it in the future you can. The only thing to remember is that to sell a going concern, you'll need to be in a position to step back and through the Companies employees, the business must still be able to function. In other words, if your a Ltd Co , one employee ie you, then this won't sell for much, if you have 10 staff and turnover of £1m then it will.

Hope this helps and has not confused you too much.

[grumpygrouter]

Just to add my bit to what has been said previously, it is probably more appropriate for you to operate as a sole trader unless you have very specific requirements for going limited. Being limited has much less protection now a days than it use to as any finance the company may require will be secured against the directors of the company... you! The accounting requirements are not really any more involved than a sole trader business except that you must file accounts annually at companies house (in accordance with the layouts detailed in the Companies Act), file a corporation tax return and also an annual return. As a director you will also need to file a Self assessment Tax Return.

As a sole trader you are required by law to keep "adequate books and records" sufficiently detailed so that HMRC can assess any tax liability reasonably accurately, so not much different to being self employed on the daily book keeping side!

[whitebeam]

Post was moved

[aph257]

Thanks guys

[Daz]

I had a similar conversation with my account recently. His general advice was that it is not worth considering a limited company until the profits exceed £25k per annum. Anything more than £25k offers financial benefits.

This advice was based on one man with one van. Your circumstances may differ.

[aph257]

Thanks everyone for your advise and comments. i'll be registering my company soon, but going as Sole trader for the time being.

[TF Ed]

for what its worth aph257, i think you have made a sensible decision mate..
hope everything works out well for you, keep us all informed..
ed.........

[mikethetile]

i agree with aston

concentrate on building a good customer base, it takes time to get known and get a continuation of work, some are lucky and fall in with another tiler who will sub work out to you while you build up your own customer base

in the early years tax can be very straight forward and as you grow the business you can make descisions as to what suits you best

good luck mate, you wont regret it

[united]

Found this information and thought it might be worth a read for the future

[B]Sole trader to Limited Company[/B]

Many businesses are incorporated for tax saving reasons or to protect the shareholders wealth, but the directors are often not told what they need to do next. Here are a few basics.

You will need to tell the following about your new company:

Bank

Your bank will need to be told so that they can accept cheques made payable to the company, but also so that overdrafts and other arrangements are officially changed into the company name. You may find that if you have an overdraft you will be asked to sign a personal guarantee. This will mean that you have to personally pay back the bank overdraft, if you ceased trading for any reason.

Customers and suppliers

You should make sure that both the people that you sell to and buy from are aware that you have change the business’ status. This will ensure that your customers pay the right business and that your suppliers chase the company rather than you for payment. Some suppliers may ask you to complete a new credit application form and may change their terms.

PAYE & VAT

HM Revenue and Customs needs to be informed of your change from a sole trader to a limited company. This involves transferring the existing registrations to the limited company or cancelling them and setting up new registrations depending upon your circumstances. You will also need to cancel the Class 2 National Insurance Stamp. In addition, you will need register the company for Corporation Tax.

Correspondence

You will need to show the company name, registered office and company number on all correspondence that you send out on behalf of the company. This includes letters, emails, orders, faxes and invoices. You can also choose to include details of the directors and company secretary, if you wish, and your trading address if it is different from the registered office.

It is important that you make everyone that you deal with aware of the changes, so that there can be no disputes at a later date. After all, there is no point in having a limited company, if at a later date you find you are personally liable for an obligation.