Sole trader or Ltd

[purleyite]

Hi,

Just wondering whats the main difference between sole trader and Ltd, and what is best for a one man band tiler?

Also does anyone know what type of insurance is needed for each type of company? for example if i was to break someones toilet or something?

Thanks.

[Sir Ramic]

Lot more paperwork with a LTD company so i believe. Most sole traders ie Tilers will not be LTD IMO .
Insurance you wil require public liability usually up to 2 Million which should cost around £75
Public Liability Insurance, Compare Cheap Public Liability Insurance Online.

[Diamond Pool Finishers]

hi if you go bust and you are a sole trader you can end up losing your house if you go bust and you are LTD you will only lose the company assets not yours personally

[Scott]

Sole trader for me, no advantage for a one man band being LTD as far as im aware. My accountant doesnt tell me to go LTD so there must be something in it!.

Also if your LTD i think you are then classed as a director as may also be lable for corporation tax on your end of year profit? I could be wrong but worth checking that out as you will have to pay tax on your earnings and then on your profits too, this is a much higher %

[pjc]

sole trader unless you earn big money or take big risks you need to net over 100g a year to make it worth it unless your single

[TF Ed]

i've just done my annual return today. £15 to fill in an online form and when you ring up for advice half of the staff at companies house dont want to know...i had to read through the entire memorandom of articles to answer a question on voting and dividend entitlements ....pain in the rear, as pj says, if you arnt takin any big risks it aint worth it imo...

[pjc]

i've just done my annual return today. £15 to fill in an online form and when you ring up for advice half of the staff at companies house dont want to know...i had to read through the entire memorandom of articles to answer a question on voting and dividend entitlements ....pain in the rear, as pj says, if you arnt takin any big risks it aint worth it imo...

i have to pay someone to do mine its all changed aint it this year lol

[TF Ed]

honestly pete, it was a nightmare and when you ring up, they dont want to know. it took 6 calls!! till some decent lad in there helped me out....as you said, it changed this year. i had last years return printed off so i could follow it step by step but that was rendered useless

oh well its done now, till they change it again!!

[purleyite]

Hi,

The guy in the third thread said about a sole trader if i was to go bust i could lose my house?? how does that work. Surely if i dont get any work, i dont get any money, but why would i lose my house.

another point,

I have just looked up a liability insurance quote and i had to give a "risk address", what does this mean??

Thanks.

[Scott]

What he means is, if you are a LTD company then the debts are on the company and not on the sole person. This is what happens when someone goes bust as a ltd company and starts up again straight away. Not the same if you are a sole trader as the risk is all yours, you can declare bankrupcy but your home is at risk if you cant keep up payments.

[albyshellshear]

What he means is, if you are a LTD company then the debts are on the company and not on the sole person. This is what happens when someone goes bust as a ltd company and starts up again straight away. Not the same if you are a sole trader as the risk is all yours, you can declare bankrupcy but your home is at risk if you cant keep up payments.

I think the law changed on ltd companies because so many were going bust as you say opening up the next week with no comebacks, I think now you need to have at least 1 director who is liable for the assets not 100% sure as I was classed as partnership with the wife.

[NewbieMike]

Well Basically,

A Ltd company has its own legal entity which means that it operates legally as a seperate identity from the director(s).

This means that if you risk lets say 20k on the business and after 1 year the business goes bust then it is the company identity which is classed as bankrupt and any fixed assets (Property, Vans etc.) belonging to the company will more than likey be taken.
Ltd is a vast process to set up and involves more paperwork including creating a memorandum of association which details exactly what duties can and cannot be carried out. which i would imagine would be required by a liability insurer and your quote may be based on the memorandum.

Sole Trader means you've a lot more le-way with your duties however if all goes tits up then its yourself that will be pursued, this could mean your fixed assets being seized.

And also, if you are a Ltd. Company then your profits would be subject to corporation tax not to mention that pretty much every bit of company money has to be accounted for.


Hope this clears this all up (i'm an accounting and business law student but totally hate it)