How long sole trader before Limited

[TPES]

Sole trader at the moment.

How long where you a sole trader before you went for limited co status and how has it effected you? What are the positives and negatives of being limited?

I know I can ask my accountant but I was looking for a more personal opinion from you who have made this step

 

[PAT ukLtd]

Hi, Don't know a great deal about it. But am in process in starting up a small business myself with help from a company called 'Orchid Blue' and have decided to start up as a Ltd Company after speaking to them for several reasons.

If the worst ever happens you are only personally liable for £1 if anything went major wrong, i.e it protects your house, car etc.
Also if your company is doing well you can just pay yourself a regular small wage to keep you going but then every now and then pay yourself a 'Dividend' (only if the company is making a profit) and you pay less tax on Dividends than you do on normal wage and no N.I is payable on it. There is an on-line firm who do all the legal work for you, think cost me £49 in total.

 

[Deleted member 26818]

Most of my work is through Agencies, so to avoid the payment fees I went Ltd. Co. I found it more hassle than it was worth.
You still have to do your Self Assessment, but also Corporation Tax return, Company Tax, annual accounts for Companies House, monthly CIS returns and 3 monthly PAYE returns. Any CIS or PAYE owed has to be paid every 3 months. You also have to have a business Bank Account and the companies house annual returns costs either £10 or £15(can't remember) to submit.

 

[SirKit Breaker]

I am a Sole Trader, i have looked into becoming a Ltd Company, but is not for me. But i will dispel one myth. If a Ltd company goes down as stated above the only assets and debts taken into account are those associated with the business name, WRONG. You have to prove to the insolvency agency that you did all you could to prevent the company going under and account for where all the money has gone. if you have been lording it up on the company accounts, buying nice big cars and all the other toys associated with it without showing that you have the means to support it, then you will have been deemed to have been wreckless or whatever it is called in legal jargon. Then the company assets will go, if they dont raise enough to cover the debts etc, and the receiver decides that you have been wreckless, then your creditors will be able to go after you personally, AND THEY WILL. The days of an easy ride for anyone, business or personal going bankrupt are long gone, so be warned. Just because you are a Ltd Company, doesnt make you immune from your company debts.

Cheers..........Howard

PS I Know an Insolvency Practitioner.

 

[bugsy]

It's ok staying a sole trader unless you start taking on large contracts , as a sole trader you can be taken to court and made bankrupt ( you loose the lot!)
As a limited company your not personally liable and only the companies assets are at stake unless you sign personal guarantee's

 

[tonys]

Have a read of this thread http://www.electriciansforums.net/business-related/27664-self-employment-issues.html

 

[tonys]

As a limited company your not personally liable and only the companies assets are at stake unless you sign personal guarantee's

Exactly how it happens it the real world, does anybody know of ****e being extracted from a rocking horse?

 

[IQ Electrical]

It's ok staying a sole trader unless you start taking on large contracts , as a sole trader you can be taken to court and made bankrupt ( you loose the lot!)
As a limited company your not personally liable and only the companies assets are at stake unless you sign personal guarantee's

Exactly right and for a new (less than 2 years trading) limited company, you'll find it very hard to get good credit without personal guarantees so you're back almost to sole trader risk again.

And that's the problem, your turnover is rising and your exposure is increasing every month so you go limited and have to personally guarantee the overdraft etc.

Think very carefully before you decide to go limited.

 

[LukeD]

sole trader all the time. Dont get up to your neck in finance,work or debt. keep it simple and enjoy life.

 

[jaresquire]

A company I sometimes sub for traded for many years in the bosses name as a sole trader. This was despite being worth several millions, he kept the LTD version of his name dormant to protect it.
One advantage of this is that the accounts are private of course.

 

[accordfire]

Sole trader at the moment.

How long where you a sole trader before you went for limited co status and how has it effected you? What are the positives and negatives of being limited?

I know I can ask my accountant but I was looking for a more personal opinion from you who have made this step

It isn't really a do one then the other kind of matter mate.

Your circumstances, and what you want to achieve have more to do with it than any other aspect.

There are clear pros and cons to both ways of doing things, but neither is ultimately "better" than the other for any external reason.

If you are sole trader now, and happy that way, happy (with your accountant's advice) that you're not paying any more in tax than you need to be, have good trading history, credit and so forth, why change?

There would be no clear gain in establishing a limited company.

Further, despite popular myth, you're not really any better protected as a limited company if it all goes nuts up. Most limited liability businesses (Ltd companies) are only marginally less "limited" than sole traderships or partnerships these days anyway. If you borrow to establish a limited company, you can almost guarantee the lender will take a personal charge too - either on your house, or other assets, or by form of something called a personal guarantee - a written agreement signed by you agreeing to cover the debt if the business folds. It makes little odds then, if you have only issued £1 of shares.

Limited companies have different tax rules which *may* provide you tax advantages of your earnings are significant, and you are paying loads in income tax. Again, this comes down to your own situation, and your accountant is best placed to advise.

For us, there was no real question - the kind of customer base we wanted, the way in which we wanted to operate, and so forth, all made the choice that we would be a limited company, though I have also run sole trader businesses in the past. Neither method was more or less of a hassle than the other - it really does come down to the demands of your business and your personal circumstances.

Certainly, I think being a limited company results in more paperwork - or certainly more requirements to tell others what and how you are doing - there's more in the way of filing accounts, and so on.

In this case, really, it is a matter for going to your accountant and asking him to inform you of which format would be better for you.