sole trader to limited

[simpson93]

hi guys at the moment im a sole trader doin abit of subbing to get experiance up
thinking of maybe goin limited in the future just wondering if some of you could shed abit of light for me.

is limited better then sole trader, benefits for each?
how do you set up a limited company? are there any requirements?

thanks

 

[brucelee]

Hi mate speak to accountant or there are loads of internet firms that do it for you

you have to register your company with companies house its about £30 give or take

you will be the M.D. as well as a employee you can pay yourself a set weekly wage say and pay usual paye tax on that and class 1 NI also as your the M.D. when the company is in profit and the tax on its been paid i think you can pay yourself a dividend and i think 8% tax not deffo what percentage tax so dont take that as gospel what tax you pay and also i think you will pay extra NI on the profit

someone such as bill has good business knowledge i am like you mate only been looking into the differences
you can go on business link and they show you the differences positive and negative

if your employing people i think you will then need employers liability as well as public liability same as sole trader and professional indemnity insurance

and if you have employees you have to operate a paye system
your the boss and the employee lol even the tea maker but it sound good Managing Director
think if your ltd you have to have a chartered accountant but not deffo mate
there have been other similar posts on here use the search bar also business link and i think accountant will give hal hour free if they think they getting your business same with bank and you may also have to get a business bank account but again not deffo


when the company is in profit you pay tax on that and everything you spend on the business is a business expense but doesnt mean you will get 100% back what you paid they have different allowances on what can be claimed and what percentage

 

[brucelee]

oh and if the company sends you on further courses thats a business expense and you claim for it
books etc megger but it all belongs to the company not you

 

[MarkieSparkie]

Hope this helps, simpson:

Setting up a limited company
The biggest difference here is that the business is treated as a separate entity from its owners, with its own legal existence. Most importantly, the company's finances are separate and distinct from the personal finances of the owners.
If you are setting up a venture that needs a lot of start up capital, a limited company will give you more protection if the company fails. It may also be more advantageous to set up as a limited company from a tax point of view, depending on your personal circumstances and expected earning potential.
Shareholders or members of the company can be individuals or other companies. They are not liable for the debts of the company unless they have given personal guarantees on, say, bank loans. If the company is not successful, they may lose the money they have invested but that is the extent of their liability.

The advantages are:

1. Liability for debts is limited.
2. The organisation is likely to have an unlimited lifespan. Capital can be raised by issuing shares.
3. Finance comes from shareholders, loans from banks or other financial institutions (which is often easier to obtain than for other business types) and retained profits.
4. A board of directors and a management team control the business.
5. The overall tax bill might be lower. As a sole trader, all profits are taxed at the personal rate. As a company director, only the salary you pay yourself as an employee of the company is taxed in this way (along with Class 1 NICs), but you may also be able to take 'dividends' out of the company's profits. These are payments that do not attract Nl as wages do, although the company will also have to pay employers' NICs. The profits of the company itself are then taxed separately at a lower business rate as corporation tax.
6. The business may be perceived as being more 'professional'.

The disadvantages are:

1. Costs of organisation are higher and setting up is more complicated than for other types of business. You need to have a Memorandum and Articles of Association drawn up, and must register with the Registrar of Companies at Companies House (or the Companies Registry in Northern Ireland). It is worth noting, however, that companies can be bought 'off the peg' quite cheaply.
2. Accounting and audit requirements apply, such as the obligation to file annual accounts at Companies House

(see Companies House for more details).

See BIF 167 A Guide to Setting up a Business as a Private Limited Company for further details.

 

[brucelee]

nice one markie sparie
spot on what i had been told and read my self

 

[simpson93]

seems im gunna have to put alot of thought into this.

 

[simpson93]

on the topic of this also if you want to start up a limited company and the name you choose is taken can you also use it ? and as a sole trader can you advertise yourself with a came e.g gms electrical?

 

[MarkieSparkie]

simpson I hope this helps also:

What name can your limited company use?
There are certain restrictions on the business name you can use. You cannot register the same name as another company, certain words are restricted and names that may cause offence are not permitted. Check the index of company names kept by the Registrar of Companies at Companies House to make sure that another company is not already using your chosen name. You can search for the availability/ acceptability of a preferred name using the Registrar's WebCHeck service.
A company name must be continuously displayed at any place where it does business, at its registered office and its inspection place. The name has to be easily seen and read. It must also appear on all company publications and correspondence, including business letters, websites, cheques, invoices and notices. The company's directors and secretary, if it has one, may be fined if the business name is displayed incorrectly. Where a company shares premises with five or more companies, each company is required to display its name for 15 continuous seconds every three minutes.
The company's place of registration (England and Wales, Wales (only), Scotland or Northern Ireland) and registered number must also be displayed on business letters, order forms, e-mail communications and websites.
You must also display the letters 'ltd' or the word 'limited' after the company name. Other requirements for company names are detailed in BIF 48 A Guide to the Business Names Act 1985 and BIF 459 An Introduction to the Companies Act 2006.

 

[steamboatwilly]

on the topic of this also if you want to start up a limited company and the name you choose is taken can you also use it ? and as a sole trader can you advertise yourself with a came e.g gms electrical?

There are strict rules about Ltd Co names and duplication but you can get around this by registering with the name you want and then adding some text which makes it different such as Acme Electrical (Durham) Ltd. Once you're registered you can also have a 'Trading As' name which is quite different...as long as you make it obvious on paperwork (etc) what the registered name is. This means that for advertising you can have what you want (well, pretty much) as long as you're not seen to be masquerading as another company.

As MS says, have a look at WebCheck first.

 

[SPARTYKUS]

Hi

Markiesparkie covered most of it, only thing I thought of mentioning is something that was mentioned to me when I went limited, and it could be interpreted as scare mongering but here it is.

IF something were to go catastophically (phew took a bit spelling that) wrong with a job, for whatever reason, and to coin a phrase, some scoundrel decided to "sue your a!s," then as a limited company you're home that your wife and two kids live in and all that is in it, is separated from that ensuing nightmare.


If your a sole trader it isn't.

 

[i=p/u]

wonder could i call myself ACDC

 

[simpson93]

wonder could i call myself ACDC

my dad actualy sugested that to me lol

 

[MarkieSparkie]

Only if you swing both ways i=p/u. lol

 

[simpson93]

so what i think im going to do at the moment is work under gms electrical as a sole trader while doing my normal job during the week.