self employed sales

[hondo]

LAds n Lasses,
Im setting up from scratch a small business where i assemble a product from parts into a saleable product. I sell these products and that leaves a small amount of profit in the company. in a limited company i could hold that profit until the right time in the year to distribute it because i have to provide support for the client base out there. is the a funtion for doing this in self employment. the scenario is i receive help with rent and council tax samll as it is and aslo WTC. The Housing stuff done buy our local council is vicious to say the least...every poenny they see are pure profit and dont see what can happen down the line where you become liable to correct posible problems, plus also the ability to build the business base.
I was going to setup a limited compnay but this would mean losing any WTC as initialy it wouldnt have enough in the compnay to pay 16 hours at £5.73 per hour and ru the website and pay the card processing etc etc etc...
any guidnace welcomed..

[Alison Jones]

With a Limited Company you have to think carefully, the accounting requirements for Companies House and Inland Revenue are much more complicated then Sole Trader, if you could afford an accountant then that not a problem, if you can't afford an accountant and don't have any experience in accounts doing your own Limited Company accounts would proove very difficult, whereas if you sole trader, a lot of sole traders manage their own bookkeeping and tax return fairly easily as long as all records are kept - including any cash sales or purchases (I believe these some people lose track off cash sales and purchases), all sales invoices, all purchase invoices, all bank statements etc.

Alison

[Maslins]

If you are a sole trader you will be taxed on your profit. i.e. whether you take the profit out and buy stuff yourself, or leave it in the business bank account for future expansion, it doesn't matter, you're taxed on it either way.

If you are concerned about things like warranties for products that may go wrong in the future, you could always put in an accrual for such things (providing you can reasonably justify the amount). This would reduce your profit and hence your tax, and also mean you would have less earnings for the purposes of WTC etc. However, as I said, you need to be able to quantify any such accrual and have a good reason for it being in there. You can't just say £5,000 for "in case anything goes wrong"!

[hondo]

Tjanks alison and maslins....thats answerd my question. I will be assembling items which i must warrant. what i doint want to do is take out the money straightaway as profit and then find if a client comes back with a fault i have a problem. I thought i could only do this as a limited company...i wasnt aare it could be done in a similar manner as a sole trader.

many thanks folks...