Ebay seller - Ltd or Sole Trader ?

[David Story]

Hello
I was just wondering if you can help me to make a decision.
I'm an Ebay seller working from home.
Recently my turnover crossed a VAT threshold so I need to register for VAT.
I've asked an accountant and he suggested to go for Limited Company.
I'm not 100% sure about it.
My turnover is between 85-95k a year , unfortunately low margin
Working from home , no employees.

Should I go for Ltd or stay as Sole Trader ?

Thank you for all advice.

David

 

[Scalloway]

There are tax advantages in trading through a limited company. I woulask your accountant to expalin them to you.

 

[NickMoore]

Also take a look at this thread.

 

[MyAccountantOnline]

Hello
I was just wondering if you can help me to make a decision.
I'm an Ebay seller working from home.
Recently my turnover crossed a VAT threshold so I need to register for VAT.
I've asked an accountant and he suggested to go for Limited Company.
I'm not 100% sure about it.
My turnover is between 85-95k a year , unfortunately low margin
Working from home , no employees.

Should I go for Ltd or stay as Sole Trader ?

Thank you for all advice.

David

Hi David

You need to consider many factors and unless you have reason to doubt your accountants professional advice he really is the best person to advise you as he will be fully aware of your circumstances.

If you have any concerns why not discuss them with him?

 

[talkinpeace]

one thing to bear in mind is the capricious nature of ebay and who they deem to own your seller account ....
these issues are often discussed on the ebay business board as well

 

[DJR51]

From a tax perspective, it depends on how low the margin is, and if you expect profits to increase in time.
Being a sole trader is far simpler generally (albeit without the limited liability), and allows you to benefit from a tax free personal allowance. A company is better for higher profits, as instead of potentially paying 40% or 45% income tax on high sole trader profits, the corporate tax rate is currently just 20% on profits up to £300,000, and no more than 23% for unlimited profits above that.

 

[SetupaCompany]

As others have stated, your accountant is best placed to advise on exactly what benefits you could get by registering as a limited company.

Also consider the non-financial benefits too we have an article that outlines some of the main ones: http://www.setupacompany.co.uk/benefits-of-registering-a-limited-company

A lot will also depend on where you want to take the business. If it is going well you may be thinking of branching out and growing it, setting up a standalone store, etc. All of these kinds of things may make more sense to be done as a limited company when things like getting your own processing, getting credit accounts, etc can become easier.

 

[Leslie66]

Hi, I have a similar issue with being advised to go ltd. Turnover is just below VAT threshold. Do I have to go VAT registered if I go ltd? Also, I know I can only take dividends from my profits but how often can I do this? Once a year? Or if I do monthly/quarterly accounts can I withdraw dividends then?

 

[nelioneil]

Hi, I have a similar issue with being advised to go ltd. Turnover is just below VAT threshold. Do I have to go VAT registered if I go ltd? Also, I know I can only take dividends from my profits but how often can I do this? Once a year? Or if I do monthly/quarterly accounts can I withdraw dividends then?

As often as you like but you need to keep the proper records. Crreating dividend vouchers and also board minutes of the "Directors" declaring the dividend.

 

[DJR51]

Hi Leslie

No need to register for VAT just because you become a Ltd Co - compulsory registration still depends entirely on when your sales breach the threshold.

 

[kevin.doran]

Hi, I have a similar issue with being advised to go ltd. Turnover is just below VAT threshold. Do I have to go VAT registered if I go ltd? Also, I know I can only take dividends from my profits but how often can I do this? Once a year? Or if I do monthly/quarterly accounts can I withdraw dividends then?

Dividends can be taken as often as you like, daily even, provided you've done the necessary paperwork to support them.

 

[SEO Team Limited]

I would recommend becoming a limited company due to the advantages of tax, through my own experience. It also looks more professional, if you were to branch out into selling through your very own website.

SEO Team Limited

 

[Leslie66]

Dividends can be taken as often as you like, daily even, provided you've done the necessary paperwork to support them.

What paperwork would I require if I wanted to withdraw them on a monthly basis?

 

[Scalloway]

How to declare a dividend

http://www.contractorcalculator.co.uk/declaring_dividends_paperwork.aspx