From sole trader to ltd.

[tony84]

How does this work in practice?

I want to start 2015 off as a ltd company.

Would it just be a case of my accountant doing the self assessment based on april-december 2014? and then each year there after it would just be company accounts?

What about paying myself? Do I have to do payslips each month or do I not need to worry about those as its just me?

I will speak to my accountant soon enough but just thought I would get a bit of a heads up on here as I had nothing better to do on a nice warm sunday afternoon

 

[Nick Kay]

Hi Tony,

Your SA will be the earnings from the sole trader business up until Dec, plus your pay and any dividends for Jan-Mar from the Ltd business.

You will still need to submit a SA each year as you will be a company director.

Once the Ltd company is registered you will need to then register it as a PAYE employer. You will need to run a payroll and make the RTI submissions to HMRC each month (if a monthly payroll).

Your accountant will be able to help with all of this and advise as required. But hopefully this info puts your mind at ease on this sunny Sunday!

Good Luck.

Nick

 

[Scalloway]

Company directors only need to submit SA returns if HMRC issue them or their income is in the 40% bracket or higher.

 

[tony84]

If I was taking £7-8k as wages (whatever the tax threshold is) and the rest as dividends, then it would never hit 40% would it?

 

[Jeremiah@RHJ Accountants]

If I was taking £7-8k as wages (whatever the tax threshold is) and the rest as dividends, then it would never hit 40% would it?

You are correct hence HMRC may not ask you to complete SA.

 

[tony84]

So basically then it would be SA in december for April -December and then Ltd co with payslips from then onwards?

Also, I have just been looking and I can register on companies house for £15 or there are companies online who will do it for £10-20 plus a £50 voucher - I can only assume they must be flogging my details to someone as there is no other reason for them to subsidise my registration?

 

[David Griffiths]

If I was taking £7-8k as wages (whatever the tax threshold is) and the rest as dividends, then it would never hit 40% would it?

It would if the dividends were high enough. I can't see that the OP has given any indication of the levels involved so it's not possible to say that it would never hit 40%. For the current tax year if you take salary of £7920 you'd hit the higher rate if your dividends were over £30,550.

 

[kevin.doran]

Goodwill....

 

[MyAccountantOnline]

Goodwill....

Something to ask your accountant about Tony

 

[Philip Hoyle]

The company has to "buy" the business assets transferred (inc goodwill) and you, as a sole trader, has to "sell" them to the company, normally at current value, which may trigger an balancing charge or balancing allowance on the sole trader tax comp (self assessment return). Likewise with any stock that you transfer. There are elections that you can make to transfer stock and tangible assets at "tax book value", and also an election for CGT relief on the goodwill (if any). Lots of opportunities for tax planning, and a few bear trips for the unwary if it's not all properly looked at. Ask your accountant and if they seem vague on the elections/reliefs, then time to find a new accountant!

 

[tony84]

Something for you to look forward to Kevin

I'll be in touch soon.

 

[tony84]

Thanks for the replies to everyone. Clearly a lot to think about.