Ltd company. should i do it?

[gizooty pet service]

ok. so i saw its only £38 to set up a Ltd company..
what other costs are involved?
i have a pet service, and i NEED money but as my credit is soo bad, i was thinking that a Ltd would make it easy for me... so just wana no the pros and cons first please ... thanks.. :|

 

[elaine@cheapaccounting]

Have a read of this:

http://www.franklyaccounts.co.uk/gettingstructure.php

and then this:

http://www.franklyaccounts.co.uk/fivefile.php

Make sure you have enough to pay to get the accounts and tax done as fines for late filing are high.

Good luck

 

[JamesCartwright]

You shouldn't set up a limited company without knowing the full responsibilities you would take on as a director. Business Link offers information about this.

As elaine said fines can be high. Also the cost of having an accountant do your accounts for you can be more expensive than if you are a sole trader, so you need to take this into consideration. The cost of formation can be very low, but you need to make sure that you consider the costs when running the company.

This may help you:Sole Trader Vs. Limited Company

James

 

[lss]

slightly different note, can I ask, do you pay N.I. on a dormant limited company and also how long can you keep it dormant before you have to do somthing with it?

 

[elaine@cheapaccounting]

NI is paid on a salary or wages - so no NI in a dormant company which by the name suggest is dormant and would not be employing anyone.

A company can stay dormant for as long as you like as long as it still completes an annual return and annual accounts.

 

[lss]

awsome! many thanks for that, am trying to seet up a ltd company as we speak am struggling filling in the form as we speak! struggling with the share holder page on wards, hate it hate it hate it!

 

[elaine@cheapaccounting]

awsome! many thanks for that, am trying to seet up a ltd company as we speak am struggling filling in the form as we speak! struggling with the share holder page on wards, hate it hate it hate it!

blimey - if you struggle with that just wait until you try a CT600!

 

[lss]

seriously... oh happy days! lol. its all a learning curve at the moment, I never done a business or anything, all on me own learning, and asking questions on this site for advice etc, Im struggleing with section 3 of the IN01 form

 

[JamesCartwright]

If you are struggling with the forms then sometimes it is better to have a formation agent do it for you as it doesn't cost much more than doing it yourself.

 

[Alison Jones]

I would say to anyone who does not need to be a Limited Company be a sole trader, much simpler, accounting costs are lower and in some cases people can even do their own tax return if they have the confidence.

We had to become a Limited Company because landlord of premises we wanted only dealt with Limited Company. Even with 15 years trainee accounts and bookkeeping experience I find all the returns, forms and accounts quite daunting and new business not in a position to pay for accountants, I know quite a lot of small new businesses in the first year especially the way the economic climate now would struggle to pay for accountants as well as all the other overheads.

And Companies House website the most impossible of websites, most forms like that have little ? so you can click on it to know what they are actually asking for, we ended up having to phone Companies House because they rejected our first return and did not have explanation of why, if they had ? on site we would have understood what they were actually asking for.

Alison

 

[OscarM]

If you are having so much trouble registering your company on paper, you might like to try doing it all online.
Our sister company, Companies Made Simple, helps thousands of people register new companies every month, they do it all through their website, http://www.companiesmadesimple.com and they offer a whole range of packages to suit every budget.
It usually only takes about 3 hours for a company to get registered too. They also offer a "Reserve a Company Name" service so you can secure the name you want. I do recommend having a look at their site for more information.
Good luck!

 

[elaine@cheapaccounting]

I would say to anyone who does not need to be a Limited Company be a sole trader,

Alison - I know where you are coming form and that is great as long as the business structure decision is not made on the ease of completing the tax paper work alone

 

[Alison Jones]

I personally think that there are no benefits of being a Limited Company these days, I know people say you get Limited Liability but that is getting so irrelevant these days because a lot of things now are asking for personal guarantee anyway, think quite a few landlords now are making this part of the lease. Ours is odd landlord would only deal with Limited Company but insisted on personal guarantee for the rent.

Locally to us we see Limited Companies closing down in premises one day, then same people re-opening next day with a new Limited Company name, probably avoiding debts. I am surprised the government are making it so easy for people to set up as Limited Company, think all people should be made to be sole trader and seen to have been paying its debts and taxes for a few years before they allow them to set up as Limited Company.

Alison

 

[MyAccountantOnline]

I personally think that there are no benefits of being a Limited Company these days

I dont agree - for some operating via a limited company is still worthwhile.

The important thing is making a fully informed decision.

Sadly so many people go ahead and merrily set up limited companys on the cheap without any awareness whatsover of the responsibilities it brings, and the legal requirements.

 

[elaine@cheapaccounting]

I don't agree either!

Alison of course there are benefits in the right situation.

It is not one size fits all and all aspects should be looked at.

Also if people were forced to operate as a sole trader with unlimited liability I think there is a huge risk that this would limit new businesses and employment opportunities.

 

[Alison Jones]

I did not say that there should not be Limited Companies but that people should firstly be made to operate as a sole trader to proove themselves as paying their bills and taxes then there would be less of Limited Companies closing down one day with debts to reopen the next day with a different Limited Company name debt free.

I know firms where it is sole trader business and still has quite a few staff members.

Alison

 

[elaine@cheapaccounting]

I personally think that there are no benefits of being a Limited Company

Alison - if there is some confusion with my post I will clarify that this is the statement that I was strongly disagreeing with.

 

[Alison Jones]

In my opinion there is not as much point to a Limited Company as there used to be when many companies are now making you sign as personal guarantee so counters out any Limited Liability, lots of landlords for example are doing this on the rent and who knows how many other companies will start to do this making Limited Liability irrelevant.

If there are any other positives of being a Limited Company they get outweighed by the negatives of increased paperwork, increased costs if have to have accountant to do this and in my opinion it is ridiculous to have to pay £15 for annual return if none of the details have changed, Companies House making money for nothing.

Alison

 

[elaine@cheapaccounting]

So if a business makes £50k of profits and so has to pay nearly £4k extra in tax then it is better to be a sole trader rather than pay a £15 filing fee! OK an extreme exampel I know but this is the problem with generalisations.

Fine if you are talking about your personal experiences with your business and landlord issue. But this issue is specific to you and I will stand here and argue until I am blue in the face that there CAN be some benefits to being a limited company.

Any I repeat it is down to individual circumstances and one cannot genarlise about the fitness of purpose of limited companies.