Ltd or sole?

[stender]

I have a full time job and side hustle selling art. I’m now also looking to start an agency unrelated to art. Im unsure whether to create a ltd company or be sole trader. If i do soletrader can i just create a generic named parent company business bank account that can be used for both businesses and put on self assessment? If i do ltd company, again can i name it generic so it can be for both businesses?
Whats the advantage of being a ltd company other than liability?

 

[itsnathanhere]

I'd be sticking to sole trader as long as I could. I had to register a LTD company to get on the app store (otherwise your apps go under your personal name and address) and it's nothing but a headache. You have legal responsibilities as a director; you have to file annual confirmation statements; you have to send returns to *both* Companies House and HMRC - and forgetting to do any of this can get you into serious legal trouble.

Not to mention, when you've done *all* of that.. it's not your money in the bank account. Your LTD company is a legal entity of its own and every penny in and out has to be accounted for. You'll need to pay yourself either in dividends, a salary or a combination of both and then pay tax on those again via self assessment.

Trust me, as a side earner it's not worth it unless your arm is being twisted. The only thing I will say is if you plan to be doing bank transactions as a sole trader, you normally won't be able to name your account after the 'business name'. Instead of "Artco", your name that will show on statements will be "Steve Jones Trading as Artco" or something similar, and that's the name you'd have to give people if they were to send money to you too. Obviously this is all a moot point if you're taking payments over stripe etc.

P.S you can have as many sole trader businesses as you like! The self assessment lets you create a business and add the profits / expenses to each one individually.

 

[Newchodge]

You'll need to pay yourself either in dividends, a salary or a combination of both and then pay tax on those again via self assessment.

if you receive salary it will be taxed via PAYE and you will have to run payroll.

 

[itsnathanhere]

if you receive salary it will be taxed via PAYE and you will have to run payroll.

Oops yes, my mistake!

 

[stender]

aah i assumed i could call the account acme trading etc. doesnt look to professional having my name. For my art the payments will be stripe and paypal but not sure about the agency or how companies usually pay? I assume i invoice them and they bank transfer?

 

[Lisa Thomas]

This is a question for an accountant. Mistakes can be costly. I can recommend one if you don't find one on here. Loosely key considerations are

1) Different taxes between the options


2) different liabilities between the two. i.e. as a sole trader you are personally liable for all creditors/liabilities/debts of your business. A Limited Company gives you a certain level of protection if things go wrong and the company becomes insolvent (as long as you don't give personal guarantees or commit misconduct).

 

[Paul Kelly ICHYB]

Without more information, it is hard to give great advice, however, in its early stages, I would stay SE, but open up a new bank account with a separate provider to keep funds separately.

 

[stender]

But as mentioned above the bank account would be my name trading as which doesnt look professional imho for an agency

 

[fisicx]

But as mentioned above the bank account would be my name trading as which doesnt look professional imho for an agency

Why not? Plenty of sole traders using their own name for the business. I get my car parts from a bloke who just has the words ‘car parts’ after his name.

 

[MyAccountantOnline]

... If i do soletrader can i just create a generic named parent company business bank account that can be used for both businesses and put on self assessment? ...

If you are a sole trader it's not a company or parent company - you just open a business bank account in your sole name and use that, and yes it can be used for both businesses.

 

[MyAccountantOnline]

If i do ltd company, again can i name it generic so it can be for both businesses?

Yes you can operate two businesses under one company name.

 

[MyAccountantOnline]

Whats the advantage of being a ltd company other than liability?

In the past - tax savings. The ability to save tax paying a combination of salary and dividends to a director/shareholder. It's not such a good saving now and it's best to get specific advice based on your personal circumstances as to whether it'll be a tax saving.

One other advantage at present - a limited company wont have to submit quarterly Income tax reports to HMRC (called MTD - Making Tax Digital) which will/does apply to soletraders.

 

[Ziggy2024]

Depending on what type of agency I would generally say go ltd for the liability. Having more than one business, for me, would be a reason to keep the income streams separate so that if one fails it doesn't necessarily affect the other.