Setting up a Ltd company before end of tax year

[si-fi77]

Hi everyone, this is my first post on here and I'm just looking for a little advice on whether it's a good idea to set up a ltd company now or wait till the end of the tax year.

I work as a music composer for media and also work as a session musician and have been operating as a sole trader since 2018. But I've been advised by many of my peers to set up and operate as a ltd company for numerous reasons but one is the protections it will offer in case of any legal disputes and copyright claims (which can happen a lot in the specific area I work in and has happened to my once before). But I'm concerned that setting a Ltd company up midway through the tax year would cause any complications for my tax returns or attract any unnecessary attention from the tax man. The idea of having to dig out all my paperwork and receipts for the past few years wouldn't be ideal. My income goes into my everyday current account but I'd Ideally like any future income for the rest of this tax year to go into a business account associated with a new ltd company then pay myself a salary.

So would it be straight forward to start my company now or wise to hold off until the new tax year in April?

Thanks for any advice!

Simon

 

[Scalloway]

As far as I am aware it doesn't make any difference when you start trading through a limited company. You stop getting self employed income and start getting a salary.
I would strongly recommend speaking this over with an accountant before you go any farther. There is a lot more red tape involved in running a limited company.

 

[DontAsk]

It matters not. The company accounting year does not have to be aligned with the tax year.

If a Ltd is the correct option then just do it. Depending on turnover, a good accountant should save you more than they charge.

 

[Socio South West]

It is not unknown for business years to be extended or truncated to suit a businesses needs - this doesn't have to align with any dates in the tax year.
Discuss with your accountant.

 

[Paul Kelly ICHYB]

But I've been advised by many of my peers

How many of them are qualified accountants? Do not fall into the common trap of listening to other people who may have experience but do not know the detail.

They may be (indeed, are probably) right, however, your personal circumstances can change the best approach.

 

[UKSBD]

If you are going to be VAT registered just make sure your end of year aligns with your VAT quarter.

 

[DontAsk]

If you are going to be VAT registered just make sure your end of year aligns with your VAT quarter.

Why?

Mine doesn't, and it is not an issue.

 

[si-fi77]

Thank you for all the helpful replies. I've since been recommended an accountant who I'm going to discuss the finer details with but from what you've all said and from everything I've read online over the past few days there doesn't seem to be a reason for me to hold off till April. But I'll see what this accountant says. Thanks!

 

[Nudge]

Hi everyone, this is my first post on here and I'm just looking for a little advice on whether it's a good idea to set up a ltd company now or wait till the end of the tax year.

I work as a music composer for media and also work as a session musician and have been operating as a sole trader since 2018. But I've been advised by many of my peers to set up and operate as a ltd company for numerous reasons but one is the protections it will offer in case of any legal disputes and copyright claims (which can happen a lot in the specific area I work in and has happened to my once before). But I'm concerned that setting a Ltd company up midway through the tax year would cause any complications for my tax returns or attract any unnecessary attention from the tax man. The idea of having to dig out all my paperwork and receipts for the past few years wouldn't be ideal. My income goes into my everyday current account but I'd Ideally like any future income for the rest of this tax year to go into a business account associated with a new ltd company then pay myself a salary.

So would it be straight forward to start my company now or wise to hold off until the new tax year in April?

Thanks for any advice!

Simon

It’s great that you’re thinking about protecting yourself and setting up a Ltd company—especially in your line of work where copyright claims can be tricky. Setting up mid-tax year is actually pretty straightforward, so no need to stress too much. The key is just keeping things separate once you make the switch:

1. Open a business bank account for the Ltd company and start running all new income and expenses through it.
2. File your self-assessment for sole trader income as usual up until the switch.
3. From the date you go Ltd, you’ll just need to report company accounts and Corporation Tax separately.

If you’re worried about tax complications, an accountant can make sure the transition is smooth—and might even point out some tax-saving opportunities by switching sooner rather than later. Since legal protection is a big priority, waiting until April might not be worth the risk. Getting that peace of mind now could save you headaches later. Hope that helps!