Sole Trade -v- Limited Company

Discussion in 'Accounts & Finance' started by DFL, Mar 13, 2008.

  1. Scalloway

    Scalloway UKBF Legend Free Member

    16,392 3,467
    A director's liability is limited to their investment in the company, plus any money they owe the company as DLA.

    I would take the rest of the advice with a pinch of salt.
     
    Posted: Jun 7, 2019 By: Scalloway Member since: Jun 6, 2010
  2. Victoria_V

    Victoria_V UKBF Regular Free Member

    153 19
    Appreciate the info! Could you possibly elaborate on that? You seem to have extensive knowledge on the subject so I'm curious to hear your feedback. Thank you.
     
    Posted: Jun 8, 2019 By: Victoria_V Member since: May 29, 2019
  3. Scalloway

    Scalloway UKBF Legend Free Member

    16,392 3,467
    Most of your comments on the advantages of using a limited company should have the words "Your accountant will be able to advise you further based on your particular circumstances."
     
    Posted: Jun 8, 2019 By: Scalloway Member since: Jun 6, 2010
  4. Victoria_V

    Victoria_V UKBF Regular Free Member

    153 19
    Agree, having a personal accountant who will help you navigate all these nuances definitely has its advantages. This is more of a general overview of pros and cons, not an in-depth analysis, just so people who don't have access to personal accounting services can try and figure it out on their own.
     
    Posted: Jun 8, 2019 By: Victoria_V Member since: May 29, 2019
  5. Chart Accountancy

    Chart Accountancy UKBF Regular Full Member

    181 22
    Incorporating a company and the accounting duties are indeed worth discussing with an accountant prior setting up. We do see clients who incorporate their companies without receiving professional advice, and often mistakes have been made at the early stages leading to missed tax savings opportunities. As mentioned above, it is best to speak to a professional. You can also find lots of accountants can give you an initial free advice over the phone.
     
    Posted: Jun 21, 2019 By: Chart Accountancy Member since: Apr 18, 2017
  6. Victoria_V

    Victoria_V UKBF Regular Free Member

    153 19
    Could not agree more! We've even launched an accounting expert service to at least point those who are just starting in the right direction. And made it available for free on our website.
     
    Posted: Jun 21, 2019 By: Victoria_V Member since: May 29, 2019
  7. Victoria_V

    Victoria_V UKBF Regular Free Member

    153 19
    Posted: Jun 21, 2019 By: Victoria_V Member since: May 29, 2019
  8. Carlene Cromedy

    Carlene Cromedy UKBF Newcomer Free Member

    5 0
    Great for sharing your thoughts, I agree with you!
     
    Posted: Jun 21, 2019 By: Carlene Cromedy Member since: May 3, 2019
  9. TheoNe

    TheoNe UKBF Regular Free Member

    135 14
    I agree with other contributors here. You should seek out professional advice before making this decision. For me a limited company makes more sense.

    I hope this helps.
     
    Posted: Jul 10, 2019 By: TheoNe Member since: Jul 6, 2019
  10. Alison Moore

    Alison Moore UKBF Enthusiast Full Member

    536 94
    Great article- thanks for posting. Yes in in doubt always speak to an accountant before making a decision as they can advise based on your personal circumstances. Also remember that all accountants are not the same, so speak to more than one if you're still unsure.
     
    Posted: Jan 10, 2020 By: Alison Moore Member since: Aug 4, 2016
  11. Jen12345

    Jen12345 UKBF Newcomer Free Member

    1 0
     
    Posted: Mar 30, 2020 By: Jen12345 Member since: Mar 30, 2020
  12. Mr_G_Useless

    Mr_G_Useless UKBF Newcomer Free Member

    6 0
    Hi, I'm not sure if this is the right forum, but I am comparing the tax difference between limited company and sole trader, could someone confirm the below is correct?

    It assumes that I will also have a PAYE job, so all profit would be taken as dividend instead of a salary.

    Sales: £20000

    Expenses: £500

    Self Employed :

    Income Tax (Self Employed) = (20000 - 1000 (trading allowance)) * 0.2 = £3800

    Student Loan (Self Employed) = (20000 - 1000 (trading allowance)) * 0.09 = £1710

    Class 2 Ni (Self Employed): 158.6

    Class 4 NI (Self Employed) : (20000 - 1000 (trading allowance) - 9500) * 0.09 = £855

    Total Tax as Self Employed = £6523.60

    Limited Company :

    Corporation Tax : 19500 * 0.19 = £3705

    Dividend Tax: ((20000 - 3705) - 2000 (dividend allowance) * 0.075) = 1072.125

    Student Loan = ((20000 - 3705) - * 0.09) = 1466.55

    Total Tax as Limited Company = £6243.68
     
    Last edited: Jun 6, 2020
    Posted: Jun 6, 2020 By: Mr_G_Useless Member since: Jun 6, 2020
  13. STDFR33

    STDFR33 UKBF Big Shot Free Member

    4,487 1,188
    It’s wrong.
     
    Posted: Jun 6, 2020 By: STDFR33 Member since: Aug 7, 2016
  14. Mr_G_Useless

    Mr_G_Useless UKBF Newcomer Free Member

    6 0
    What part(s)?
     
    Posted: Jun 6, 2020 By: Mr_G_Useless Member since: Jun 6, 2020
  15. STDFR33

    STDFR33 UKBF Big Shot Free Member

    4,487 1,188
    for starters, you’ve not factored in your personal allowance.
     
    Posted: Jun 6, 2020 By: STDFR33 Member since: Aug 7, 2016
  16. Mr_G_Useless

    Mr_G_Useless UKBF Newcomer Free Member

    6 0
    I have posted that I already have a PAYE job, so the personal allowance gets used up in that.
     
    Posted: Jun 6, 2020 By: Mr_G_Useless Member since: Jun 6, 2020
  17. Mr_G_Useless

    Mr_G_Useless UKBF Newcomer Free Member

    6 0
    Just spotted the expenses error on LTD, it should be

    Limited Company :

    Corporation Tax : 19500 * 0.19 = £3705

    Dividend Tax: (19500 - 3705 - 2000) * 0.075 = 1034.625

    Student Loan = ((19500 - 3705) - * 0.09) = 1421.55

    Total Tax as Limited Company = £6161.175
     
    Posted: Jun 6, 2020 By: Mr_G_Useless Member since: Jun 6, 2020
  18. Mr D

    Mr D UKBF Legend Free Member

    24,309 2,951
    You know you don't have to take all the profit as dividends in any one year?
     
    Posted: Jun 6, 2020 By: Mr D Member since: Feb 12, 2017
  19. Newchodge

    Newchodge UKBF Big Shot Free Member

    14,389 3,834
    Wht would a limited company have to pay a student loan?
     
    Posted: Jun 6, 2020 By: Newchodge Member since: Nov 8, 2012
  20. Mr_G_Useless

    Mr_G_Useless UKBF Newcomer Free Member

    6 0
    Its student loan on the dividend payment to the director.
     
    Posted: Jun 6, 2020 By: Mr_G_Useless Member since: Jun 6, 2020