Sole Trader or LTD?

[MarkSS]

I am employed fulltime my earnings take me £6000 away from the higher earnings bracket. I am about to launch an online store as a side interest. If I go sole trader it sounds a cheaper option but when I start making profits I edge closer to the high earnings level tax level. If I go for ltd company can I reserve any profits until the best time to with draw them? Also I guess a ltd company will cost more?

 

[Scalloway]

. If I go for ltd company can I reserve any profits until the best time to with draw them?

Yes

Also I guess a ltd company will cost more?

Theoretically the only extra cost is the £13 for filing the annual confirmation statement but practically speaking you need to hire an accountant to prepare annual accounts and the corporation tax return. An accountant will also advise on the best way to structure things for tax.

 

[MarkSS]

Yes



Theoretically the only extra cost is the £13 for filing the annual confirmation statement but practically speaking you need to hire an accountant to prepare annual accounts and the corporation tax return. An accountant will also advise on the best way to structure things for tax.

Thank you I will do that. Plus registering the company will protect the company name too

 

[Scalloway]

registering the company will protect the company name too

Getting it trademarked trumps registration of a company for protecting a name. To see if that is possible go to.

https://www.gov.uk/how-to-register-a-trade-mark

 

[DWS]

You will still need to pay 19% Corporation Tax on any profit the Company makes.

 

[DontAsk]

As a LTD you will pay corporation tax on any profit and then PAYE on any salary you take, so the situation could be worse than sole trader.

I would look at extra pension contributions to claim the tax relief. The LTD can also make pension contributions.

If it's a serious business then a good accountant should save you more than you pay in their fees.

 

[MarkSS]

Looking at replies very much swings and roundabouts. Thanks guys.

 

[Cloud Accounting]

Start as sole trader & if your business takes off think about switching to Ltd co. Depending what you're doing/selling, the limited liability element could be a bigger factor than tax or accounting fees.