What differences are their from sole trader to LTD?

[Vestor]

I understand liability etc


but have been told that accounting is different?

Can someone linjk me or explain how / why its different?


Also is it best to just buy an LTD for £50 from one of these companys who form them? Or can I do it myself with just terms and conditions and registering with companies house?


Also is the any difference in the income tax and VAT thresholds / obligations when running an LTD or any thing else substantial I should be aware of?


Kind regards fellow entrepreneurs for any help!!!

Glad to say my biusiness is currently BOOMING

 

[david100]

Establishing a Limited company requires more formalities to be observed. This includes the filing of memorandum and articles, keeping the company registrar up to date with changes, and filing an annual return. Formation also requires the company accounts to be open to public inspection. All companies must file annual accounts with the company registrar. This involves additional costs because you need to use an accountant, however accountancy fees are tax deductible.

 

[Philip Hoyle]

There's a sticky thread on the accounts/finance sub board which has everything you could possibly want to know about the differences between sole trader & limited company and how to change. Have a read:-

http://www.ukbusinessforums.co.uk/forums/showthread.php?t=60813

 

[MyAccountantOnline]

I understand liability etc


but have been told that accounting is different?

Can someone linjk me or explain how / why its different?


Also is it best to just buy an LTD for £50 from one of these companys who form them? Or can I do it myself with just terms and conditions and registering with companies house?


Also is the any difference in the income tax and VAT thresholds / obligations when running an LTD or any thing else substantial I should be aware of?


Kind regards fellow entrepreneurs for any help!!!

Glad to say my biusiness is currently BOOMING

The actual accounting records aren't hugely different actually, it's just that with a limited company you need to remember the company is a separate entity to the owner so it really needs it's own bank account etc.

The accounts and tax are different, and in my opinion anyone operating a limited company needs an accountant (and yes that is a bias, but honest opinion )

You may find this link helpful but nothing beats specific advice based on your circumstances.

Setting up a company is easy, you'll find agents online who do it free but you need to make sure you know what you are getting into and what it entails. So many people dont, as an accountant I get a lot of people come to me who have set up a company cheaply without taking advice first and got into a terrible mess paying totally unnecessary and avoidable taxes and penalties.

In a nutshell as an individual if you trade as a sole trader you can earn £8,105 for this tax year before paying tax after that you pay tax on your income/profits starting at 20%. You also have to pay class 2 and class 4 NIC depending on your profits.

If you trade via a company your company will pay Corporation tax on its profits and no NIC (that can be the main reason people trade via a company ie to save NI), and you can withdraw the profits by paying a salary and dividends and possibly repayments of any loans you have made to the company.

The VAT threshold is the same for a sole trader and company.

 

[Vestor]

thank you very much good advice here

but if accounting is not much different, why do I need to hire accountant?

I spose it cus they will know how to avoid unnessacery charges that I don't?

What would be typical rate for accountant to check my books at end of finanacial year?

 

[Scalloway]

Basic bookkeeping is the same but you need to be able to produce something like this at the year end.

http://www.vtsoftware.co.uk/final_accounts/small.pdf

 

[MyAccountantOnline]

thank you very much good advice here

but if accounting is not much different, why do I need to hire accountant?

I spose it cus they will know how to avoid unnessacery charges that I don't?

What would be typical rate for accountant to check my books at end of finanacial year?

To clarify I meant the actual bookkeeping requirements arent much different ie the recording of day to day accounting transactions. The accounts and tax requirements are very different.

Keeping good, accurate, records will reduce the amount of time an accountant has to spend preparing the accounts and tax return (thats true for a soletrader or limited company) and therefore the fees.

Accountants fees, and how they charge, vary considerably. If you want to take a look at what my firm charges our fees are on our website.