Setting up limited company advice

YoungBusinessman · 1 May 2012 at 11:22PM

Registered as sole trader, looking into setting up as limited company. Give me all the advice,tips,things to watch out for that use can please.

Pennywise · 2 May 2012 at 9:07AM

This comes up very often on these and other forums. Search back a few pages and you'll find a few discussions. The best and most comprehensive forum thread is over on the UK business forums:-

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

The "official" information is on business link's website:-

http://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073865436

Once you've had a look at these links and previous threads, most of your questions will be answered and you'll have a far better idea of the pros and cons. Come back with specific queries and I'm sure someone will help you.

PlutoinCapricorn · 2 May 2012 at 9:13AM

Why are you thinking of setting up a company? Is it because of high income? What sort of work is this for?

I am a sole trader, and would only have a company as a last resort.
Anyone can get a lot of information about you and your affairs online if you have a company; the accounting effort is much greater; you need a separate bank account whereas sole traders who are consultants trading under their own names can use their personal bank accounts.

Suarez · 2 May 2012 at 9:28AM

Someone posted a figures comparison a while ago :

Sole Trader vs Limited

It was quite helpful and showed what you would have to pay.

SteProud · 2 May 2012 at 9:31AM

Have a chat to an accountant. There are specialist accountants out there who will set up the limited company for you as part of a regular monthly fee.

What sort of work will you be doing?

lcharm · 2 May 2012 at 11:24AM

It only costs £18 to set up a ltd company directly with Companies House so don't pay an accountant to do it as I've done it and it's reasonably straightforward if you read their guidelines and give them a call.

As to whether you should or shouldn't do it is dependent on your situation but here are a couple of tips

When I search for any company online, especially online stores, I look for a statement saying Ltd Company registered in England and Wales and company number, it's just me but gives me the knowledge that they are operating as a proper business.

If you're working as plumber, electrician etc... it's only really worth it if you're turnover and profits are high and you can get a tax benefit. from taking your income as a dividend payment, an accountant can explain this better to you.

Even if you do operate as a sole trader it's best to keep seperate bank accounts for personal and business to differentiate because expensive mistakes on tax returns could happen otherwise.

paddyrg · 2 May 2012 at 2:55PM

lcharm wrote: »

It only costs £18 to set up a ltd company directly with Companies House so don't pay an accountant to do it as I've done it and it's reasonably straightforward if you read their guidelines and give them a call.

Do not forget though that being a director of a limited company carries responsibilities, and the annual tax returns for your ltd company are a significant cost.

HappyMJ · 2 May 2012 at 2:59PM

paddyrg wrote: »

Do not forget though that being a director of a limited company carries responsibilities, and the annual tax returns for your ltd company are a significant cost.

What cost? I spend an hour each year filling in the numbers online and clicking submit. The PAYE returns take just as long once a month and the VAT returns hardly take any time at all.

YoungBusinessman · 3 May 2012 at 8:14PM

Cheers guys. Will be waiting until iv got a mortgage in place and in my own house with savings behind me then i will reassess and most likely set up. Its for high income and being paid dividends. Can i set up as a limited company and only put through earnings from outside a regular job,where i am paid net wages,not gross.

dixie_dean_2 · 11 May 2012 at 1:30PM

HappyMJ wrote: »

What cost? I spend an hour each year filling in the numbers online and clicking submit. The PAYE returns take just as long once a month and the VAT returns hardly take any time at all.

So you file your accounts with company house and HMRC yourself and you find it very easy? I've been looking into it and it seems a minefield (dont want to pay an accountant as first year accounts very limited and profit very small).

To the OP, I would definiotely say don't be a limited company unless you have to as as others have said, it's far simpler.

Pennywise · 11 May 2012 at 2:04PM

HappyMJ wrote: »

What cost? I spend an hour each year filling in the numbers online and clicking submit. The PAYE returns take just as long once a month and the VAT returns hardly take any time at all.

So you've mastered annual accounts preparation in the format required by the Companies Act and know enough about Accounting Standards to get the accounts right do you? You've also mastered iXBRL for the submission of the full accounts to HMRC with the corporation tax return.

PAYE and VAT "may be" easy for people with the right software and who know how to use it, but lots of people find it all very hard and are happy to pay for it all to be done by professionals. Just like ANY other job, such as servicing your own car, painting your own house, etc. Some people have the ability, patience and time to learn it, others don't.

Setting up limited company advice

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