Ltd company AND sole trader?

cheapshots

Hi.

I really do apologise if this has been repeated! I searched all over the forum but I couldn’t find what I was looking for.

I’m a locum pharmacist, and I started working in community (Boots, Lloyds, Superdrug, etc) on 01/08/2009. Since then I am set up as a sole trader because it was the simplest option :-)
(Although I haven’t informed the IR yet, I know I have 3 months to do it).

Now the problem. . . .

I started working in an NHS hospital on 28/09/2009 and for reasons I cannot understand, I needed to set up a Ltd company, which I have done. I have also found an accountant.

So to summarise, throughout the year I will be working mainly in hospitals (who pay the Ltd company I set up) and occasionally in community (who still pay my sole trader account directly).

For community work, I heavily use my car and keep all petrol, car repair and allowable expenses receipts. For hospital work I use public transport and again keep all travel receipts.

My accountant suggested I be paid £1000 a month from the Ltd company and that I merge the sole trader account with the Ltd company.

I’m no accounts expert but after reading posts on here I was thinking maybe I should receive just my PA (i.e. around £450/month)?

Also, I wanted to keep both the Ltd company and sole trader running purely because then its easier to claim car expenses (insurance, MOT, tax, petrol, etc) and less hassle.

My accountant seems nice at heart, but I am sceptical about his knowledge….maybe I’m wrong?!

Any suggestions would be highly appreciated.

Cheapshots

fengirl_2

First of all the 3 mth grace period for informing HMRC that you have started in business has been abolished and you are now required to notify as soon as possible.
I really think it would be more simple to put all your freelance work through the company if you can. You can claim mileage allowance for the use of your car throught the company and/or fares on public transport as well. these expenses will not be taxable on you and the company will receive CT relief. I am not sure why you think its easier to keep the two cources separate.
If you can live on £450pm, then just draw that - as the sole director you can set your salary at whatever level you want, or combine salary with dividends.

cheapshots

Thanks for the advice.

The reason I want to keep both Ltd company and sole trader is, and forgive me if I'm wrong, as a sole trader I have more allowable expenses (car repairs, insurance, MOT, road tax, lunch - maximum £6.00/day, broadband internet, i.e things that I require to do my job).

Whereas the allowable expenses for the Ltd company are more restricted? This is what the accountant has said anyway.

Cheapshots

Rolo_Tomasi

I agree that it would be easier to maintain just one set of books. I would set your salary at £475 per month, charge the company for all of your expenses and take out dividends for the remainder of your income.

Just one question - did your accountant mention the managed service company or IR35 legislation? From your post it sounds like you are providing your services through a Limited Company so this could apply. Its certainly something you should find out more about.

cheapshots

Ah I see, well that's something I'll look into.

The accountant hasn't mentioned anything regarding the IR35 regulation, I will read up about it and hassle him later this week. Any good websites? :-)

Hmmm...so I take it the few extra allowable expenses I am entitled to as a sole trader are not worth keeping two sets of accounts for.

I might go with the flow here and put all your freelance work through the company.

Cheapshots

fengirl_2

The allowable deductions for a sole trader are exactly the same as for a company. As a sole trader, you include a deduction for anything to do with running the business. A limited company also receives a deduction for anything to do with running the business.

cheapshots

fengirl wrote: »

The allowable deductions for a sole trader are exactly the same as for a company

Thought so, its just the accountant said otherwise. Thanks for all your help.

Cheapshots

fengirl_2

I doubt if the accountant said otherwise - get him to explain it in detail to you.

orangeslimes

cheapshots wrote: »

Thanks for the advice.

The reason I want to keep both Ltd company and sole trader is, and forgive me if I'm wrong, as a sole trader I have more allowable expenses (car repairs, insurance, MOT, road tax, lunch - maximum £6.00/day, broadband internet, i.e things that I require to do my job).

There are stricter regulations about how you treat the money in a ltd company- i.e. you can't just treat the money as your own - how much money you withdraw has tax implications. Also if you are VAT registered then to claim back VAT you have to have receipts in the name of the limited company. So it is more hassle.
Maybe what your accountant meant was something along those lines?

Why are you sceptical about his knowledge? he could just be bad at explaining things/ or lazy/ or not know much.