Sole trader of LTD Account

alanjohnson

Hi,

I'm in the process of setting up my company.

I will be providing managed Computer maintenence plans, data backup plans and computer support to both businesses and home users.

The dilemma I have is whether to setup as a sole trader or a LTD company.

I really like the idea of a sole trader, due to the benefits and my company is a low risk company (I have no outlay as I already own hardware / software) - but I'm worried companies won't want to deal with a sole trader.

So could anyone give me some good advice / details about the benefits of both and their experiences of being a sole trader trying to sell monthly services to companies.

Thanks

fengirl_2

You are right - setting up a limited company, whilst it offers protection from creditors, it is more expensive and bueaucratic. You would need to draw up a Mem and ARts, register with Companies House and submit accounts there annually. You would also need an accountant to prepare your accounts and everything you draw from the company (apart from reimbursed expenses) would be subject to PAYE, which is another thing you have to get to grips with.
As a sole trader, your only regulator is HMRC and you can produce your own accounts if you are capaable of doing so.
Surely anyone who asks you to provide your service to them is more interested in your capability than your legal structure?
I would advice starting as a sole trader and moving on to incorporation if you find you are making big money or that indeed companies will not deal with you on that basis.
Good idea to go and half an hour's free advice from a couple of accountants as your own financial position does come into it.

alanjohnson

fengirl wrote: »

You are right - setting up a limited company, whilst it offers protection from creditors, it is more expensive and bueaucratic. You would need to draw up a Mem and ARts, register with Companies House and submit accounts there annually. You would also need an accountant to prepare your accounts and everything you draw from the company (apart from reimbursed expenses) would be subject to PAYE, which is another thing you have to get to grips with.
As a sole trader, your only regulator is HMRC and you can produce your own accounts if you are capaable of doing so.
Surely anyone who asks you to provide your service to them is more interested in your capability than your legal structure?
I would advice starting as a sole trader and moving on to incorporation if you find you are making big money or that indeed companies will not deal with you on that basis.
Good idea to go and half an hour's free advice from a couple of accountants as your own financial position does come into it.

Thank you, some very good advice. Your right and I didn't think about it like that (companies should be interested in dealing with me)

I will therefore keep the business as a sole trader.

Thank you!

paulwf

If you decide to go more down the B2B route it may be worth becoming VAT registered as you can claim on purchases and companies can claim back what you invoice them. It will also make more of a difference to how large your company appears to be than your legal status.

Fengirl as always gives good advice. Starting as sole trader makes it easier to close the business if you decide the business isn't right for you so is a good option for the first year.

alanjohnson

Yes I was always planning to be VAT registered as I'll be selling b2b, so thanks for confirming to me that it's a good idea!

Ste_C

fengirl wrote: »

As a sole trader, your only regulator is HMRC and you can produce your own accounts if you are capaable of doing so.

He could also produce his own Ltd company accounts. There is no need for an accountant to do them.