limited liability or enterprise

medical

Dear all
i will soon become self employed and would like to know which is better in terms of cash in hand after tax etc -enterprise or limited liability company
All suggestions welcome
thank you
medical

straws

What do you mean by enterprise?

medical

what types of self employed are there?

helen_vasey

it all depends on how much turnover you think you will do and how complicated your accounts will be, if you go limited company, your company pays corporation tax, if you go self emlpoyed , you pay income tax and possibly n.i. contributions, depending on level of income. with a ltd co. you can't have a salary as such, you have dividends paid from the company, usually quarterly. whereas with being self employed you can take cash out whenever you like. accounting fees are also higher with ltd. companys. have a chat with your local business link office, we did and it saved us from unnessacarily registering as a ltd. company, also consider very carefully whether you NEED to become vat registered ( another minefield).

straws

You would generally register as a sole trader or as a limited company. It's easier to be a sole trader, as you just have to keep basic records and fill in a self-assessment form, but it depends what sort of business you're starting, what your turnover is likely to be and if you will have any employees. Take a look at the HMRC website or your local Business Link website, which explain all your options clearly.

straws

Sorry Helen - crossed posts!

Astaroth

The other big difference between sole trader and limited company is that as a sole trader you and the company are one and the same in the eyes of the law so if your company got into debt or was sued your person assets (eg your home) could be taken to pay off the debt. A limited company is a separate legal entity and therefore only the value of the shares you own in the company is at risk (which can be as low as 1 share at £1).

If you have an accountant and making a reasonable turn over a limited company is normally easier to reduce your tax liability legally too. That said and done however there is much more paperwork involved in running a limited company and it does require the company to have a director and a secutary (though they dont have to take an active role in the company and are often wives/ husbands etc).