Limited company????

Dan08

I am currently a sole trader but am now looking to start trading as a Limited company. As a sole trader my current tax year ends on the 5th April 2013, is it worth me waiting until then to start up the Limited company or should I do it now? Will starting up a Limited company now help in reducing my next tax bill or is it too late for that?

Also, I am looking to move property in May/June time this year so will be applying for a new mortgage, is this likely to affect my chances of getting a mortgage if I start a Limited company now?

Many thanks

chrismac1

You raise many issues here. I think you should seek a professional accountant who can advise on specific issues.

1. It takes 2 hours to create a limited company. Put one transaction into it and you can reckon on it taking 6 months to get rid of it. Not a step to take lightly and there are many more issues than merely tax to consider.

2. You can trade under a limited company once it exists. Some trades are easier to backtrack into a limited company than others. No trades can be backtracked further back than the incorporation date. You should save tax - after extra annual fees - if your taxable profits are above £15k and definitely should if they are over £20k.

3. Your mortgage application - if it is to be backed up by your business - will depend on at least 2, often 3, years of trading history. Different banks take into account different factors. My most extreme case was a client turned down by one bank. I then went through an experienced commercial mortgage broker for the client and the same bank said yes!