Is a Ltd Co really necessary?

Slinky

HasBeen wrote: »

E.g: If you sign a shop lease and the business goes bust, as a sole trader you are responsible for the lease debt and you will have the debt. A limited company provides limited liability and the limited company will owe the money - not you. If you have risk of debt, its best to go Ltd.

It's unlikey that a landlord will let a new ltd company sign a business lease for precisely this reason so you'd probably be signing the lease in a personal capacity anyway.

Mistral001

You can loose business because you are Ltd. Many sole traders will not deal with limited companies precisely because they have been caught by them going into liquidation. The clue is in the phrase "Limited liability".

I am a sole trader and on occasions have refused to do work for Ltd companies. In one instant it saved me several £1000.

leveller2911

Mistral001 wrote: »

You can loose business because you are Ltd. Many
sole traders will not deal with limited companies precisely because they have
been caught by them going into liquidation. The clue is in the phrase "Limited
liability".





I am a sole trader and on occasions have refused to do work for Ltd
companies. In one instant it saved me several £1000.

Same here, I've been caught out by Ltd companies twice and I now refuse to deal with them unless I'm paid in full upfront.

I would also say that being a Ltd company can cause problems when applying for a mortgage with regards to earnings,dividends etc.

mehera

LTD companies are now 10 times easier to form online plus you no longer need a secretary so it is easly done if you are a one man band . . .

Prothet_of_Doom

I'm a one man ltd company, providing engineering consultancy into the aerospace industry. In my line of work there is a fine line between the disguised employee, and being truely in business, and taking risks.
Because of the risks to a company of contractors claiming to be employees, and all that might entail, they won't deal with them direct, and will only deal with blood sucking middle men, who effectively manage 1000's of temps across the industry, with fairly standard terms and conditions. The Recruitment agent won't deal with sole traders, and will only deal with Ltd companies. Those people who really don't want to be self employed choose another blood sucking middle man to allow them to be employed and work via an Unbrellor company.
All I can say is that if you are selling to another business, it is better to be Vat registered, and from a tax point of view, the potential to take dividend (which is the remaining profit after corporation tax has been paid) as well as a salary, may have an advantage for most.

Personally I have learnt alot from having to run myself as a ltd company. Just having to do the paperwork, in a risk free business (my investment was £100), has been as good as studying an MBA in my opinion.
For instance. this week, I'm doing a 1/4ly VAT return, monthly PAYE run, yearly companies house submission, and putting the final touches to my yearly accounts, before supplying them to an accountant. Plus I'm setting up regular payment runs for pension payments and temp accomodation (My business is paying for a small cottage 4 nights a week, because it's cheaper than a hotel)

Sounds like hassle ? Well yes, but I find myself thinking more entrapranerial because of it.

Prothet_of_Doom

Mistral001 wrote: »

You can loose business because you are Ltd. Many sole traders will not deal with limited companies precisely because they have been caught by them going into liquidation. The clue is in the phrase "Limited liability".

I am a sole trader and on occasions have refused to do work for Ltd companies. In one instant it saved me several £1000.

Would you not protect yourself by carefully worded T&C's ?

Stage payments, or even a Third party holding the cash with clearly defined deliverables for stage payments ?

Pennywise

mehera wrote: »

LTD companies are now 10 times easier to form online plus you no longer need a secretary so it is easly done if you are a one man band . . .

But the accounts, corporation tax return, payroll RTI and VAT returns aren't "10 times easier".

The formation was always the easiest bit - now it's a lot cheaper too.

But where people get into real difficulties is the filings with HMRC and Co House, especially easy to run up £100s/£1000s of late filing penalties. Whilst most people with small simple businesses can tackle their own self assessment tax returns, most people will need an accountant to deal with their companies' accounts and returns filings which are completely different. Not only that, far too many people don't realise the discipline needed to separate business and personal monies and don't understand the legalities about paying themselves, whether it be payroll, dividends, loan repayments, expenses, etc. All you need to do is look on these and other fora at the sheer number of people who are in serious difficulties because they glibly formed a limited company without understanding (or caring) about the filing requirements and legalities.

Prothet_of_Doom

Pennywise wrote: »

But the accounts, corporation tax return, payroll RTI and VAT returns aren't "10 times easier".

The formation was always the easiest bit - now it's a lot cheaper too.

But where people get into real difficulties is the filings with HMRC and Co House, especially easy to run up £100s/£1000s of late filing penalties. Whilst most people with small simple businesses can tackle their own self assessment tax returns, most people will need an accountant to deal with their companies' accounts and returns filings which are completely different. Not only that, far too many people don't realise the discipline needed to separate business and personal monies and don't understand the legalities about paying themselves, whether it be payroll, dividends, loan repayments, expenses, etc. All you need to do is look on these and other fora at the sheer number of people who are in serious difficulties because they glibly formed a limited company without understanding (or caring) about the filing requirements and legalities.

I spent 3 hours last night on my monthly PAYE submission, my 1/4ly Vat Submission, my yearly companies house submission, and tidying up my accounts (Year end was 3 weeks ago, ready to give my accountant. His advise to go VAT registered on the Flat Rate scheme, more than pays for him, but my first one was useless, (turned out not to be qualified - but he didn't need to be for small companies ), and got me various filing penalties due to his ineptitude.
What accountants like to do is use smoke and mirrors to make it look complicated, but actually it's fairly simple.
I do know people who fail to separate ltd company money from personal money, and it all falls apart.
My main thing is that I have a business bank account with a linked savings account, and every for every payment in I transfer 20% to cover the VAT, and 20% to cover the Corporation Tax, and I run a cash flow spreadsheet that shows exactly when and how much is going out.