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Switch from sole trader to ltd company implications?
janicearcher
Posts: 20 Forumite
in Cutting tax
Hi folks
this is a question re switching status from sole trader to ltd company; I'm sure it's a complicated area so if anyone could point me to a website I am happy to do the digging!
Currently tax is based on the profits of the business at usual rates, and is in the 40% bracket + additionally class 4 conts.
An offer is on the table to form a company with another individual, I know this changes my tax situation significantly but have no idea of the actual tax costs as opposed to my current trading status.
Can anyone advise how to calculate the tax on a) taking a salary; b) what the tax liability is on taking additional dividends; c) the impact of corporation tax; and finally d) am I then also liable for employer's Ni conts?
Any pointers, advice, good websites to visit will be immensely appreciated.
Cheers,
Janice
this is a question re switching status from sole trader to ltd company; I'm sure it's a complicated area so if anyone could point me to a website I am happy to do the digging!
Currently tax is based on the profits of the business at usual rates, and is in the 40% bracket + additionally class 4 conts.
An offer is on the table to form a company with another individual, I know this changes my tax situation significantly but have no idea of the actual tax costs as opposed to my current trading status.
Can anyone advise how to calculate the tax on a) taking a salary; b) what the tax liability is on taking additional dividends; c) the impact of corporation tax; and finally d) am I then also liable for employer's Ni conts?
Any pointers, advice, good websites to visit will be immensely appreciated.
Cheers,
Janice
0
Comments
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I suggest you discuss it with your accountant as it is a totally different tax situation and you will need to balance up the benefits of income with dividends and see which works best for you. Some people are better off with higher dividends whilst others are better off with higher income.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0
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