Going from self employed to limited company

bengal128

Okay so I am thinking of going self employed to limited company, but at the moment I am worried about having enough money to pay tax bill from 13/14 year. How easy did you find the transfer? Thanks in advance

MataNui

bengal128 wrote: »

Okay so I am thinking of going self employed to limited company, but at the moment I am worried about having enough money to pay tax bill from 13/14 year. How easy did you find the transfer? Thanks in advance

I think i know what you are talking about. I changed from self employed to ltd a couple of years ago. I did it specifically because of a tax issue that i would have had.

A client wanted to clear their budget and basically pay in advance for a years worth of work. because of the timings this would mean my personal accounts would show an income of at least twice the normal amount in that year but i would only receive half the normal amount the year after giving me a ridiculous tax bill. So i set up my ltd company thus ending my personal income and all new funds started again as far as tax was concerned.

Personally i have found it hard to manage. being self employed meant all the money was mine. I had a big bank account and never felt skint. Now the money belongs to the company and my small monthly salary isnt enough to live on so i keep dipping into the company accounts (call it a directors loan) to see me over. I do keep accurate records so my accountant sorts it all out at year end but i still feel like i am not doing it right AND i always feel skint.

But it is a lot better being a ltd company. For one thing Banks/CC providers and pretty much all credit providers treat you like dirt if you say 'self employed', regardless as to how much you earn. Now though i just say i am 'full time employed' (by my own company but i am legally employed) which does make a difference.

jp1964

MataNui wrote: »

I think i know what you are talking about. I changed from self employed to ltd a couple of years ago. I did it specifically because of a tax issue that i would have had.

A client wanted to clear their budget and basically pay in advance for a years worth of work. because of the timings this would mean my personal accounts would show an income of at least twice the normal amount in that year but i would only receive half the normal amount the year after giving me a ridiculous tax bill. So i set up my ltd company thus ending my personal income and all new funds started again as far as tax was concerned.

Personally i have found it hard to manage. being self employed meant all the money was mine. I had a big bank account and never felt skint. Now the money belongs to the company and my small monthly salary isnt enough to live on so i keep dipping into the company accounts (call it a directors loan) to see me over. I do keep accurate records so my accountant sorts it all out at year end but i still feel like i am not doing it right AND i always feel skint.

But it is a lot better being a ltd company. For one thing Banks/CC providers and pretty much all credit providers treat you like dirt if you say 'self employed', regardless as to how much you earn. Now though i just say i am 'full time employed' (by my own company but i am legally employed) which does make a difference.

We run two limited companies and have done for the past 8 years, its not hard at all, certainly no harder than trading on a self employed basis.

I am surprised that you have not been told by your accountant that paying yourself a small salary needs to be topped up by paying yourself additiional dividends from profit, no wonder you have been struggling, you don't need to take this money as a director's loan, and its fine to pay yourself money from profits made.

We found it perfectly simple to change from self employed to Limited Companies, really the only difference was the annual return to Companies House, and obviously paying Corporation Tax at the year end, as long as you keep proper records so that your accountant can sort it all out when filing your accounts you should be fine.

I agree that Limited Company status does make you more credit worthy, rightly or wrongly and it does make you look far more professional and trustworthy.

Now if only I could find out how to get on the books of S**rbu**s' and Am**on's accountants, we could have saved ourselves about £32k's worth of corporation tax this year alone by sending all our profits abroad!!:rotfl: