Business Type Advice Needed

BossHog

Hi,

I'm currently employed full time, and will continue to be for a while at least, and looking to start my own part-time business. I've looked at the options for being a sole trader and ltd company but i'm not sure what is going to be the best option and how each choice would affect my full-time employment.

I have two issues with the types of business I can be:

Sole-trader - I really can't afford (at this stage) to pay for Class 2 NI on earnings I might not make until my apps (hopefully) start selling. I'm on a strict budget and could do without the expense of what is essentially a part-time business. Plus, i'm not sure how this would affect my full-time earnings and tax.

Ltd company - This seems like the right choice, but i've recently read that in order to be a ltd company I need to have a business bank account (I was hoping to use my own) which is something i'm not likely to be approved for.

Any help would be greatly appreciated.

Thanks.

lovinituk

A Ltd company must have a bank account in the name of the company as it is a separate legal entity to you as a person.

Pennywise

You can get small earnings exemption from Class 2 NICs if your profits will be less than about £5700 p.a.

Buy anyway, class 2 NIC is only a couple of hundred pounds per year. If you can't afford that how are you going to afford the formation fees, the Co House annual return fee and an accountant's fees to do the year end accounts and corporation tax return?

Suarez

Why buy class 2 if they're already paying NI through employment?

purdyoaten

Suarez wrote: »

Why buy class 2 if they're already paying NI through employment?

Because you do not have a choice unless you pay enough class 1 to be able to defer class 2/4. Unless. As has been said, small earnings exemption applies.

Annisele

Why do you think a limited company sounds like the right choice?

It might well be, but in general (not always) going limited isn't worth it until you get a reasonable turnover.

Suarez

purdyoaten wrote: »

Because you do not have a choice unless you pay enough class 1 to be able to defer class 2/4. Unless. As has been said, small earnings exemption applies.

I must have misinterpreted the post as it mentioned small earnings exception then says to buy class 2 anyway.

purdyoaten

Suarez wrote: »

I must have misinterpreted the post as it mentioned small earnings exception then says to buy class 2 anyway.

I think that I get your point now - there would be no point in paying class 2 if not required to so do because of small earnings exemption

zygurat789

purdyoaten wrote: »

I think that I get your point now - there would be no point in paying class 2 if not required to so do because of small earnings exemption

Or paying out all the fixed costs and risking all the fines of an Ltd when you can be a self employed sole trader for nowt.
Which answers the OP's question.