self assessment or private limited company

daverave7

I'll be receiving consultancy payments in the next few years of around £50K. This is in addition to my first job where I earn £50K per annum.

Is there any benefit financially (i.e. paying less tax) if I set up a limited company as opposed to self assessment. As I understand it, if I set up a limited company then I will need to pay corporations tax of profit, then income tax on dividends? My spouse earns £20K per annum and would also be a partner in the company. Can someone point me in the direction of a basic guide to this question (highlighting the relative merits of each) or even perhaps a comparison calculator which will calculate totl take home pay based on all scenarios?

Cheers!

Pennywise

Any half decent accountant will do the sums for you and give you the proper info re pros and cons of both options.

daverave7

Pennywise wrote: »

Any half decent accountant will do the sums for you and give you the proper info re pros and cons of both options.

True, but they would cost...I'm happy to do the sums and research myself initially, if pointed in the right direction.

00ec25

daverave7 wrote: »

True, but they would cost...I'm happy to do the sums and research myself initially, if pointed in the right direction.

then keep on googling because the right direction is to talk to a qualified accountant who will cover much more than the few issues you have listed

daverave7

00ec25 wrote: »

then keep on googling because the right direction is to talk to a qualified accountant who will cover much more than the few issues you have listed

Yes, I'll be sure not to research anything myself and I'll go straight to an accountant. :money:

Dazed_and_confused

This type of thing can be much more complicated than you might first imagine.

Anyone replying to your posts can only go off what you have posted and the comment below suggest you have already got the concept of limited companies and self employed partnerships mixed up. It might just be a simple typo but everyone reading these posts has to rely on what is posted.

My spouse earns £20K per annum and would also be a partner in the company

Pennywise

Forums like this and others (on UK business forums for example) are littered with people who've "done it themselves" and ended up in a right mess, with the wrong legal structure, paying too much tax due to lack of understanding and missing planning opportunities, being fined penalties for failing to realise submission/payment deadlines, etc. Some extreme cases losing their businesses, their savings, even their homes due to being too tight/arrogant to get proper professional advice.

If you insist on DIY, then set aside a few days, spend many hours not only researching the official websites, such as Companies House and Gov.uk (specifically their HMRC pages), and also look at previous postings on forums like this. Everything you'll ever need to know is available online, but you need the time and inclination to trawl through it all and research all the pros and cons. If you can't do that, then talk to an accountant (it won't be as expensive as you think and you'll need one when you start trading anyway to do your tax returns etc). Cheaper to pay upfront and do things properly than muddle through and end up paying more for someone to sort out the mess.

There simply isn't room on a post on here to tell you all you need to know. Best thing would be to do plenty of research yourself to get to understand the basics and then come back with specific questions on the few remaining areas where you're unsure. We're a helpful bunch, but we're not going to do everything for you.

daverave7

Pennywise wrote: »

Forums like this and others (on UK business forums for example) are littered with people who've "done it themselves" and ended up in a right mess, with the wrong legal structure, paying too much tax due to lack of understanding and missing planning opportunities, being fined penalties for failing to realise submission/payment deadlines, etc. Some extreme cases losing their businesses, their savings, even their homes due to being too tight/arrogant to get proper professional advice.

If you insist on DIY, then set aside a few days, spend many hours not only researching the official websites, such as Companies House and Gov.uk (specifically their HMRC pages), and also look at previous postings on forums like this. Everything you'll ever need to know is available online, but you need the time and inclination to trawl through it all and research all the pros and cons. If you can't do that, then talk to an accountant (it won't be as expensive as you think and you'll need one when you start trading anyway to do your tax returns etc). Cheaper to pay upfront and do things properly than muddle through and end up paying more for someone to sort out the mess.

There simply isn't room on a post on here to tell you all you need to know. Best thing would be to do plenty of research yourself to get to understand the basics and then come back with specific questions on the few remaining areas where you're unsure. We're a helpful bunch, but we're not going to do everything for you.

Thank you. That's the kind of advice I am looking for. I do prefer to research these things myself, rather than having no knowledge when seeing a professional. It will prepare me for the right kind of questions I need to ask, to prepare the right information and most of all for me to understand what they might be telling me.

I'm sure a good accountant will be different, but I have had bad advice from mortgage brokers and even a solicitor in the past which would have cost me a lot of money if I hadn't persevered with doing some research myself.

Janet_2019

The Tax Insider website has a downloadable PDF titled 'tax tips for company directors 2018/19' which you might find useful. It includes a table to compare the tax savings between being self employed compared to a company director. Can't give you a link because I'm a newbie.

Potbellypig

daverave7 wrote: »

Thank you. That's the kind of advice I am looking for. I do prefer to research these things myself, rather than having no knowledge when seeing a professional. It will prepare me for the right kind of questions I need to ask, to prepare the right information and most of all for me to understand what they might be telling me.

I'm sure a good accountant will be different, but I have had bad advice from mortgage brokers and even a solicitor in the past which would have cost me a lot of money if I hadn't persevered with doing some research myself.

Before getting an accountant, I was considering doing it myself too (Ltd company). Believe me, there are so many loopholes that a good accountant will know from knowledge and experience, that you just won't. You may think I'm not paying X amount a year for someone just to do my books, but if you get a good one, they'll save you many more pounds in the long run.

hopon

Pennywise wrote: »

If you can't do that, then talk to an accountant (it won't be as expensive as you think and you'll need one when you start trading anyway to do your tax returns etc).

Nobody needs an accountant anymore, Quickbooks and Xero do it all for you......:rotfl: