Sole vs Limited Company

bananaperson

Hey folks - looking for some real world advice.  I am due to speak to a tax advisor this week, but being a little impatient

I have been a sole trader for 7 years working as a comedian, however over the last year or so I have diversified a little bit into event management and promotion as well, and now have several ongoing ventures, for which I have created a company website.  I don't have any contracted staff but am paying out lots every week to fellow performers and freelance people who assist in the running of the events.

Has anyone gone from sole trader to Ltd and had any negatives?  It seems there are mostly positives for my situation, and should help in legitimacy (I had to fight for some contracts as not registered with company house for example).

Thanks in advance for any advice.

DullGreyGuy

This is presumably a sideline and your main income is from a job?

The main two things are that most sole traders do their own tax returns but most companies employ an accountant to do the corporate ones and so there is an additional cost. Secondly you go from 7 years trading experience to being a brand new employee of a brand new company and so lenders for remortgaging etc will be much more wary but if its a sideline and not main income then obv less of an issue.

Outside of that its just the mentality to get into that you and the company are separate legal entities and so you cant just dip into its monies etc

bananaperson

Lovely thanks, it is main source of income.  Does that change your advice any?

Dip into monies is a very good point.  I believe I have to pay myself a fixed salary?

DullGreyGuy said:

This is presumably a sideline and your main income is from a job?

The main two things are that most sole traders do their own tax returns but most companies employ an accountant to do the corporate ones and so there is an additional cost. Secondly you go from 7 years trading experience to being a brand new employee of a brand new company and so lenders for remortgaging etc will be much more wary but if its a sideline and not main income then obv less of an issue.

Outside of that its just the mentality to get into that you and the company are separate legal entities and so you cant just dip into its monies etc

DullGreyGuy

bananaperson said:

Lovely thanks, it is main source of income.  Does that change your advice any?

Dip into monies is a very good point.  I believe I have to pay myself a fixed salary?

No, just means the issue around lending is more likely to bite if you are needing to remortgage in the next couple of years etc.

You dont have to pay yourself a salary but most do a modest salary and take the rest as dividends. All depends on your personal situation and risk appetite. Know one chap running a business where he is the only worker but he's got the whole family on his payroll and as shareholders as they dont work and he wants to leverage their tax free allowances etc. Even puts a holiday down as an AGM once a year. 

bananaperson

DullGreyGuy said:

bananaperson said:

Lovely thanks, it is main source of income.  Does that change your advice any?

Dip into monies is a very good point.  I believe I have to pay myself a fixed salary?

No, just means the issue around lending is more likely to bite if you are needing to remortgage in the next couple of years etc.

You dont have to pay yourself a salary but most do a modest salary and take the rest as dividends. All depends on your personal situation and risk appetite. Know one chap running a business where he is the only worker but he's got the whole family on his payroll and as shareholders as they dont work and he wants to leverage their tax free allowances etc. Even puts a holiday down as an AGM once a year. 

Wow, that's funny.  Thanks for the comments, really appreciate that.

LessImpecunious

DullGreyGuy said:

. Know one chap running a business where he is the only worker but he's got the whole family on his payroll and as shareholders as they dont work and he wants to leverage their tax free allowances etc. Even puts a holiday down as an AGM once a year. 

Is he a member of our current government by any chance?

tifo

LessImpecunious said:

Is he a member of our current government by any chance?

Not anymore ......