Clean It Up
UK Window Cleaning Forum => Window Cleaning Forum => Topic started by: TomSE on July 21, 2014, 10:58:38 am
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Hi Fellas
Just curious as to what people think financially is the best way.
Recently spoke to an accountant who told me that if a sole trader is making 20k after expenses (but before tax) then they would be better off going limited as a limited company would pay the same tax 20% but not have to pay 9% NI. Is this correct as I would have thought if this was true the majority of people would be limited?
Need to make some changes, getting a loan and bigger van etc so trying to get all sorted for the future now rather than later. Wondering about going Limited rather than staying as a sole trader.
Looking at the future and wondered what your thoughts were on the best way (Sole Trader or Limited) for say
a) Someone making 20k after expenses
b) Someone making 30k after expenses
Or if someone knows the point at which it becomes beneficial to make the change that would be great.
Cheers Fellas
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Your accountant is selling it to you 'cause he will charge you more.
From the figures I worked out, it was worth it after around £50k turnover.
Everything is more expensive once your ltd.
The money you spend will go on more that just tax.
Extra insurance you're legally bound to have.
Accountants fees will double, possibly triple.
Business banking charges.
Loads of little extras that your accountant won't tell you about.
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Thanks for that mate hadn't thought about the additional accountancy fees or the insurance!
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I went ltd 2 years ago and don't pay as much tax as what I did as a soul trader. Fees are a little dearer but what I save in Tax is a no brainier. I had to go ltd as my accountant couldn't lose as much as he use to sue to picking up more work. Now I take a small wage each week. My wife and I are both Directors and my son is self employed. I'm vat reg as well and had my accountant for about 27 years and only charges me £200, my wife use to work for the bank and she does the vat. As I'm now employed by my company I have to account for everything I spend on the company card which can be a pain.
But pole king is right with things being slightly dearer
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What extra insurance do you need when you switch to being ltd???
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I went ltd 2 years ago and don't pay as much tax as what I did as a soul trader. Fees are a little dearer but what I save in Tax is a no brainier. I had to go ltd as my accountant couldn't lose as much as he use to sue to picking up more work. Now I take a small wage each week. My wife and I are both Directors and my son is self employed. I'm vat reg as well and had my accountant for about 27 years and only charges me £200, my wife use to work for the bank and she does the vat. As I'm now employed by my company I have to account for everything I spend on the company card which can be a pain.
But pole king is right with things being slightly dearer
You've only been Limited for two years Richard ? ;D
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if your profits are in the region of £30.000 then it may be worth it, it can depend on your accountants fees, my brother gets his for around £60.00 a month (£720.00 a year) mine would be over a £1000. and no im not changing.
He doesn't deal with any cash...........i do, well a little
He as a greater risk of damaging peoples property........i dont
Its all these little things you after take into consideration
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What extra insurance do you need when you switch to being ltd???
employers insurance. As now you're technically employed. Its a legal requirement.
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There is more to it than just tax and ni. Here are a few things to consider:-
1. Security. A ltd company has it's own identity. If something "bad" should happen when working, such as an accident where someone gets hurt. You are in a better position as long as processes have been followed and people are working safely. If you employ, I would definitely go Ltd for your peace of mind.
2. The sole trader can sell the good will to the Ltd company. This can be used over the next five years to reduce your tax liability.
3. Impressions. Some [not all by any means] commercial customers would rather deal with a Ltd company than John Smith. Even though Mr Smith does an excellent job for the same money.
4. Exit. If you want to sell at some time. The fact that your accounts are for a Ltd company and more detailed can help with the sale of the business.
5. Yes, the accountant may charge more, to be fair he is doing more work but you can negotiate with him or find a cheaper one if you wish. I have found paying more for accountancy to be a great investment. Mine is great but not cheap.