[TomCrowther]

Hi All
My accountant has suggested moving to a ltd company status to save ni contributions and have more protection for when I take on first employee. I can see the advantages but what about the disadvantages? These are the ones I am aware of but would be greatful for other suggestions:-
1. Bigger accountancy fees. My guy has said it would be around £500 more
2. Insurance changes to the van. Loss of no claims etc if the van becomes a company van.
3. Hassle of changing bank accounts and getting customers to change dd's and standing orders.
Cheers..

[Perfect Windows]

1. You'll save much more than that in reduced NI.
2. If you go to the right insurers (A-Plan brokers did this for me) they moved my no-claims bonus to the company.  Only problem is that it can't be brought back, so you need to get yourself named on your wife's policy to start building your personal one back up.
3. Some hassle, but no more than if you hanged bank.  Choose the right account.  Sorry to keep banging on about this but if you join the FSB you get free banking from the Co-op (I suspect forever givent he tight links betweek the FSB and the Co-op)

Vin

[TomCrowther]

Thanks Vin, so you recon it's the right way to go?

[Perfect Windows]

We also get the huge extra advantage that the current Mrs Vin doesn't have another job.  That means that effectively we now get two personal tax allowances rather than one.  If you're in that position it's a no-brainer.

I'd suggest that you sit with your accountant and ask him exactly what it's all going to cost to be Ltd and what financial advantages you will gain.  He's a better source of advice than a bunch of windys.  It's a serious decision. 

If it balances out financially in your favour go for it.

It also will give customers the impression that you're here to stay.

Vin

[William McCafferty]

I cannot see how your accountant is going to charge you an extra £500 because you are a ltd company, I changed over to a ltd company last year and my accountant fees are the same as when I was a sole trader

With regard the van insurance, I have kept the van in my personal name, my insurance company are happy with that.

The bank account was easy to do and as Vin has said if you join the FSB you will get free banking

[Erithwc]

What does the FSB cost per year couldn't find it on their site when i looked the other day.

Paul

[Perfect Windows]

What does the FSB cost per year couldn't find it on their site when i looked the other day.

Paul

Yeah, they took that off the page - you now need to call and someone from the FSB will visit you to discuss it.  

The registration fee (yr 1) is £30.

After that:

Sole trader: £120
1-4 employees £170
5-10 employees £220
And onwards...

Loads of benefits, too many to mention, but includes insurance against tax investigation and full employment legal help up to and including tribunals (provided you speak to them before doing anything - including interviewing, etc).  Free banking probably pays for itself every year, so the rest is effectively free.

Vin

[Erithwc]

Thanks Just found the page 

http://www.fsb.org.uk/value

Paul

[bobplum]

Hi All
My accountant has suggested moving to a ltd company status to save ni contributions and have more protection for when I take on first employee. I can see the advantages but what about the disadvantages? These are the ones I am aware of but would be greatful for other suggestions:-
1. Bigger accountancy fees. My guy has said it would be around £500 more
2. Insurance changes to the van. Loss of no claims etc if the van becomes a company van.
3. Hassle of changing bank accounts and getting customers to change dd's and standing orders.
Cheers..

i really cant see the need to go ltd just because you have an employee or am i missing something

[Perfect Windows]

Hi All
My accountant has suggested moving to a ltd company status to save ni contributions and have more protection for when I take on first employee. I can see the advantages but what about the disadvantages? These are the ones I am aware of but would be greatful for other suggestions:-
1. Bigger accountancy fees. My guy has said it would be around £500 more
2. Insurance changes to the van. Loss of no claims etc if the van becomes a company van.
3. Hassle of changing bank accounts and getting customers to change dd's and standing orders.
Cheers..

i really cant see the need to go ltd just because you have an employee or am i missing something

Yes, you're missing something.  When you pay yourself from a Ltd company, there's a significant benefit in NI deductions from those payments.

I'm not going to go into it (it may well have changed in detail since I looked at it) hence my advice to get an accountant to lay it out for you.

Vin

[bobplum]

does it also depend on turnover,for instance the "average"  sole trader w/c will normally have about 350 customers,so lets say thats about,£40.000 a year,give or take,he then decides to take someone on,maybe just one day a week or two would that be a a good example to change from sole trader to ltd
i appreciate this really is an accountants question but would like to know if this is what others have done

[William McCafferty]

does it also depend on turnover,for instance the "average"  sole trader w/c will normally have about 350 customers,so lets say thats about,£40.000 a year,give or take,he then decides to take someone on,maybe just one day a week or two would that be a a good example to change from sole trader to ltd
i appreciate this really is an accountants question but would like to know if this is what others have done

Hi Bob

I went Ltd with the figures you have quoted apart from the amount of customers, if I had that many I would be looking at registring for vat.

The way a ltd company works is you pay corporation tax of 21% on any profits from the business, you pay yourself your personal tax allowance without paying any PAYE tax or NI you can then take out dividends of £35000 per year free from any NI payments.

This saves you 12.8%

The other benefit of going Ltd is you are protected if you go bump or are sued. 

[David Salkeld]

My Opinion:

First, I am not an accountant.  But, over the 9 years I have had D.Salkeld.Ltd I have learned a lot.

Being Ltd IS MORE HASTLE until you get the hang of it.  It IS less tax to pay.....But.....more accountancy fees.

Sole Trader Accounts is:-

      Takings
    - Expenses
    =Profit
     -Personal Allowance
    =Taxable Profit
    - Class 2 NI @ £2.65/week
     -Tax @ 20%
    -Class 4 NI @ 9%
=  Available Funds

Ltd Co is:

     Work Done (Wether paid or not,NOT Payments)
   - Expenses  (wether paid or not) to include, currently, 7488 directors wages
  = Taxable Profit
  - Corperation Tax 20%
  = Available Funds
Directors Dividends are drawn from avaiable funds.

Looks simpler?? NO NO

First you as Ltd Co have to keep ledger accounts:
Sales A/C is Work Done - Payments = debtors
Purchase A/C is Purchases aquired - Payments made = credtitors.
Then you have:
Capital A/C Value of business and Assets
Directors A/C what you have put into the business - what you have drawn = what you owe the business or it owes you.
Then there's the accounts to Tax Office AND Companies House.  Including Dividend vouchers Tax certificates blaa, blaa, blaa.

As far as your van is concerned.  If you sell it to you new Co then you will be taxed personally for use of co vehical
Or, better, keep it yourself. Same insurance SDP and Ins'rds Business and claim 45p per mile business use.

In summery:

If you are a small one man band windy......Sole Trader is better.
If you are heading bigger and employing then Ltd is the way.

It's just like Trad or WFP

Trad is simpler if you are happy with a regular wage.
But if you want to run a proffesional SME then WFP is a must.

Company Ledger Accounting when you get the hang of it will help you see how well the business is doing and the Employer Liability is on the company NOT you personaly.

I am in the reverse position.....My new accountant is wondering if it is worth me being LTD??  I'm not sure....will have to chat it over??

Hope this is of information.
Probably totaly confused you all    :

David Salkeld
MD and CEO 
D.Salkeld.Ltd

But still "David the window cleaner" 

[TomCrowther]

Many thanks for taking the time to reply David.

[David Salkeld]

Also, FSB is a good idea 

[♠Winp®oClean♠]

If you are trading as a ltd company, are you required by law to state that fact on all your trading media?

[Ian Lancaster]

Some years ago Gordon Brown offered an incentive for all small Sole Traders to go Ltd.  It was that after all other calculations, your first £10,000 profit was free of any sort of taxation.

Thousands, like me, jumped on the bandwagon and saved ourselves megabucks in tax quite legally for the first year of being Ltd.

GB immediately realised he had stuffed his size umpteen boot right in the brown sticky stuff and changed his mind.  Result: thousands, like me, jumped straight off the band wagon again

Just thought I'd share that gem with those of you young enough not to have heard of it.

As for being Ltd now - Vin has explained the benefits very succinctly.  My wife and I are co-directors of our Ltd company.  We save lots per year.  My latest bill from my accountant is £454 for the year which includes all expenses regarding posting accounts with Companies House, both our personal Tax Returns and all our PAYE costs: he sends me a paying in slip every month for our tax and N.I but he does all the necessary paperwork etc - all I have to do is go online and pay HMRC their (very small) share.  Once a year I have to pay Corporation Tax - about two thirds of what I used to pay in Income Tax.  I haven't a clue about the stuff David Salkeld mentions - I pay my accountant to take care of all that.

I think it's a bargain all round

[David Salkeld]

Ian,
You're lucky to have an accountant so cheap. I also jumped on the same "bandwagon"
I had an accountant for 15 or so years. Very good, helped me out over the years.
Last year I asked them to sort out a spreadsheet to do my books as I have described.
When it arrived it was a simple "cashbook" and they charged me........400 for it :O
And 900 per year.  Sod that ..........so I shopped around and did my own spreadsheet
I now have the spreadsheet that works well and an accountant who charges only 650
Works for me

[Ian Lancaster]

I'll give you my accountants contact details if you want - he can do it all by post or email so doesn't matter that you aren't local

[♠Winp®oClean♠]

I'll give you my accountants contact details if you want - he can do it all by post or email so doesn't matter that you aren't local

Have you ever checked your "accountant's" calculations? Or do you solely rely on his actions?