Been a Ltd Co twice
Once a few years ago when the government offered a carrot of not having to pay tax on the first £10,000 of profit. The next year they took the carrot away, so we reverted to Sole Trader.
Two years back our accountant recommended going Ltd again, so we did. As employees of our own company we pay tax and NI on the PAYE system but only take a basic wage each to use up our tax free allowance. We then pay Corporation Tax at 20% of our net profit on the rest, before taking our dividend so our personal tax is already paid from the Company profits.
That's sort of it, I don't get too involved - that's what the accountant is paid for, all I know is that our annual tax bill is a couple of thousand less than it used to be.
As for 'losing your house' - if you are a Sole Trader and you have lots of trading debts (hire purchae on your van, for instance) then if you go bust your creditors can apply to the courts for your assets (your house) to be sold to pay the debts. Not vey likely in our trade, as we don't carry vast amounts of stock bought on credit like retailers. As a Ltd Company it's the company which owes the debt, and only assets which can be proved to belong to the Company can be siezed to pay any debt. These would be only things like WFP equipment, vans registered to the company and any other equipment/spares etc.
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