[wcs.]

I

[dd]

I am sure there are benefits to being Ltd, but for the one man band life is much more simple if you are just self-employed. I am and do not in any way feel threatened.

I know someone who went Ltd and they now have to employ a chartered accountant, their insurance is much more expensive and they have to be more rigorous with thier book-keeping etc. They still benefit from being Ltd, but their overheads have increased substantially (I think at least £1000 per annum) and it does take more of their time.

I do O.K. but feel no desire to boast how much I earn (more than some, less than others).

[cvdewsbury]

not actually followed what you are saying ..but to my best knowledge (which is 18 yrs experience of top flight scrimming under my belt) I do not know of any s/e window cleaners going bust,how can they,there aint no major cash flow problems money is normally paid straight away or collected within 2 weeks of been cleaned ..no comprehend vous?

[poleman]

I am Ltd and loving it!  Pay myself a top wage up to 35k a year tax free, going Ltd is a lot involved but the benefits are good, but it might not be for everyone, I would speak with your account before you went down this road

[dd]

There is always the danger of the tax man removing some of the benefits of being Ltd, e.g. in the Budget. Talking to your accountant is good advice.

[Rob_Mac]

Andy

I am in London from this afternoon - rush job on for some media coverage on a store.

Will call you later on in week - could do with your angle on going LTD

Cheers

Rob

[kirky]

can someone explain LTD to me i aint a clue 

[David Slater]

can someone explain LTD to me i aint a clue 

It can be complicated or easy. It depends who is advising you.

Your accountant will probably want to make it sound very complicated and difficult (so you'll need to pay extra for his services!).

In a nutshell, A Limited Company is an entirely separate legal entity. It is not you.

You dont 'own it'

'It' isnt yours

You are an employee of the Ltd company (even if you own 99% of the shares in it)

'It' pays its own tax.

'It' has its own Public Liability

'It' can go bust....and leave you free of debt - just like if you bought shares in M&S and they went bust, the bailiff wouldnt chase you as a shareholder for debts.

'It' can pay you a dividend each year (which is taxed lower than PAYE)

'It' still has to pay tax on its turnover (so strictly speaking, Poleman is incorrect when he says he draws 35k tax free)

The simplest way to think of a Ltd company is your child turning 18. Legally, you are no longer responsible for them, (but in reality you probably still control everything they do!)

Do a quick google search or a 'wicki' search for the finer details.



 

[poleman]

Andy

I am in London from this afternoon - rush job on for some media coverage on a store.

Will call you later on in week - could do with your angle on going LTD

Cheers

Rob

Rob, give me a call any time, best after 5pm as I dont like to talk about what I get paid in front of my emplyees 

[poleman]

'It' still has to pay tax on its turnover (so strictly speaking, Poleman is incorrect when he says he draws 35k tax free)

Yes the Ltd Company pays corporation tax, so the MD (me) does not pay tax up to 35k as that would be classed as a double take

[dd]

I don't get how becoming Ltd turns you into a business with a team and systems.

Your post is about becoming Ltd. Do a seperate post about business building.

[Joe Lauzon]

I run a limited firm.  A word of warning.  It is easy to become limited.  Once you are limited its a big problem going back to self employed - I tried.  It would have cost me a lot of money.  I would have had to buy the the company's goodwill and assets blah, blah, blah.

If your a one man band, forget going limited.  3 or so years ago you were crazy not to be limited, you saved a bunch in tax.  The government cottoned on to this "misuse" of a limited company.  They are currently in the process of changing tax laws, it is now better to be self employed if you are a 1 man band.

It will cost me too much to go back now, unless the government really crank it up on limited companies.

[Joe Lauzon]

The tax benefits are real compared to having a job or being self employed. This shouldn’t be the reason alone for going ltd.

A good way to look at it, as a sole trader if you compete for business against a company you will be up against a team. Teams are stronger than the individual.

Another obvious point is as a sole trader you own your job, with that come all the problems for example if you are of work due till ill health.

Companies or businesses are completely different they are systems. The owners of established companies don’t even have to be there. They employ an MD to run it for them.

There is no way even the most successful self employed window cleaner can compete with in any way to an average window cleaning firm.

Ewan,

Have to say I disagree with your post.  I have no idea where your coming from 

This team versus individual bit makes no sense to me whatsoever.  In reality being limited really just matters when its time to do your books.  In the business world being limited has the advantage of having a better perception, but as window cleaners I don't believe our customers really give a monkeys quite honestly.  It doesn't effect them.

[windowwashers]

The tax benefits are real compared to having a job or being self employed. This shouldn’t be the reason alone for going ltd.

A good way to look at it, as a sole trader if you compete for business against a company you will be up against a team. Teams are stronger than the individual.

Another obvious point is as a sole trader you own your job, with that come all the problems for example if you are of work due till ill health.

Companies or businesses are completely different they are systems. The owners of established companies don’t even have to be there. They employ an MD to run it for them.

There is no way even the most successful self employed window cleaner can compete with in any way to an average window cleaning firm.

that is totally wrong, I used to be a one man band I used to go up against companies all the time, I won a fair share of the work. Are you a window cleaner Ewan ?  



Also while I am here, anyone can buy a limited company name : do a search, I know loads of people that run very big business' yet are not limited if what ytou say is true can you explain this to me I am not limited
Ian

[windowwashers]

The tax benefits are real compared to having a job or being self employed. This shouldn’t be the reason alone for going ltd.

A good way to look at it, as a sole trader if you compete for business against a company you will be up against a team. Teams are stronger than the individual.

Another obvious point is as a sole trader you own your job, with that come all the problems for example if you are of work due till ill health.

Companies or businesses are completely different they are systems. The owners of established companies don’t even have to be there. They employ an MD to run it for them.

There is no way even the most successful self employed window cleaner can compete with in any way to an average window cleaning firm.

that is totally wrong, I used to be a one man band I used to go up against companies all the time, I won a fair share of the work. Are you a window cleaner Ewan ?  



Also while I am here, anyone can buy a limited company name : do a search, I know loads of people that run very big business' yet are not limited if what ytou say is true can you explain this to me I am not limited
Ian

Ian, it’s not totally wrong at all it’s not even a little bit wrong. Just because you have and I hope continue to win work over firms. Doesn’t mean they can’t crush you if it was in there interest.

An extreme example would be if you went up against OCS for a contract of say one million pounds they could offer to do it for free pay the client for doing it! And OCS would still make a profit at year end.

As for saying you no people who run very big businesses and are not ltd. This is a fallacy, but does depend on your definition of big and not what is actually big.

PS. People aren’t ltd businesses are for good reason.

Ewan

Please don't insult my intelligence by saying about what my definition of big is I am not a silly little boy. You are word twisting.

As for crushing me buy doing work free to get the contract I do know what you are saying. My point was and still is you do not have to be a limited company to win contracts nor IMO does it make any diffrence as said before you can buy a limited company online.

Again I say what you put is wrong and yes even a little bit wrong not totally but still wrong.

Are you a window cleaner ?

Ian

p.s OCS I would say are not an average firm

[gsw]

I am Ltd and loving it!  Pay myself a top wage up to 35k a year tax free, going Ltd is a lot involved but the benefits are good, but it might not be for everyone, I would speak with your account before you went down this road

the fact that you are an "employee" of your ltd compnany and your ltd company has to pay corporation tax how does this mean that your 35k salary is tax exempt??

as an employee should you not have to pay tax on those earnings? you may be able to pay yourself some of the profits from the firm tax free via a dividend at the end of the financial year but i would have thought that your earnings are tax liable.

I might be wrong here and i'm not saying that what i have said is right so if i am  wrong could someone please explain why !??


greg

[groundhog]

An extreme example would be if you went up against OCS for a contract of say one million pounds they could offer to do it for free pay the client for doing it! And OCS would still make a profit at year end.

Why would they do that??? I'm sure that they didn't become a successful business by working for free!!!! 

[David Slater]

I am Ltd and loving it!  Pay myself a top wage up to 35k a year tax free, going Ltd is a lot involved but the benefits are good, but it might not be for everyone, I would speak with your account before you went down this road

the fact that you are an "employee" of your ltd compnany and your ltd company has to pay corporation tax how does this mean that your 35k salary is tax exempt??

as an employee should you not have to pay tax on those earnings? you may be able to pay yourself some of the profits from the firm tax free via a dividend at the end of the financial year but i would have thought that your earnings are tax liable.

I might be wrong here and i'm not saying that what i have said is right so if i am  wrong could someone please explain why !??


greg

Its a convoluted system. I'll try and break it down for you -

The Ltd company pays corporation tax. The Ltd Company pays its shareholder (you) a "dividend" at the end of they year. Thats your return on your shareholding. Just like M&S pays dividends each year to its shareholders.

Because the Ltd company has paid tax itself on that money then it can pay it out as a dividend to the shareholder technically tax free (but its your company and you've just paid corporation tax through the company so it is in no way tax free).

As you most likely will have no other income (because you work for the Ltd company) then you wont be hitting tax thresholds that would affect the dividend payout.

You claim the money once a year. You technically have no wages all year.

It isnt a way to get tax free wages. Its nothing of the sort.

It can be handy for staff and if you start hitting VAT thresholds. Apart from that, its just another expense to add to the list.

[gsw]

thanks david

so essentially you dont pay tax on the same money twice. assuming polemans company (ltd) earns more than 35K profit a year (and he portrays that image!) then what happens to the excess profit if it cant be paid as a yearly dividend? is this then liable for higher rate corporation tax? and how can the "shareholder/s" receive it  if not as wages? bit heavy for saturday night i know!!!!

thanks, greg

[Joe Lauzon]

Ewan,

Perhaps I am misunderstanding where you are coming from.

What did you mean by this statement?

Fact is you are more vulnerable if you are self employed.

This statement below is very misleading.

The tax benefits are real compared to having a job or being self employed. This shouldn’t be the reason alone for going ltd.

Also this makes no sense.  A sole trading company can be larger than a limited firm.

A good way to look at it, as a sole trader if you compete for business against a company you will be up against a team. Teams are stronger than the individual.

No, I take it back.  I don't think you know what your talking about on reflection