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Topic Title: LTD OR SOLETRADER
Topic Summary: PROs Cons
Created On: 25 January 2013 10:16 PM
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 27 January 2013 07:04 PM
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Paradigm

Posts: 700
Joined: 10 September 2010

Bollywood / Zumba fusion, now you're talking, just cap it with a bit of gangnam style and it's a proper party.


Nick

-------------------------
"be careful of what you write"
 27 January 2013 07:25 PM
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perspicacious

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I watched the BBC 2 program about sheriffs a few mornings (07:15 to 07:45) last week and one debtor (a solicitor) claimed that they couldn't take his office computers etc as they are "tools of his trade" but the sheriffs pointed out that this "get out" didn't apply if you are a Ltd Co or as a non Ltd Co, with an employee.......

Regards

BOD
 27 January 2013 08:25 PM
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Zs

Posts: 2899
Joined: 20 July 2006

Originally posted by: OMS

It will be soon Nick - I'm orf home -



Right, where did I put my zumba/bollywood fusion CD ?



OMS


He's having you on guys. OMS,I have a stack more for you here including Clapton Blues and Lynyrd Skynyrd, and something interesting, if not a bit 'lift music' from a bloke who used to be a busker in the Twickenham area.
I bet you 50p that, seeing as OMS was at work on a Sunday, he is driving home to Welsh Wales with Nanci Griffiths Late Night Grande Hotel (title track on repeat, for another 50p) or Shawn Colvin's 'Cover Girl' on the player. At a push two tracks recorded by Zs. Zumba Bollywood...I ask you? He's 'avin' a giraffe.

Anyway, Ampman,

I became Limited last year from sole trader. Just me as a director so not much has changed from my point of view. I had resitsted it but needed to do it when I started working for the agency. They were going to deduct a stupid amount of tax were I not a Ltd company so that gave me the kick to make the cross-over. I chose a name for the limited company which is anonymous and not gender specific. Nor is it trying to be funny or salesy. It is, on the QT a tribute to those who have helped me along the way but few ask about it.

Since becoming Limited I note a far more professional response from my clients, especially after estimating or invoicing them on the Ltd headed paper. From that point of view I would recommend the change. The casual approach to the little woman who came round and fixed the hot tub has completely disappeared.

If you are going to make the change then I would suggest that you do it exactly in line with the end of your tax year. Then your final self-assessment accounts are easy and all you have to do is click the box for a reduction of your on account payments to £0 and explain that you ceased trading as self employed. I have just filed my last ones as self employed.

All you need to do is choose a name, check that it is available from any one of loads of on line sites and get yourself an accountant. I chose one who is about 60 miles from here but he specialises in what we do. It cost about £50 to get the new Limited company incorporated and running. He asked me the name, made a call and then did the whole lot. He will charge me about £700 a year for filing the returns. I trust him and he seems clued-up. He is in Essex BTW.

Zs Ltd (not really) has two bank accounts and one of them gets 15% of turnover paid into it as a saving account. Corporation tax is about 15% so that should be more than enough.

Times are still tough out there but I like it, I am comfortable with being looked after by an accountant and would recommend the change.

But then I would not take a loan for anything, I'd borrow your drill instead, so I am not sure if that makes a difference.

Zs
 27 January 2013 09:35 PM
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Martynduerden

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Originally posted by: Paradigm

Originally posted by: Martynduerden

Don't be fooled by the less risk argument, most aggrements you would sign as a director will have a personal guarantee clause, effectively this means you remain liable.


What sort of agreements are you talking about Martyn, I have no personal guarantees on any part of my business, do you then?

Nick


I am not a ltd company yet, hence I don't have any director agreements.

Every contract for the supply of goods from wholesalers including all current ones have had a personal guarantee section applying to directors.

I have accounts with most of the nationals both for electrical & plumbing supplies, I would be quite surprised if many of you that are limited either know about the clauses or have negotiated them out, most are well disguised.

-------------------------
Regards

Martyn.

Only a mediocre person is always at their best



www.electrical contractors uk.com
 27 January 2013 09:45 PM
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perspicacious

Posts: 7232
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"most are well disguised."

Like the ability to get further bank references after the initial application...........

Regards

BOD
 27 January 2013 09:49 PM
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Martynduerden

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Originally posted by: perspicacious

"most are well disguised."

Like the ability to get further bank references after the initial application...........

Regards

BOD


I'm not sure I follow you BOD ......

-------------------------
Regards

Martyn.

Only a mediocre person is always at their best



www.electrical contractors uk.com
 27 January 2013 09:50 PM
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Zs

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Nope, I pay as I go Mart, at the counter as I order. As such I'm not familiar with the process for the Nationals on accounting and Ltd companies. That may have a bearing for Ampman so do tell.

Zs
 27 January 2013 09:58 PM
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Martynduerden

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Originally posted by: Zs

Nope, I pay as I go Mart, at the counter as I order. As such I'm not familiar with the process for the Nationals on accounting and Ltd companies. That may have a bearing for Ampman so do tell.

Zs


Our local also have/had a personal guarantee policy for directors - though obviously not an issue for cash accounts.

-------------------------
Regards

Martyn.

Only a mediocre person is always at their best



www.electrical contractors uk.com
 27 January 2013 09:59 PM
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perspicacious

Posts: 7232
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"I'm not sure I follow you BOD ......"

A difficult path Martyn

Most traders accept that they have to give a couple of trade references and their bank details as part of the application for a trade account. However, I declined to sign up for a well known electrical wholesaler as the small print entitled them to ask your bank for not only their opinion of the way you conduct your account but to repeat this at any time in the future that they wish......... If I have to use them, they get a debit card under their nose and little option to get the invoice wrong and delay a credit note.......

Regards

BOD
 28 January 2013 10:12 AM
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OMS

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He's having you on guys. OMS,I have a stack more for you here including Clapton Blues and Lynyrd Skynyrd, and something interesting, if not a bit 'lift music' from a bloke who used to be a busker in the Twickenham area. .
I bet you 50p that, seeing as OMS was at work on a Sunday, he is driving home to Welsh Wales with Nanci Griffiths Late Night Grande Hotel (title track on repeat, for another 50p) or Shawn Colvin's 'Cover Girl' on the player. At a push two tracks recorded by Zs. Zumba Bollywood...I ask you? He's 'avin' a giraffe.


Both of those plus a selection from Bare Naked Ladies - just listening and re-listening to Smiley Smile in fact -

He's 'avin' a giraffe - well, perhaps

OMS

-------------------------
Failure is always an option
 28 January 2013 06:47 PM
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Paradigm

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Originally posted by: Martynduerden



Every contract for the supply of goods from wholesalers including all current ones have had a personal guarantee section applying to directors.

I have accounts with most of the nationals both for electrical & plumbing supplies, I would be quite surprised if many of you that are limited either know about the clauses or have negotiated them out, most are well disguised.


They do if you are a sole trader or a partnership and this can be carried over if you start trading as a Ltd company and do not fill out a new credit application form but the credit form for my main wholesaler does not have a personal guarantee clause into it if you are LTD. If they believe you to be a high risk, they may ask you to sign another form giving this but its not built into their terms.

I know so as I spoke to them today and they are a national chain Martyn.


Nick

-------------------------
"be careful of what you write"
 28 January 2013 07:05 PM
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DOUGIE1000

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I still prefer the ltd company status and pros com paired to non ltd.

Also maybe I missed it however I can drawn earnings of over 40k and not pay highter tax rate,

Ps I don't earn more than 40k unfortunately.

-------------------------
Dougie
Power Plus Electrical.co.uk

My mission is to live as long as possible......so far so good!
 28 January 2013 07:23 PM
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Paradigm

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Dougie

I am with you all the way, the NI benefits alone sold it to me, let alone the CIS setoff or the non payment of tax on account.

I just wish I had done it a few years earlier.


Nick

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"be careful of what you write"
 28 January 2013 09:37 PM
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Martynduerden

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Originally posted by: Paradigm

Originally posted by: Martynduerden


Every contract for the supply of goods from wholesalers including all current ones have had a personal guarantee section applying to directors.

I have accounts with most of the nationals both for electrical & plumbing supplies, I would be quite surprised if many of you that are limited either know about the clauses or have negotiated them out, most are well disguised.


They do if you are a sole trader or a partnership and this can be carried over if you start trading as a Ltd company and do not fill out a new credit application form but the credit form for my main wholesaler does not have a personal guarantee clause into it if you are LTD. If they believe you to be a high risk, they may ask you to sign another form giving this but its not built into their terms.

I know so as I spoke to them today and they are a national chain Martyn.

Nick


I guess your lucky, as I said I have not come across an initial application for a trade credit account where a personal guarantee clause is not included as a matter of corse for ltd companies.

-------------------------
Regards

Martyn.

Only a mediocre person is always at their best



www.electrical contractors uk.com
 28 January 2013 09:53 PM
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Paradigm

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Martyn

The word lucky is rarely used in conjunction with talking about me except in a completely ironic way, but thanks, you did make my day.

Nick

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"be careful of what you write"
 29 January 2013 09:00 AM
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tomgunn

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Originally posted by: Martynduerden

Don't be fooled by the less risk argument, most aggrements you would sign as a director will have a personal guarantee clause, effectively this means you remain liable.



Know what? I have never signed a contract in the construction game - wouldn't do it! Managed to survive!

Tom

-------------------------
Tom .... ( The TERMINATOR ).

handyTRADESMAN ... haha

Castle Builders

Why did Nick Clegg cross the road? Because he said he wouldn't!

I can resist anything..... except temptation! ( Karl Gunn ).
 29 January 2013 09:06 AM
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tomgunn

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Originally posted by: OMS

For sure Stu - but if you wanted to borrow £100k to expand or deal with cashflow and materials on a big contract you wouldn't have that "walk away" power available to you.

As I said, avoid them at any or all cost unless you really have no options - and then get a re-negotiation clause in place that would allow you to transfer the risk into something or somewhere else

regards

OMS


Quite horrific to be honest - the thought of anyone wanting a loan of £100k! I have worked for some of the biggest electrical contractors as a subbie - easiest way forward back then - no tax deductions etc - go home and no worries! But in the same context - I have seen several good electrical contractors go under - and I knew that if they had used me full time on price works I would have made them a lot of money but most fear the thought of someone actually making money themselves... tallow under the bridge now - init?

Tom

-------------------------
Tom .... ( The TERMINATOR ).

handyTRADESMAN ... haha

Castle Builders

Why did Nick Clegg cross the road? Because he said he wouldn't!

I can resist anything..... except temptation! ( Karl Gunn ).
 29 January 2013 10:09 AM
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OMS

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Quite horrific to be honest - the thought of anyone wanting a loan of £100k!


Well perhaps - but in many businesses that kind of working capital is small coal. In a previous life, I ran a property development company on behalf of two very wealthy individuals.

Whilst they would actually finance the development plot/property/car park or whatever they never financed the development works - that was the problem of the sister company I worked for, and was a director of

As you can imagine, we had plenty of guys like you on the books doing the jobs - and like you most would want a draw down, stage payments, materials on site payments etc etc - quite correctly, they wouldn't wait until we had made our margins from resale/rent/lease etc back to the sister company. That takes working capital and lots of it - I had lines of credit that exceeded £1million -and this was back in the yuppie days - so a while back.

Personally I never had a problem with our selected contractors/designers/specialists making money - that's the name of the game - as long as I was making more than them then it's no drama. Good quality, reliable labour and staff costs money - if the team is reliable then the increased margins more than cover the slightly higher costs you have to be a "savvy" employer.

Big loans are a fact of life Tom - take a look at the cost on big PFI schemes to see the kind of money that needs to be available - Barts Hospital is over £1billion - the topt tier lenders are looking to dilute thier exposure time and time over - that often results in key playes having to finace thier parts of the job and they push that down to thier second, thierd etc tier suppliers/contractors. The warning is not to end up giving personal gaurantees - becaue if it goes wrong it will flatten most people - even if the only way out is to go bankrupt.

Stick with your model Tom - and avoid contracts like the plague.

Regards

OMS

-------------------------
Failure is always an option
 29 January 2013 03:16 PM
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tomgunn

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Originally posted by: OMS

Quite horrific to be honest - the thought of anyone wanting a loan of £100k!




Well perhaps - but in many businesses that kind of working capital is small coal. In a previous life, I ran a property development company on behalf of two very wealthy individuals.



Whilst they would actually finance the development plot/property/car park or whatever they never financed the development works - that was the problem of the sister company I worked for, and was a director of



As you can imagine, we had plenty of guys like you on the books doing the jobs - and like you most would want a draw down, stage payments, materials on site payments etc etc - quite correctly, they wouldn't wait until we had made our margins from resale/rent/lease etc back to the sister company. That takes working capital and lots of it - I had lines of credit that exceeded £1million -and this was back in the yuppie days - so a while back.



Personally I never had a problem with our selected contractors/designers/specialists making money - that's the name of the game - as long as I was making more than them then it's no drama. Good quality, reliable labour and staff costs money - if the team is reliable then the increased margins more than cover the slightly higher costs you have to be a "savvy" employer.



Big loans are a fact of life Tom - take a look at the cost on big PFI schemes to see the kind of money that needs to be available - Barts Hospital is over £1billion - the topt tier lenders are looking to dilute thier exposure time and time over - that often results in key playes having to finace thier parts of the job and they push that down to thier second, thierd etc tier suppliers/contractors. The warning is not to end up giving personal gaurantees - becaue if it goes wrong it will flatten most people - even if the only way out is to go bankrupt.

Stick with your model Tom - and avoid contracts like the plague.

Regards

OMS


Any chance of a fiver loan then OMS?

I just found that the electrical contractors that I subbed to didn't like the idea of me / us making money - on many occasions it was very clear - on one job I was put in with about 5 other PAYE sparks to wire new fire alarm systems in old peoples homes - it took us over a week to complete and then I was let loose on similar projects on my own - haha - the boss wasnt too happy when he came to visit the site at the end of my week there on price works - yeah - this'll cheer RnR up - it was all run in MICC - it took me a week to do what all of us had taken to do in over a week together and he was not a happy bunny! Many similar stories, sadly! When I worked on an enormous building in London circa 1998 - I could see that they were losing lots of money and they had a budget of £1m for the sparks and 1m for the plumbing and they had almost run out of money but if I had my way I could have saved them tons and I told them at the time - Bob Young was in charge and he said that if I ever wanted to work directly with Balfour Beatty then I was in - but I didnt fancy it at the time and he used to get me to go around after the other sparks checking their works for his peace of mind.

It is strange that they dont like to see you earning good wages - I feel that thats the difference between the USA and us. When it was so obvious that BB was losing money and I actually told them I could save them tons - they didnt blink!

Hey - never mind a, as me dear olde mum wudda said!

Tom

-------------------------
Tom .... ( The TERMINATOR ).

handyTRADESMAN ... haha

Castle Builders

Why did Nick Clegg cross the road? Because he said he wouldn't!

I can resist anything..... except temptation! ( Karl Gunn ).
 29 January 2013 03:45 PM
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OMS

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Any chance of a fiver loan then OMS?


For sure Tom - try Wonga dot com - - perhaps I should point out that the million squids wasn't mine - I just got a wage and a bonus on the god days -

It is strange that they dont like to see you earning good wages - I feel that thats the difference between the USA and us.


For sure Tom - I always wanted the good subbies to make some wedge - happy bunnies are easy to lead into the next job and the next job and they do good work for you - and when the s**t hits the roundy thing, they'll go the extra mile to help you out. It's a two way street of course - we used to help out where we could if someone was getting a bit of cashflow grief on another job - or we used send big bunches of red roses and nice choccies to the home address (and sometime to the other address ) of those lads who would follow us where needed and were away from home a lot - most of the dull buggers would forget and if the missus was happy, then they could keep coming to work - one of the wealthy people was a yank - we learned loads from him.

When it was so obvious that BB was losing money and I actually told them I could save them tons - they didnt blink!


That's because you didn't have a nice suit and a degree see Tom - there are some stupid bloody people in construction, I've watched them in action when I used to wear a bib and brace and big boots - trouble is they think you and I are stupid and they are bright. It hurts them when you point out the bleeding obvious - it's the same as calling them thick because they didn't notice and you did - and how can that be, because you're just a spark and they are managers.

Have a good one

regards

OMS

-------------------------
Failure is always an option
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