IET logo
 
IET
Decrease font size
Increase font size
Topic Title: LTD OR SOLETRADER
Topic Summary: PROs Cons
Created On: 25 January 2013 10:16 PM
Status: Post and Reply
Linear : Threading : Single : Branch
1 2 3 Next Last unread
Search Topic Search Topic
Topic Tools Topic Tools
View similar topics View similar topics
View topic in raw text format. Print this topic.
 25 January 2013 10:16 PM
User is offline View Users Profile Print this message



Ampman

Posts: 988
Joined: 06 February 2006

Evening all ,


Pros & cons Of both ?

Sole trader easy to set up i know . but how do you take money being LTD

You obviously need a lot of money to start with to survive .

cheers
 25 January 2013 10:25 PM
User is offline View Users Profile Print this message



mrcornbeef

Posts: 245
Joined: 05 December 2005

We take a set wage then top up with dividends assuming you make a profit ,i think your books are scrutinized more LTD but it gives a more professional look as you business information is available to all online it gives a chance to check you out and see if you can handle that 10000,000 job your after .
Sole trader less hassle easier to get your money out not as professional in some people,s opinion i think.
 26 January 2013 07:56 AM
User is online View Users Profile Print this message



alanblaby

Posts: 342
Joined: 09 March 2012

I've got both, and currently only use the Sole Trader as my earnings are not enough to justify the Ltd Company running costs.

Sole Trader, dead easy to manage. Tax Return once a year, NI payments twice a year.

Ltd. Co. Far more paperwork, tax return for the company and the employee. NI payments for the employee - the benefit of this is you get full pension etc. The downside is more initial cost.
I worked it out last year, to be viable, the Ltd. Co. should make £30k/yr to be competitive with a Sole trader.

Other factors come into it. If you are doing volatile work, and need a little protection so that your house is not at risk, then a Ltd. Co. is best. But, the argument is, you shluldnt get into such situations anyway. You do a lot of consulting - large risk of litigation against you if you get it wrong, so a Ltd. Co. would be better there.

In the real world, you'd be looking at your turnover to see which route to go. One man band earning a wage, then sole trader, doing bigger contracts, earning a lot, then a Ltd. Co.
 26 January 2013 07:58 AM
User is offline View Users Profile Print this message


Avatar for ebee.
ebee

Posts: 5664
Joined: 02 December 2004

The way I see it is
Sole trader takes a wage (OK then it`s called "Drawings") and gets taxed on it.
LTD pays you (an employee) say a minimum wage you get taxed on and you also can get paid as a shareholder at a lower rate .
So to the two persons can get paid the same in total but the LTD one pays less tax therefore gets more money left over.

That`s just the money side of it, there are other differences too.

Oh and if you are MD of a LTD company you can sign passport photos and get paid for it too. LOL

-------------------------
Regards,
Ebee (M I S P N)

Knotted cables cause Lumpy Lektrik
 26 January 2013 10:45 AM
User is offline View Users Profile Print this message



Pacific

Posts: 588
Joined: 29 January 2005

Started out as sole trader, went Ltd on accountants advice during boom years, post credit crunch, changed accountant and she advised go back to sole trader, so ltd is dormant for time being
 26 January 2013 11:23 AM
User is offline View Users Profile Print this message


Avatar for Paradigm.
Paradigm

Posts: 700
Joined: 10 September 2010

My take on it.

As a ltd company the pros for me are

I don't pay NI on my dividends, which I used to have to pay on my drawings as a Sole trader, that's around £3,100 a year saving on £42k a year.

I don't have to make tax payments on account for the current year that you have to do as a Sole trader, so increased cash flow and working capital.

I can setoff CIS deductions against PAYE, so again, cashflow & working capital benefits.

I do most of my bookwork so the added accountancy costs are kept to a minimum and are normally negated by the reduction of NI anyways.

I am not personally liable any more and in this current climate, gives me increased piece of mind.

That, in my book, is a big bucket of win

Regards


Nick

-------------------------
"be careful of what you write"

Edited: 26 January 2013 at 11:38 AM by Paradigm
 26 January 2013 02:15 PM
User is offline View Users Profile Print this message



Ampman

Posts: 988
Joined: 06 February 2006

What would it cost to set up a ltd company ?
 26 January 2013 03:15 PM
User is offline View Users Profile Print this message


Avatar for tomgunn.
tomgunn

Posts: 3213
Joined: 25 May 2005

I think its about £100 to set up your Ltd name - just get a form to fill out and go from there - you'll sleep better under the Ltd company - I used to be ok as I had the house in the wifes name but for obvious reasons I had to put it back into my name - I am not a Ltd company but if I had my time again I certainly would as it reduces the worry factor and also the tax payable.

Good luck!

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 ).
 26 January 2013 03:33 PM
User is online View Users Profile Print this message



alanblaby

Posts: 342
Joined: 09 March 2012

£18.00 to set up a Co. online.
Takes around a week for them to check you out (no bankrupts etc)
Fast-track can be done quicker for more money.
Details at companieshouse.gov.uk/
 26 January 2013 07:11 PM
User is offline View Users Profile Print this message


Avatar for Martynduerden.
Martynduerden

Posts: 3211
Joined: 13 July 2008

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.

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

Martyn.

Only a mediocre person is always at their best



www.electrical contractors uk.com
 26 January 2013 09:43 PM
User is offline View Users Profile Print this message



DOUGIE1000

Posts: 4151
Joined: 13 August 2005

Limited company for me. Nobody seems to want to pay us for works so give me and family peace of mind.

I do all my quarterly VAT, invoicing and expenses books apart from CIS tax for subbies, employees weekly wageslips , P45, p60, end of year, company house annual returns my account does these and I pay my accountant £600.00 a year.

My accountant does everything by email apart from when I ask him for meetings or advice and this is included within my fixed price annual fee, well worth the £50pm for accountant fees.

Dougie

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

My mission is to live as long as possible......so far so good!
 27 January 2013 04:43 PM
User is offline View Users Profile Print this message


Avatar for Paradigm.
Paradigm

Posts: 700
Joined: 10 September 2010

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

-------------------------
"be careful of what you write"
 27 January 2013 05:03 PM
User is offline View Users Profile Print this message


Avatar for OMS.
OMS

Posts: 19433
Joined: 23 March 2004

Directors personal guarantees are often part of lending contracts from the bank to the company and they may form part of ther contract awards as well.

Essentially the directors are signing away the protection offered by a limited liability company to give personal undertaking to the agreement or contract

Avoid them like the plague - but do check specifically on any borrowing terms, thay are often implicit to the agreement - you need to negotiate them out (if you can)

regards

OMS

-------------------------
Failure is always an option
 27 January 2013 05:40 PM
User is offline View Users Profile Print this message


Avatar for slittle.
slittle

Posts: 3453
Joined: 22 November 2007

Having just gone from partnership to limited, one of our suppliers whom we've dealt with for years wanted a directors guarantee (or their credit people did)... I explained in simple terms if they valued our business they would consult the previous trading history and give me the correct answer


Stu
 27 January 2013 05:57 PM
User is offline View Users Profile Print this message


Avatar for OMS.
OMS

Posts: 19433
Joined: 23 March 2004

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.

They hurt - often big time, becaue by the time they get caled in, it's all gone a bit Pete Tong anyway.

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

-------------------------
Failure is always an option
 27 January 2013 06:14 PM
User is offline View Users Profile Print this message


Avatar for Paradigm.
Paradigm

Posts: 700
Joined: 10 September 2010

Oms

I know what they are, I just don't have any, I was interested whether Martyn had any.

Nick

-------------------------
"be careful of what you write"
 27 January 2013 06:19 PM
User is offline View Users Profile Print this message


Avatar for OMS.
OMS

Posts: 19433
Joined: 23 March 2004

Ohhh OK - I read your post as asking about what they were

regards

OMS

-------------------------
Failure is always an option
 27 January 2013 06:24 PM
User is offline View Users Profile Print this message


Avatar for Paradigm.
Paradigm

Posts: 700
Joined: 10 September 2010

No worries, It's all good.

Nick

-------------------------
"be careful of what you write"
 27 January 2013 06:41 PM
User is offline View Users Profile Print this message


Avatar for OMS.
OMS

Posts: 19433
Joined: 23 March 2004

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

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

OMS

-------------------------
Failure is always an option
 27 January 2013 06:54 PM
User is offline View Users Profile Print this message


Avatar for slittle.
slittle

Posts: 3453
Joined: 22 November 2007

OMS

Very true, I've got a plan "B" in the unlikely event that I was in the situation to want that sort of financing... The house is too important to the family to put it on the line any more. I do however have some customers with deep pockets (and lots of land) that tell me they would be up for some "investment"

Never the banks, no way. As well as I get on with my business manager he's only a puppet on the banks strings !

By the way, I hear Bokwa's the way to go, Zumba is so 2012 !


Stu
IET » Wiring and the regulations » LTD OR SOLETRADER

1 2 3 Next Last unread
Topic Tools Topic Tools
Statistics

See Also:



FuseTalk Standard Edition v3.2 - © 1999-2014 FuseTalk Inc. All rights reserved.