Going LTD from sole trader info please

Thank you everyone, some great advice here. I do have an accountant who I see twice a year and let sort my stuff out. I'll try and speak to him tomorrow and ask his advice.

My missus reckons that if you earn over £12 ph (which I do), you should be go ltd (she works with loads of contractors who earn £25-120 ph and they're all limited or paid via umbrella companies).

Finances have never been my thing, as you can probably tell, but I'm trying to focus a bit more on that aspect. Normally I just work freelance and treat my earnings as a salary - I'm trying to branch out a little with a sideline, which involves buying, selling, shipping, vat.
 
Swales lives said:
Thank you everyone, some great advice here. I do have an accountant who I see twice a year and let sort my stuff out. I'll try and speak to him tomorrow and ask his advice.

My missus reckons that if you earn over £12 ph (which I do), you should be go ltd (she works with loads of contractors who earn £25-120 ph and they're all limited or paid via umbrella companies).

Finances have never been my thing, as you can probably tell, but I'm trying to focus a bit more on that aspect. Normally I just work freelance and treat my earnings as a salary - I'm trying to branch out a little with a sideline, which involves buying, selling, shipping, vat.
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Not sure where your missus is getting her facts from and I believe she is wrong. It is not the £12ph that is the factor it is how much you earn per year. If as a sole trader you earn enough to pay 40% tax you need to think about being a company, you and your wife become shareholders in the company, then as someone else has said, pay yourself minimum wage each week/month and pay the 2 of you dividends every 3 months. This means you pay 20% tax on everything not 40%. It is however totally seperate from anything to do with VAT. Rather than ask this forum you need to sit down with your accountant and discuss it.
 
Ian Paisley said:
Sole trader or Ltd company you should have a good accountant and book keeper.VAT doesn't matter either way as it is based on turnover.The big difference is as a sole trader income tax is charged partially up front and settle the difference at the end of year plus the next projected amount up front.Ltd companies pay in arrears and gives you the chance to take a lower wage and make up the difference with a directors dividend with a lower rate of corporation tax.Be aware though that as employer and employee your national insurance contributions will rise considerably.
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This is what I don't get, I started a LTD company last year after working through an umbrella company and my accountant now keeps telling me I don't have to pay NI. I've just set up a payroll for me and they still say I don't need to pay NI.

The other thing I don't get is the company pays VAT, has a Corporation tax figure that is getting into biggish numbers and then I have to pay income tax. I'm beginning to think I was actually better of with the umbrella company.
 
Blue Mist said:
Swales lives said:
Thank you everyone, some great advice here. I do have an accountant who I see twice a year and let sort my stuff out. I'll try and speak to him tomorrow and ask his advice.

My missus reckons that if you earn over £12 ph (which I do), you should be go ltd (she works with loads of contractors who earn £25-120 ph and they're all limited or paid via umbrella companies).

Finances have never been my thing, as you can probably tell, but I'm trying to focus a bit more on that aspect. Normally I just work freelance and treat my earnings as a salary - I'm trying to branch out a little with a sideline, which involves buying, selling, shipping, vat.
Click to expand...

Not sure where your missus is getting her facts from and I believe she is wrong. It is not the £12ph that is the factor it is how much you earn per year. If as a sole trader you earn enough to pay 40% tax you need to think about being a company, you and your wife become shareholders in the company, then as someone else has said, pay yourself minimum wage each week/month and pay the 2 of you dividends every 3 months. This means you pay 20% tax on everything not 40%. It is however totally seperate from anything to do with VAT. Rather than ask this forum you need to sit down with your accountant and discuss it.
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Thanks for your advice. My missus got that £12ph info from a large accountants firm called "Brooksons", it was at one of their seminars, so they may have just been touting for more business, knowing full well that everyone in the room was earning well over that rate.

Anyway I will meet with my accountant, but asking on here is always a good starting point, there's always good advice to be had from BMs plethora of brains, as your post has proved. Cheers.
 
stonerblue said:
Seasideblue said:
you dont have to be limited to charge vat you just have to be vat registered


I think ?
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i think so too.
Turnover of £70k minimum i think as well
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No no no, (although i think the Op bugered off long ago.) If your turn over is 70k you HAVE to register for VAT but if it is below that you can voluntarily register. The problem with VAT is you have to do your books 4 times a year and therefore your bill from the accountant is a hell of a lot more than him doing it once a year. It depends on what you do as to what the best advice about VAT and companies is.

Can I go now ?
 
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