x14xe sport
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Registered: 27th Apr 09
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not sure where this one wants to be mods.......
is it worth it and whats the pros and cons anyone here had the dealings with it?
i am a self employed joiner prob turn over 50k this year (turn over not profit) not sure on technical jargons etc so keep it simple if poss, seems hard to find real people to talk to about these things, guess normally it would be an accoutant but i just do it myself not that hard, cheers 
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Cosmo
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Registered: 29th Mar 01
Location: Im the real one!
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Off Day really, and we have had a few of these threads recently.
Personally Id say not to bother, I really couldnt see any advantages for you in doing so as you would lose some of the tax benefits of being a sole trader.
The main reason to become Ltd would be to limit your exposure to risk, but you dont really have any risks that would be avoided being a ltd company over a sole trader.
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TurboChris
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Registered: 31st May 02
Location: L'pool,drives ESCORT COSSIE,EVO 9 GT, BMW 525D MSP
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50k turnover isnt really worth declaring yourself as a limited company, its really just a good self employed trade income, you wouldnt benefit from it in my opinion
chris
[Edited on 22-10-2009 by TurboChris]
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connollygt30
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Registered: 16th Nov 08
Location: West Lothian
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Fuck me mate you are doing not bad! Me and the guy i work with are struggling to make £1000 between us a week these days!
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Cosmo
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Registered: 29th Mar 01
Location: Im the real one!
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quote:
Originally posted by TurboChris
50k turnover isnt really worth declaring yourself as a limited company, its really just a good self employed trade income, you wouldnt benefit from it in my opinion
chris
[Edited on 22-10-2009 by TurboChris]
Has nothing to do with turnover if to become a Ltd company or not. You could be turning over £1m and their would still be massive benefits of staying as a soletrader.
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bubble
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Registered: 24th Jan 04
Location: Darwin, NT Australia.
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it has it advantages.
if anything happened when you were a ltd company, ie went bust or owed £1000's out due to the business, your personal, non work related possessions cannot be touched.
just got my uncles joinery company ltd, he turnsover about 250k a year with profit of approx 170k. depends on circumstances tbh.
if u have a mortgaged house or finance repayments, going ltd is better for less risk exposure.
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Cosmo
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Registered: 29th Mar 01
Location: Im the real one!
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Yeah but what financial risk does a joinery company really have? Does he have debts placed on the company such as for huge amounts of stock, equipment, vehicles, etc? Does he have premises where the remainder of the lease is secured against the business?
If you have things like that then Id say it could be worthwhile, but if not I dont see the risk to make with worthwhile.
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bubble
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Registered: 24th Jan 04
Location: Darwin, NT Australia.
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quote:
Originally posted by Cosmo
Yeah but what financial risk does a joinery company really have? Does he have debts placed on the company such as for huge amounts of stock, equipment, vehicles, etc? Does he have premises where the remainder of the lease is secured against the business?
If you have things like that then Id say it could be worthwhile, but if not I dont see the risk to make with worthwhile.
after a job is done with building regs, there has to be a minimum 14 year guarantee of sorts, so if anything goes tits up or somebody is injured as a result of the work and sues for example, it cant come back on personal possessions.
he has a separate premises where stock is kept, and vehicles, not sure what that has to do with becoming ltd.
being ltd does have some advantages, i have the paperwork here, it says that there is a corporation tax he now pays as opposed to an income tax, this is lower than the current rate of income tax. plus, what can be done and its very clever and only if you are ltd, if you earn say 500k one year, you are then subject to one of if not the highest tax bracket, you can "place" 61% of the earnings/profit into the ltd companys bank accounts, and pay an even lower amount of the corporation tax.
you can alos invest in your own ltc company and have the first £10,100 risk free (and can be kept) if the ltd company somehow goes bump.
in regards to the corporation tax, because my uncle has some guys working for them, he can offset their wages against the company somehow, and pay them a pension as such, and receive even lower corporation tax.
being a sole trader ie like the poster is now, the debts lie on him completely, being ltd means the debst if any are completely separate from him,there is a separate legal existence of the debt. if the company goes bump, the personal assets of the owner, ie house , personal car, cannot be seized to pay off company debt.
there are clear advantages, assuming the right conditions. if it wasnt worth it, people wouldnt do it.
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a_j_mair
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Registered: 23rd Jan 04
Location: Scotland
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quote:
Originally posted by bubble
quote:
Originally posted by Cosmo
Yeah but what financial risk does a joinery company really have? Does he have debts placed on the company such as for huge amounts of stock, equipment, vehicles, etc? Does he have premises where the remainder of the lease is secured against the business?
If you have things like that then Id say it could be worthwhile, but if not I dont see the risk to make with worthwhile.
after a job is done with building regs, there has to be a minimum 14 year guarantee of sorts, so if anything goes tits up or somebody is injured as a result of the work and sues for example, it cant come back on personal possessions.
for the garauntee on work it is has to be an architects certificate or NHBC registered etc
as for injuries thats what public liability insurance is for
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Tommy L
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Registered: 21st Aug 06
Location: Northampton Drives: Audi wagon
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this thread has some good points in it and some, well stupid ones
http://www.corsasport.co.uk/board/viewthread.php?tid=522075
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Cosmo
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Registered: 29th Mar 01
Location: Im the real one!
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quote:
Originally posted by bubble
after a job is done with building regs, there has to be a minimum 14 year guarantee of sorts, so if anything goes tits up or somebody is injured as a result of the work and sues for example, it cant come back on personal possessions.
This could be an issue as I dont know about this - but I would of thought your insurances would deal with this so nothing would be personally guaranteed if you were a soletrader..
quote:
he has a separate premises where stock is kept, and vehicles, not sure what that has to do with becoming ltd.
My point wasnt if he has them, its how they are being paid for and what the lease (if he has any) is secured upon. If, for instance, he has £10k worth of stock on credit, £20k worth of vehicles with a balance remaining to be paid, and £10k worth of rent secured against the business, then this would be £40k worth of risk - and for that reason worth being limited over sole.
Saying that though, a lot of places are even asking Limited companies for personal guarantees now for the above sort of things.
quote:
being ltd does have some advantages, i have the paperwork here, it says that there is a corporation tax he now pays as opposed to an income tax, this is lower than the current rate of income tax. plus, what can be done and its very clever and only if you are ltd, if you earn say 500k one year, you are then subject to one of if not the highest tax bracket, you can "place" 61% of the earnings/profit into the ltd companys bank accounts, and pay an even lower amount of the corporation tax.
Yeah if you are earning big money then the tax advantages swing the other way, however its not as simple as retaining the profit within the company and only paying tax on the other 39% as in your example.
I personally wouldnt say that £170k worth of profit is worthy of doing this, as you could of taken a lot of that profit out tax free if you were a soletrader through various costs being allocated to the business.
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in regards to the corporation tax, because my uncle has some guys working for them, he can offset their wages against the company somehow, and pay them a pension as such, and receive even lower corporation tax.
Any more info on this?
We employ about 50 people and havent heard anything about this.
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being a sole trader ie like the poster is now, the debts lie on him completely, being ltd means the debst if any are completely separate from him,there is a separate legal existence of the debt. if the company goes bump, the personal assets of the owner, ie house , personal car, cannot be seized to pay off company debt.
I understand how it works!
My whole point is - what debts does the company really have? Does it really have that much debt that if the company did fail that he would be screwed? Hence my reason to ask about lease guarantees, stock on credit, etc.
And the lines are very much blurred now, Limited companies dont carry the same amount of security as they used to, and a lot of company directors have been taken to court to be found liable for their companies debts once it goes tits up.
quote:
there are clear advantages, assuming the right conditions. if it wasnt worth it, people wouldnt do it.
Of course it does, but mainly for bigger companies.
If the financial debts that the business holds are low, and the other risks that cant be covered via insurances are low, then they should stay as soletraders. Companies rush in to going limited thinking it is some holy grail of security when they have no need to and would be much better sticking as they were.
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bubble
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Registered: 24th Jan 04
Location: Darwin, NT Australia.
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Cosmo-in regards to the pension thing, ill type up exactly what the papers say.......
"Often it is possible to reduce the Corporation Tax with careful planning by making dividend payments to its shareholders and by the use of a Company Pension Scheme"
the company who set my uncle up are called Form A Company.
they told him if he had pension schemes for Damo and the other lads, itd lower the rate of payable tax.
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Cosmo
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Registered: 29th Mar 01
Location: Im the real one!
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quote:
Originally posted by bubble
Cosmo-in regards to the pension thing, ill type up exactly what the papers say.......
"Often it is possible to reduce the Corporation Tax with careful planning by making dividend payments to its shareholders and by the use of a Company Pension Scheme"
the company who set my uncle up are called Form A Company.
they told him if he had pension schemes for Damo and the other lads, itd lower the rate of payable tax.
He has to, by law, off a pension plan to his employees. However a simple out of the box pension would do and he does not have to contribute to it.
I THINK what the above is suggesting is that his contributions to the pension scheme could be off set against tax, which it probably can be, but it will mean he has to contribute which is going to cost him more than he will save in tax.
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