Rob B
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Registered: 8th Jan 04
Location: Area Motorsport Drives: Race EP3
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Hi guys,
I've done some research but would like some input from guys on here in the know.
If you were to set up a company purely buying and selling products with a estimated turnover of 40k per year, but the traders you deal with require you to be VAT registered to open a account.
The business would be setup at a home address and the only overheads would be a PDQ machine and website maintence.
Would it be more beneficial to setup as a ltd company or a sole trader in this case? No borrowing of money is required to setup the company.
Any pros and cons?
Cheers Rob
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Tommy L
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Registered: 21st Aug 06
Location: Northampton Drives: Audi wagon
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In your case i'd setup as a sole trader purely because there are more fees with setting up a company (initially and annually).
If you setup as a Ltd company you will save a little bit in tax a year but not enough to justify it imo.
[Edited on 08-07-2011 by Tommy L]
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Gary
Premium Member
Registered: 22nd Nov 06
Location: West Yorkshire
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LTD looks more professional imo.
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Sam
Moderator
Premium Member
Registered: 24th Dec 99
Location: West Midlands
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Limited, VAT registered company.
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Nismo
Member
Registered: 12th Sep 02
User status: Offline
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quote:
Originally posted by Sam
Limited, VAT registered company.
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JamesMG
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Registered: 14th Nov 06
Location: Newcastle-under-Lyme, Staffordshire
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Sole trader.. I would look up the legal obligations of LTD, stock taking, directors meetings and shares etc.
You may also end up having to pay business rates on the part of your house used for business which may or may not be more expansive that council tax etc.
Also be aware that if you have an 'office' in your home that if you are audited etc then they have a legal right to do a random inspection, but only in the areas used for business.
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Mad Moe
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Registered: 14th Jun 01
Location: Northumberland
User status: Offline
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For £40k/annum I wouldn't waste your money going Limited
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strick206
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Registered: 12th Apr 07
Location: Wigan Drives:Integra DC5
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40k turnover a year isn't very much, sole trader imo
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Marc
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Registered: 11th Aug 02
Location: York
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Not that I know, but isn't Ltd better if it all goes tits up?
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Tommy L
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Registered: 21st Aug 06
Location: Northampton Drives: Audi wagon
User status: Offline
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quote:
Originally posted by Marc
Not that I know, but isn't Ltd better if it all goes tits up?
Of course, as a sole trader you are liable for everything so all personal assets are at risk.
With going the Ltd route you have to think of it as a 'living thing', you can't just pick it up and put down when you feel like it. A lot more to think about it.
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JamesMG
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Registered: 14th Nov 06
Location: Newcastle-under-Lyme, Staffordshire
User status: Offline
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Even as a LTD company you have to sign a Directors Guarantee, so you are still liable for company debts to some degree. Either way requires you to be dedicated and make wise decisions, especially in a product or stock based business
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Sam
Moderator
Premium Member
Registered: 24th Dec 99
Location: West Midlands
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Running a limited company isn't some big scary thing that most people seem to think it is.
I have been running a limited company since October 2010 and before that I was self employed for 3 years.
Yes there is a few more things to keep on top of but if you have a decent accountant and use a system to deal with most aspects of your accounts then it's quite easy to do.
Also you will end up paying a lot of tax if you are self employed, whereas if you do it right as a limited company you will have little to no corporation tax/personal income tax to pay.
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JamesMG
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Registered: 14th Nov 06
Location: Newcastle-under-Lyme, Staffordshire
User status: Offline
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You do have a valid point, I was also running a LTD company, Im now a sole trader and in my line of business I find its a lot easier to manage and allows me to spend more time focusing on the business rather than time at my desk.
But you have a good point, if you have the relevant systems in place and a good accountant etc then its not too hard, but there are a lot of formalities that you have to comply with, thats for sure!
[Edited on 09-07-2011 by JamesMG]
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Sam
Moderator
Premium Member
Registered: 24th Dec 99
Location: West Midlands
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I use a system called KashFlow which is web based so I don't need to worry about installing software anywhere, plus my accountant is pretty good at answering questions about stuff (and finding loopholes to avoid paying tax unnecessarily lol)!
VAT returns are easy as they are submitted through KashFlow anyway (you have no choice but to submit returns online now anyway).
In some ways, I find it easier sorting stuff out for the company than say for my own annual tax return!
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Sam
Moderator
Premium Member
Registered: 24th Dec 99
Location: West Midlands
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On a separate note, I forgot to mention re. business rates: if you are only using a room (or rooms) part of the time for your business then you don't have to pay rates.
It's only if a room(s) is exclusively used for your business that you would have to pay rates for that particular room(s).
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