Self Employed or Limited?

[SPARTYKUS]

Your lucky -


S/E with my 1st - no Paternity Pay
Employed for my 2nd - no paternity pay - back to work within 48hrs of him being born - just started a new job and the employer was a b******

But the third ..... :crazy:

 

[mo the test]

you do not earn enough to consider going limited at this stage of your development. Firstly as an ex chartered accountant let me say that without knowing all your financial details it is impossible to give completely accurate advice, however you do not appear to have visible assets apart from your vehicle so you are safe from them being stripped from you if a job was to go t**s up. No court would deprive you of the means to work and with your current legal bills it would appear that you do not have sufficent funds to pay a settlement. It is possible to complete your own accounts but they must be audited properly and that would be more expensive than using a competent accountant in the first place. So if you are worried about accounts leave it to the expertsIt would appear best to remain S/E until such time you have more time to devote to being an sparks and you have more assets to speak of, the S/E tax is very easy to complete and would cost you nothing. good luck.

 

[sambotc]

Hi mate,

Just started a business myself so think I may be able to answer a few questions as I asked all the same to 3 different accountants.

If you are not clearing £20k + a year profit, you will lose out going ltd due to increased costs

going ltd in the current climate does not give you any extra security as to liability as most (all) creditors will require a guarantor meaning your just as liable, to many were bitten by company liquidating and losing money in the process.

A ltd company is a separate entity so the company itself pays corporation tax, then you pay tax on your earnings that you draw from the company, so you'll lose out.

You'd be better of losing the money in other ways, than throwing it at the tax man and your accountant. Why don't you consider taking on an apprentice, you can pay him whatever and you'll be doing a young lad a favour at the same time, not to mention someone to pass you a few tools?

Or failing that, you could pay someone like your misses to do your bookkeeping or something else legitimate, or a family member that may give you it back at a later date etc?

 

[Spazz]

you do not earn enough to consider going limited at this stage of your development. Firstly as an ex chartered accountant let me say that without knowing all your financial details it is impossible to give completely accurate advice, however you do not appear to have visible assets apart from your vehicle so you are safe from them being stripped from you if a job was to go t**s up. No court would deprive you of the means to work and with your current legal bills it would appear that you do not have sufficent funds to pay a settlement. It is possible to complete your own accounts but they must be audited properly and that would be more expensive than using a competent accountant in the first place. So if you are worried about accounts leave it to the expertsIt would appear best to remain S/E until such time you have more time to devote to being an sparks and you have more assets to speak of, the S/E tax is very easy to complete and would cost you nothing. good luck.

Thanks mo the test - best advice

You are right the only assets I is the van (£1,000 worth) and the car (£10,000 worth) as well as all my tools (£1,000 worth) and my IT equipment (about £800 worth)
So £13K in total - nothing compared to most others on here and in the trade.

I have just been given a plot (not in my name and not going in my name (in my brothers name at present) - it was to offset death tax of my grandfather who is expected to go within the next 7 years so hes given all his assets away to the grandkids - mine in my brothers name because of the legal aid situation) was thinking of starting building on it in the next few months - self build. I done this before a few years back but not sure if I can afford to do it till new year.

Im happy to discuss the situation with u mo, but I think you have it down to a T at the moment - I will stay S/E - thanks for the advice!

 

[Spazz]

Hi mate,

Just started a business myself so think I may be able to answer a few questions as I asked all the same to 3 different accountants.

If you are not clearing £20k + a year profit, you will lose out going ltd due to increased costs

going ltd in the current climate does not give you any extra security as to liability as most (all) creditors will require a guarantor meaning your just as liable, to many were bitten by company liquidating and losing money in the process.

A ltd company is a separate entity so the company itself pays corporation tax, then you pay tax on your earnings that you draw from the company, so you'll lose out.

You'd be better of losing the money in other ways, than throwing it at the tax man and your accountant. Why don't you consider taking on an apprentice, you can pay him whatever and you'll be doing a young lad a favour at the same time, not to mention someone to pass you a few tools?

Or failing that, you could pay someone like your misses to do your bookkeeping or something else legitimate, or a family member that may give you it back at a later date etc?

Thanks sambotc

Great advice again!
As said above my income is below £10K per year so I cant aford to pay anyone - misses not fit to do the books anyway!
I also dont have enough work to even think about employing anyone - if I ever need a hand I have a mate who is S/E who I call on - cheap wages as hes on the dole so usually below min wage just to give him some extra cash in his pocket more than anything - I know hes S/E I already checked.

Thanks again - making me think harder bout staying S/E

 

[alarm man]

well taking away the kids situation which must be a hard thing to go thru,id thought of doing it years ago but its a minefield,the fact your claiming/massaging your income to get legal aid,while you have a plot to do a self build in the future..you will be better of than most long term...

 

[DurhamSparky]

i changed to LTD this financial year!!

couple of reasons..

i have 2 staff...
i have 2 propertys that i don't want to loose... (well maybe 1 would not be a miss)
my van and tools are owned by me then leased to company
i needed to seperate my own dealings and company dealings...

if it goes wrong i will walk away...!

 

[Steve_P]

The decider for me is based on turnover.

I have a LTD company for another business but am currently not putting my electrical business through it. There are good tax savings going limited (like you hardly pay any) but unless your profit is more than 20k it'll cost you more than is saves.

 

[sythai]

Just recently changed from SE to Ltd also.... initially for tax reasons, my accountant fees remain the same which is good. Still trying to get my head round it all...

my van and tools are owned by me then leased to company

How does that work then - thanks Sy ?

​

 

[paulgw]

Apologies for a reasonably long first post and raking up an old(ish) thread but I am currently looking at a career change and becoming an electrician and have decided to go the limited company route for the business plan, however some of the advice I have been given by accountants, HMRC and companies house varies considerably from some of what has been said above, so I would be interested in people’s views on my current understanding and reality.

The advice I have been given is that if you have significant private assets then limited co status protects these should the worst happen and you are personally sued for negligence etc (company will have prof indemnity insurance). It should not be considered as an option to avoid paying day to day creditors, as someone above pointed out a new company would require some form of guarantor in place to get a sizeable credit line anyway.

The accounts can be completed /filed by the company themselves and under the small company’s exemption do not need to be fully audited (goal posts are more than 50 employees and turnover in the millions or assets in the millions) and therefore you don't need an accountant if you don’t want one. In my research on these topics I found out my father’s company (consultancy business) could be flat rate VAT registered and potential paying tens of thousands of pounds less in tax to HMRC - something his £1,000 a year accountant has failed to spot for several years - co-incidentally the flat rate VAT registration would mean less work for the accountant and my father in producing the accounts.... My current thinking is that flat rate doesn’t look attractive for an electricians business due to volume of purchasing, but interested what others are doing?

In terms of income tax - as a limited company most people I talk to recommend the route of paying a salary equal to the tax free earnings threshold and then paying any additional profits as dividends - the company will pay corporation tax on the profits but the first 20odd K of dividend is then free of personal taxation due to a 10% rebate. Also shareholders don't have to be employees, they only have to be over a certain age, so wives etc can be shareholders and receive dividends under the same conditions.

One of the other things I have read a lot of discussion on relates to company registered addresses and the implications if you use your own address - plenty of stuff on this on contracting forums - but for 50 quid a year there are plenty of companies that will sell you the use of their office address and space on the wall for the plaque - This is what I plan to do, has anyone had bad experiences doing this??

I would also be interested in how the leasing of tools and van works as I currently plan to privately buy the van and charge the company 45p per mile in mileage as allowed under AMRA as an expense. My current tools will be sold into the company using prices found on somewhere like ebay - the prices I charge the company have to be seen to be realistic i.e. I can't charge the company 2K for a 3 year old Makita drill!! I was told that any money I made leasing things to the company would need to appear on my personal tax bill and would be pretty obvious to HMRC from the company accounts so there was no realistic way to hide it but interested to hear how it works in practice?

Before anyone decides to flame me for being a career changer going the Electrical Trainee route I will point out that I have an HND in Electrical engineering plus a Degree in Electrical and Electronic and in addition to having spent the last 17 years in a technical electronic engineering role I have also spent the last 8 years renovating properties in my spare time including full house rewires that have sailed through inspection by LABC / qualified electricians.

Thanks

Paul