Stay paye or go self employed?

[tombrooker84]

I'm no accountant, but I was under the impression that it was worth setting up a limited company if your earning over 50k a year, due to the fact that after 50k you pay less tax than you would as a sole trader due to the company tax being only 20%. Also there is the added benefit of limited liability?

 

[Spazz]

That is true yes - but that income cant be used as your wages then, you will have a set amount that you can take out (as your wage) and the rest belongs to the company.


A Limited company is great if you or a partner (business or personal) has loads of debt


Situation that my nabour is in now:
She is in loads of debt so the bank has just reprocessed her flats (5 in total). If she had made the business (of renting flats) a company (which has now been done with the other 3 flats in the block owned by different people) the bank cant reprocess them.

Only problem is if the company is in trouble is based at your house you have to prove who bought the house so that does not get reprocessed.


Setting up a company is also great if the director does not have much credit score as when s/he sets up a limited company the credit score is mid way - allowing borrowing and credit, but some companies/businesses (like myself) wont give credit to companies unless they have been running for at least 2 years and have a very good credit score.


Have a chat with a personal adviser about it.


You can always set up as S/E then change into a company - just write to all your creditors (people you have accounts with) explaining why your changing from a sole trader to a company and they should be happy to change the account over as you have a good reputation with them already that you have built up

 

[i=p/u]

so if i was a sole trader, i could still rent myself to a company and bill them like self employed....

is sole trader harder to achieve, is there much difference

 

[Spazz]

And dont forget if you set up a limited company then you dont need to register as S/E because you are not S/E, you are employed by the company! - therefore an employee - but the employer if you have people on the books.

The company is the employer for you, and has to be registered as an employer and file your PAYE regular as if you would if you employ someone

 

[Spazz]

so if i was a sole trader, i could still rent myself to a company and bill them like self employed....

is sole trader harder to achieve, is there much difference

Exactly!

If you set up as a limited company and the company gets NICEIC then you cant use that yourself unless the company is contracting you out - the HMRC will want to see you charging for this - even if its family



If you are S/E and get NICEIC its yours! and you contract yourself out to your customers - could even be family - family you wont have to charge as HMRC dont have access to your EICs or PIRs

 

[Spazz]

No difference at all.

Excuse me from asking:
Are you in any debt?

If the answer is - how much would depend on if you want to go as a sole trader or company

If a debt collector comes after you for debt and your Self Employed (sole trader) then they can take all the business stuff off you as well

If you set up a company and the company owns the equipment (even your house) the debt collector can not take any of them (just make sure you have documents to prove it)

Same if you pay maintenance - If you are a sole trader - the maintenance will look at the business accounts and take that into account (same if you divorce)
With a company they cant look into them at all - so not effected with divorce or maintenance


So personal debt, maintenance, going through a divorce (or risk of it) or very high turnover (above the threshold (£100,000 at current) are all good reasons to set up a limited company

 

[i=p/u]

as you say speak to an advisor of some sort.. but thanks for the info to now..

 

[Spazz]

Also check out here

This is the tax rates you pay - if your going to come into the lower rate (only profit is counted) and dont have any of the above issues then you might as well be a sole trader

If your going to be in the higher rate (profit only) and/or have any of the above issues then a limited company is the best option for you




Bed time now for me

 

[alarm man]

i feel the need for a drink all of a sudden..

 

[i=p/u]

thanks nicholas, i am going to go self employed for now as thats where i can get work .... bar the odd we job here and there... im growing like shetland pony everyday


alarm man no alcahol, nice fresh the marra, smell good

 

[alarm man]

thanks nicholas, i am going to go self employed for now as thats where i can get work .... bar the odd we job here and there... im growing like shetland pony everyday


alarm man no alcahol, nice fresh the marra, smell good

just a couple will do mate,i need to keep a clear mind when it comes to avoiding paying for your kids and your debts,while i work 7 days a week to feed my family and pay my bills..and pay £1200 a month tax and ni for those who dont..im just off to the fridge again mate....

 

[i=p/u]

if thats what you are paying tax and ni what arnt you paying then , dont suppose you got porche 911 camara like myself

 

[alarm man]

if thats what you are paying tax and ni what arnt you paying then , dont suppose you got porche 911 camara like myself

what im not paying,is there anything left to pay,if so im going on the dole and having another 20 kids..another thing i found out the other day,as of next year anyone in the house earning over 42k isnt allowed to claim child benefit that includes you and the wife if one of you earns over 42k,tho 2 people in the house earning 40k each ie you and the wife earning 40k each can still claim it..how does that work? i wonder why i bother sometimes:cuss: