Sole Trade or Limited Company ?

[xcharliex]

Hello,
I just wanna run my own it busines and i got a few questions..
At the moment i would like work by myself, but i thinking about employe somebody on the future. At the moment i will be working at home or customer site.

1. How mauch tax and other charges i have to pay every week/year/month if i am registred as sole trader or limited company ?
2. I know if i got limited company i can employe some peoples. But if i am registred as sole trader can i hire a person who is registred as a self employed for the price job ? (not for contract)
3. What is minimum capital to registred as limited company ?
4. If i'll be sole trader, and my company will be groove, can i change my status to limited company after a few months ?
5. At the moment i finish preparing my business... Can i make registration now and start my services for example in july ?
6. Do i need a bookeeper or i can do administration/tax work by myself ?
7. Can i register my company as name: XXX and providing my services using name YYY and give recipts for customer as XXX company ?

Ok that's all for the moment.. What do You think.. what option will be better for me ? sole trader or ltd ?
Thanks for anserws

[Joyous]

Hi Charlie

The advantages and disadvantages of a sole trader compared to a limited company have been discussed a number of times on this forum. Do a search on the words “limited company” and you’ll see some of the past discussions.


1. The tax you pay is dependent on your profits. Obviously the more profit you make the more tax you pay.

2. Being a sole trader does not stop you employing people. You can employ people or take on subcontractors as a sole trader in the same way you can as a limited company.

3. It’s possible, and quite common, to register a limited company with capital of £1.

4. As you suggest it’s a good idea start trading as a sole trader and then if things go well you can consider incorporating. It’s a lot easier to move from being a sole trader to a limited company than in the opposite direction.

5. It is possible to form a limited company and leave it dormant while you are preparing to trade. But as you’ve suggested you might be better off delaying incorporation and starting as a sole trader first.

6. If you have the time and ability to keep books by all means do it yourself. If not, get yourself a bookkeeper. Whatever you choose to do don’t ignore the bookkeeping.

7. It is possible for your company to trade in a name other than it’s registered name but all business stationery must disclose the registered name and number of the company.

Regards

Joy

[Quintain]

Hi

I would recommend opting for a limited company as the advantages far outweigh the disadvantages.

Kind regards

Pauline
Director
Quintain Limited - Corporate Consultancy for UK & Offshore Companies

[MikeH]

That is a little too simplistic I'm affraid. What business are you in? What are the risks associated with it? One of the real benefits of an LTD is protected liability. The flip side is you have a little more administration in running an LTD.

A limited company is not always right for new businesses. Joy has already stated that it may be better to start off as a sole trader and switch as your business grows. Joy has also answered your questions succinctly. However if you do want to discuss it further we have a free phone and my time to forum members is free (to an extent).

Mike.

[xcharliex]

Ok, so i gonna go for sole trader.
Thanks for answers.

Aaa i forgot...
How did they know (tax office) how much I am earn in each year ?
For example, do i need to give recipts to all customers and collect the copies of it ?

[Eagle]

Originally Posted by xcharliex

Ok, so i gonna go for sole trader.

Good call!

How did they know (tax office) how much I am earn in each year ?

You tell them!

For example, do i need to give recipts to all customers and collect the copies of it ?

Yep. Keep all invoices/receipts both outgoing and incoming. Consider using an accountant in order to make your life simpler when it comes to the yearly return. If you're UK based, I can personally reccommend www.jamesesmith.co.uk

[Ian J]

and I can personally recommend Joy who is not only my accountant but also an active member of this forum as you can see from her answer above