• Welcome to the ShrimperZone forums.
    You are currently viewing our boards as a guest which only gives you limited access.

    Existing Users:.
    Please log-in using your existing username and password. If you have any problems, please see below.

    New Users:
    Join our free community now and gain access to post topics, communicate privately with other members, respond to polls, upload content and access many other special features. Registration is fast, simple and free. Click here to join.

    Fans from other clubs
    We welcome and appreciate supporters from other clubs who wish to engage in sensible discussion. Please feel free to join as above but understand that this is a moderated site and those who cannot play nicely will be quickly removed.

    Assistance Required
    For help with the registration process or accessing your account, please send a note using the Contact us link in the footer, please include your account name. We can then provide you with a new password and verification to get you on the site.

Sole Trader or Limited Company

Benfleet A1

Hector Of The House
Joined
Jan 19, 2007
Messages
8,970
Location
Slade Prison
A question for the business and legal minded chaps and ladies on here who I know are plentiful. My previous setbacks have been overcome but what is better, Sole Trader or Limited Company.
 
A question for the business and legal minded chaps and ladies on here who I know are plentiful. My previous setbacks have been overcome but what is better, Sole Trader or Limited Company.

From my bailiff days I would say limited company would be best as all the assets belong to the company and not you so if it went tits up (hope it don't) then the bailiffs would only be able to seize company assets and not personal one even if at your home property.
 
Limited company 100% mate.

Both for taxation reasons and also if the business gets into trouble.

From a tax point of view a Limited Company can pay dividends to its directors as and when it sees fit. The main benefit of this is that dividens dont attract a NI contribution (from memory) where as a sole trader in effect is treat as a person for the purposes of tax.

Think you will also find that if the business goes bust a limited company director is limited to the extent that the business can be folded if you have no more money where as I think a sole trader (in effect being you as a perso trading) can be perused for alot more

That was my understanding of it a few years ago when I went S/E.
 
Sent green to those helpful comments (bucket & spade, Kent Shrimper and Dave) but Dave just got some red by mistake. My bad, could a mod sort that out please.
 
Limited company 100% mate.

Both for taxation reasons and also if the business gets into trouble.

From a tax point of view a Limited Company can pay dividends to its directors as and when it sees fit. The main benefit of this is that dividens dont attract a NI contribution (from memory) where as a sole trader in effect is treat as a person for the purposes of tax.

Think you will also find that if the business goes bust a limited company director is limited to the extent that the business can be folded if you have no more money where as I think a sole trader (in effect being you as a perso trading) can be perused for alot more

That was my understanding of it a few years ago when I went S/E.

Unless you are a limited company who has taken credit out with a signed directors garuntee
 
All very rule of thumb...

From a tax perspective - company if your profits are over 25k, otherwise additional compliance costs outweigh benefit

Commercially:

Companies have 'limited liability' but anyone with any common will get a personal guarantee from director
Companies are perceived to be stronger businesses - some companies will only deal with other companies
Companies have much more paperwork than sole trades
Companies have obligations on the directors which traders don't
Some industries have tax benefits for traders
Sometimes BIK taxes mean that a trade might be more worthwhile than a company

There are just a few suggestions, plenty more issues to consider!!
 
Depends on the business and your circumstances. I would speak to an accountant if I were you.
 
Sole trader works for me as a freelancer. Companies can then use me on a retainer basis, and to be honest, there's no debts anyway.

My limited company organises its own events. So any profit comes back to me.
 
Depends what you're doing and what it's chances of failing are (sorry, I may have missed earlier threads).

My best mate set up a shop in Southend as a Partnership maybe eight or nine years ago. They shut their doors after two years and he was still paying half of salary each month out in debt repayments until recently. Had he been set up as a Ltd Co none of that would have happened.
 
Depends what you're doing and what it's chances of failing are (sorry, I may have missed earlier threads).

My best mate set up a shop in Southend as a Partnership maybe eight or nine years ago. They shut their doors after two years and he was still paying half of salary each month out in debt repayments until recently. Had he been set up as a Ltd Co none of that would have happened.
It almost certainly would if they had PG's
 
It almost certainly would if they had PG's

Maybe, maybe not. A sole trader is going to be liable for all debts, whereas a guarantor is only going to be liable for those debts which he guaranteed. Not everyone is going to demand a personal guarantee. I don't think gas, electricity, tax etc need a guarantee. Obviously the bank invariably will. Either way, I think it's fair to say all things being equal you'd be liable for less under personal guarantees than as a sole trader and therefore would pay it off quicker.

There will be more admin doing it as a limited entity, not sure what's the biting point where it becomes more efficient to go from sole trader to limited company.

ps Am pretty impressed by the answers so far. I think it goes to show that Essex has a far more entrepreneurial attitude than many other counties.

Good luck GHG.
 
Back
Top