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Sole Trader or Limited Company

Benfleet A1

Hector Of The House
Joined
Jan 19, 2007
Messages
8,529
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.
 

bucket&spade.f.c

SUFC Tour Organiser 2012
Joined
Aug 1, 2007
Messages
2,243
Location
With your mum
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.
 

DTS

The Business
Joined
Oct 25, 2003
Messages
16,173
Location
In a world of my own.
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.
 

Benfleet A1

Hector Of The House
Joined
Jan 19, 2007
Messages
8,529
Location
Slade Prison
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.
 

TrueBlue

Save Our Southend
Joined
Oct 26, 2003
Messages
22,717
Location
Hockley now on loan to Rayleigh
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
 

Hotman

reason, honour, integrity
Joined
Apr 12, 2006
Messages
5,611
Location
Not here
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!!
 

londonblue

Topgun Pilot
Joined
Feb 18, 2004
Messages
17,112
Depends on the business and your circumstances. I would speak to an accountant if I were you.
 

Napster

The Horse with no Name⭐
Joined
Oct 27, 2003
Messages
36,192
Location
The wilds of Kent
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.
 

Beefy

Life President
Joined
Oct 27, 2003
Messages
18,906
Location
Old Leigh
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.
 

Hotman

reason, honour, integrity
Joined
Apr 12, 2006
Messages
5,611
Location
Not here
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
 

Yorkshire Blue

Super Moderator⭐
Staff member
Joined
Oct 27, 2003
Messages
37,814
Location
London
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.
 

Napster

The Horse with no Name⭐
Joined
Oct 27, 2003
Messages
36,192
Location
The wilds of Kent
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.

Maybe people born in Essex. Me, DtS and Kent Shrimper all make money outside the county. :winking:
 
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