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View Poll Results: Limited or Soletrader?
Limited 2 40.00%
Soletrader 0 0%
Neither 0 0%
Depnds on nature of business 3 60.00%
Voters: 5. You may not vote on this poll

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andik andik is offline
Newbie
Join Date: Nov 2002
Posts: 7
Limited or not?

Hi. I'm starting up a residential letting agency and have planned to trade as a limited company. I am now having second thoughts over whether it would be easier to be a sole trader.
Can someone tell me how I pay myself as a limited company and any thoughts on which format would be best will be HUGELY appreciated.
Cheers to all
Andi
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ion_star ion_star is offline
Entrepreneur
Join Date: Oct 2002
Posts: 42
Have a look up at www.startups.co.uk which has some info on this. I think the main advantage of being a soletrader is that it is simpler on the paperwork side. There is no legal division between you and your company unlike a LTD. As a sole trader you have to just file a self-employer tax form at the year end.

The main advantage of a Ltd is the limited liability. I.E. You liability if the company folds is none. Though I have been advised that if you act as both company director and secretary this limited liability protection is diminished. There is a risk of creditors chasing you directly for the company's debts.

The downside of a Ltd is the paper work. Right from the start there is paperwork. I got round this problem because my accountant acts as my company secretary and takes care of the paperwork to ensure the company complies to the relevant laws. (Note my accountant can do this because the company turnover is low once you become a multi-million pound company this is not allowed). I cannot recommend you do one or another because I do not know you situation fully. Best advise is to find an accountant either through recommendation or through yellow pages. Though they may charge for the initial advise at least you will be confident in knowing how you wish to proceed.

Paying yourself as a sole-trader: You just take them money as needed as there is no difference between you and your 'company'. The tax return at the year end will show this and this is how your tax is completed. (Make sure save money to allow for the tax demand at the year end). You also will need to notify the DSS office so you can make N.I. Contributions directly.

Paying yourself as a Ltd. This is more complicated though it is relatively easier with the numerous payroll packages kicking about. You need to register by ringing the new employer government hotline. They will send you out a load of info along with your monthly NI and Tax return booklet.. You then notify your tax office that you are now working for yourself/employee of the new company (using p45) and they will update your tax records accordingly. Get one of the basic payroll packages follow the instructions and away you go. At the year end the package should produce all the figures and forms you require to complete the required paperwork.

Additional if you are a limited company you could just pay yourself a dividend which can have tax advantages. Again an accountant can help with this.

Hope of use. There was a thread sometime back on finding an accountant which you made find of interest.

Regards

Richard

Note: I am not qualified in any way to give accounting advice.
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andik andik is offline
Newbie
Join Date: Nov 2002
Posts: 7
thanks

richard,

thanks very much for your help/advice.

regards
andi
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Lins Lins is offline
Starting Out
Join Date: Sep 2002
Posts: 14
Legal View of Ltd or not...

Or have a look at this http://www.newbusinessvoice.com/sa_tradingchoices.asp as there is a view from a legal expert in this area.

Cheers

Lindsay
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joshdhaliwal's Avatar joshdhaliwal joshdhaliwal is offline
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Join Date: Jan 2003
Location: Covent Garden, London
Posts: 97
Company Secretary

As a limited company do you not have to appoint a Company Secretary? I'm not totally up on the details but I think that the Co. Sec. has to be somebody other than the Director of the company if you're a one man company. Any clarification?
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chris q chris q is offline
Entrepreneur
Join Date: Feb 2003
Posts: 37
www.companies-house.gov.uk (I think). Send for a free start up pack which will explain more of the legalities and the pros and cons. One thing I found was that being a limited company makes it easier to set up accounts with new wholesalers and gives a veneer of respectability to your business.

Chris
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