Originally written by Haydn Rogan on Small Business
Being a sole trader means that you run your own business as an individual and are essentially self-employed. This is the most popular way of trading in the UK, with almost 60 per cent of businesses opting for this structure.
By contrast, a limited liability company is a separate legal entity to you, with separate finances.
Each option has its own advantages and disadvantages, and anyone starting out in business will need to decide what will work best for them.
Here, we look at some of the major differences in terms of legal liability, taxes and bureaucracy.
Also see: Should I go sole trader, partnership or limited company?
Liability
A key advantage of a limited company structure is that it ringfences your personal assets. If your business fails or is sued, you will only lose any investment in the business and won’t be personally liable for meeting charges such as litigation costs or damages from your own finances. Although, in some cases, lenders may require personal guarantees.
As a sole trader, you and your business are one single legal entity. You are personally liable for any debts and liabilities you incur in the running of your business, including taxes, putting
Tag Archive for Limited company
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Forming a company: Choose your trading type
by Joanne Harris • • 0 Comments
Originally written by Joanne Harris on Small Business
Choosing to go self-employed is a career goal for many working people in the UK. More money, better hours, and a flexible work-life balance are just some of the reasons many people aspire to work for themselves. But should you become a sole trader, form a limited company or even a partnership? Choosing the right trading type is a crucial early decision.
Although the pandemic has caused issues for all types of businesses, it failed to dampen the nation’s entrepreneurial spirits, with the latest ONS data recording more than 4.3m people still registered as being self-employed as of March 2021.
As vaccinations speed up and lockdown restrictions ease, now could be the time to form the business you’ve been planning to set up over the past year.
However, before you start, it’s important to consider the right company trading type for you.
The way in which you register your business can impact your tax, take-home pay, legal responsibilities, and even personal finances, so it’s vital to look at all the options before you make your choice.
Sole trader
Being a sole trader is the single most popular way of trading as business, with almost 60 per cent of UK
Hot Business News Today
Forming a company: Choose your trading type
by Joanne Harris • • 0 Comments
Originally written by Joanne Harris on Small Business
Choosing to go self-employed is a career goal for many working people in the UK. More money, better hours, and a flexible work-life balance are just some of the reasons many people aspire to work for themselves. But should you become a sole trader, form a limited company or even a partnership? Choosing the right trading type is a crucial early decision.
Although the pandemic has caused issues for all types of businesses, it failed to dampen the nation’s entrepreneurial spirits, with the latest ONS data recording more than 4.3m people still registered as being self-employed as of March 2021.
As vaccinations speed up and lockdown restrictions ease, now could be the time to form the business you’ve been planning to set up over the past year.
However, before you start, it’s important to consider the right company trading type for you.
The way in which you register your business can impact your tax, take-home pay, legal responsibilities, and even personal finances, so it’s vital to look at all the options before you make your choice.
Sole trader
Being a sole trader is the single most popular way of trading as business, with almost 60 per cent of UK
Hot Business News Today
Buying a company name before starting up
by seantoomer • • 0 Comments
Originally written by seantoomer on Small Business
Buying a great company name isn’t everything but when it comes to the success of your business make no mistake, it counts for a lot
It will be the way customers find and identify you, so if you have a great name in mind it’s worth protecting it – even if you aren’t ready to start trading yet.
You might think of buying a company name, but really what you’ll be doing is creating a dormant company – that is a company which is legally registered with Companies House, but doesn’t trade or have any business transactions. As long as you maintain it, no one else can set up a company in your space or sector with the same name.
This is a well-established and accepted practice, but it does come with certain annual responsibilities, and there are definitely a few pitfalls to avoid when buying a company name. So here’s a handy guide to steer you through and make sure the process is smooth sailing.
>See also: How to choose the perfect name for your business
Creating a dormant company
In short, what you need to do to keep a company name for yourself is to incorporate a limited
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Registering a company name – a Small Business guide
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Do I need to register a company name if I am a sole trader?
You don’t need to register a company name if you are a sole trader. However, you should register with HMRC to let them know they should expect an annual self-assessment tax return from you.
7 benefits of registering a company name vs. sole trader
#1 – Pay lower tax
One of the biggest advantages of registering a company name is that running your business as a limited company can help you to legitimately pay less personal tax than being a sole trader.
Limited company profits are subject to UK corporation tax, which is currently set at 19 per cent compared to personal tax rates of 20pc-45%.
If you are the director and shareholder of a limited company, you may choose to take a small salary and draw most of your income from the business in the form of dividends. This reduces the amount of national insurance contributions (NICs) you pay, because company dividends are not subject to NICs.
#2 – Limited liability
Because a limited company is a separate entity to you, the owner, you have “limited liability”. What this means is that you are not responsible
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How to wind up your personal service company ahead of IR35 legislation
by John Bell • • 0 Comments
Originally written by John Bell on Small Business
While the nation has been gripped by Brexit over the past three years, another hot topic for those in the contracting sector is the impact of the new off-payroll legislation, otherwise known as IR35. In particular, its ramifications when it’s rolled out to the private sector in April 2020.
We know that when the reforms hit the public sector in 2017 many public-service hirers put all contractors inside IR35 to avoid any comeback. Come April 2020 the same could happen.
Faced with being deemed an employee and unable to continue working through their own personal service company (PSC), many contractors will consider their options. Some could choose to work through a different model, such as an umbrella, but many contractors may decide to shutter their limited personal service company and pursue alternative paths.
So, how do you wind up your personal services company ahead of IR35 coming into effect next April?
‘Start the MVL conversation with your accountant now’
Voluntary strike off
A contractor closing a business can apply for voluntary company strike off at Companies House but a Members’ Voluntary Liquidation (MVL) may be more appropriate. A strike-off request could be turned down if a business has creditor
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Should you register as a sole trader or a limited company?
by Anna Jordan • • 0 Comments
One of the most important decisions you’ll have to contend with is the structure and legal status your business will use moving forward: will you operate as a sole trader or as a limited company? The structure you choose can have an impact on almost every aspect of your business, including how much tax you
The post Should you register as a sole trader or a limited company? appeared first on Small Business.
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Should you go for Limited Liability Partnership or Limited Company?
by Ben Lobel • • 0 Comments
It can be argued that the first requirement of the ‘successful’ business structure is limited liability: without this protection against failure, many businesses would simply not assume the commercial risks necessary to succeed. If this is correct, then the available choice of structure is straightforward: a Limited Liability Partnership (LLP) or Limited Company? An LLP
The post Should you go for Limited Liability Partnership or Limited Company? appeared first on Small Business.
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Starting a limited company? Be aware of these new requirements
by Emily Coltman • • 0 Comments
If you’re planning on setting up a new limited company, there’s a multitude of things that you need to consider first, such as how much tax relief you can claim on your costs, how easily you’ll be able to attract investment and whether receiving limited liability protection is worth all of the extra paperwork and
The post Starting a limited company? Be aware of these new requirements by Emily Coltman appeared first on Small Business.