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Tax when to go Limited.

When is beneficial for tax purposes to change from Sole Trader to Limited Company?

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New start up business. Currently, no earnings or tax payable. Not dependent on any future earnings. Currently, everything paid for by Bank of Mum & Dad!!. When would it be Tax beneficial for me to change from Sole Trader to Limited company? This with the understanding that I am aware of the related legalities and adddition record keeping involved with a company.  

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06th Jun 2019 17:09

Any advice will be greatly appreciated.

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06th Jun 2019 17:10

When your accountant, who knows about about you, your personal affairs, your business and your future prospects, tells you.

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06th Jun 2019 17:37

With profits of c.£40k you are about £1k better off being ltd but you may find much of that taken by additional accountancy fees depending on your location.

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By AW71
to bettybobbymeggie
06th Jun 2019 19:21

So you know all the person's personal affairs?

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to AW71
06th Jun 2019 19:42

No.

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to AW71
06th Jun 2019 19:48

When there is no income or any tax payable currently, I do not feel you need to know of any personal details. The decision is purely based on level of income and the tax it attracts as a Sole Trader as opposed to a being the only director of a Limited Company.

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to DIPAK RAJGOR
06th Jun 2019 20:01

If tax is your sole concern you may as well incorporate now.

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to DIPAK RAJGOR
06th Jun 2019 22:07

DIPAK RAJGOR wrote:

When there is no income or any tax payable currently, I do not feel you need to know of any personal details.

[chuckle]

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By AW71
to DIPAK RAJGOR
06th Jun 2019 22:58

You're right I don't need to know, because I won't be the one on here giving you free advice.

Just because mum and dad bail you out doesn't mean I'll be giving you any time for free.

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By Matrix
to DIPAK RAJGOR
07th Jun 2019 06:17

The decision is not purely based on the sole trader income. If a sole trader was earning, for example, £50k in employment, then this would need to be taken into account.

A new client has just become a contractor and is 65 so doesn’t pay NI so no point incorporating.

So you will need to give the bespoke facts to a tax adviser.

Generally I agree with Betty though and I am glad that you haven’t rushed into setting up a company, see if the business is successful first.

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06th Jun 2019 17:42

Hey thank you so much!

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06th Jun 2019 18:06

There are a lot of factors to be taken into consideration. Such as limited liability and whether you are up to dealing with the increased legislation and regulation that being a director of a limited company brings.

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to lionofludesch
06th Jun 2019 18:08

lionofludesch wrote:

There are a lot of factors to be taken into consideration. Such as limited liability and whether you are up to dealing with the increased legislation and regulation that being a director of a limited company brings.

I suspect that the OP is blissfully unaware of all of that and will remain so if he chooses not to take professional advice.

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to Accountant A
06th Jun 2019 18:25

Au contraire - I'm sure the OP knows it all.

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07th Jun 2019 09:15

Its beneficial incorporating from day 1.

If you want to know why you have to pay for some advice

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to Glennzy
07th Jun 2019 10:16

Hi Glenn,
Love your "straight to the point" comment. Totally agree. Many thanks for your input.

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By frankfx
07th Jun 2019 12:09

How much would you willingly for pay for the advice required?

Would you pay £35 per hour?

Would you think the right advice from the right advisor would start at £195 per hour?

Oh do not forget VAT.

Btw car servicing and diagnostic costs may be a useful benchmark .

Only you can triage your intial needs.

The good advisor may have to start by dismissing your self-triage.

Then ,while scratching his head and stroking his chin , conclude that " it all depends ".

Do not be surprised at this.
Because your own / all business
is / are built on " it all depends " foundations .

The workers and businesses at British Steel , Honda at Swindon and Ford Bridgend know this full well.

Good, unhurried and considered advice invariably pays dividends or saves pots of money.

All this would have an impact ( positive) on the bank of mum and dad.

Happy days. Happy family.

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to frankfx
07th Jun 2019 12:25

Hi Frankfx,
You are a star! Thought of writing as a profession?

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