Sole trader to LTD in Uk

[acs]

I have been running my company part time as a sole trader for over 5 years in the UK.

I am about to retire from my “full time job” and am considering moving to a Limited Company for additional protection as I develop my business. To anyone who has done this, have you any regrets?

If you did it again what questions would you ask of potential accountants?

Did you get caught with costs for anything you were not expecting?

I am happy to do my own book keeping but what other fees does your accountant ask you for. I am about to contact 3 local accountants but would like to be armed with some potential questions before hand.

 

[ChrisTech]

Do you intend to get professional advice before registering? I would weight things up carefully after hearing all the pros and cons.

This isn't an exhaustive list but my experience was that the changeover was fairly painless, as my accountant (who I've used for many years and doesn't charge me the earth) did the paperwork for Companies House. I had to re-register at HMRC and make sure that the company details were put on the website, emails, letterhead, etc. I also had to transfer the bank account into a new account and inform the insurance companies, so there's a few people that need to be notified but planning makes that painless.

As far as bookkeeping goes I don't know what accounting package you are using but I would make sure that you are using a good one - there are threads here about that but I use Kashflow.

Yes a limited company gives you some protection but it can also give legal responsibilities too, for example yearly statement to Companies House and all the paperwork that your accountant would need to do every year - all at cost - so you need to ask the accountants to list all their initial and ongoing charges.

Also, there are benefits from paying yourself a dividend instead of a salary, but that depends on your overall tax situation, so its vital that your accountant goes through that with you otherwise you may be losing out.

Good luck!

 

[seedubya]

IANAL. The biggest reason to go LTD is limitation of liability. The next is for shared ownership.
The "liability" in question is personal liability to debt accrued by the company. The reality is that, as a small business owner, you have little or no limitation of liability regardless of the structure of your business. If you go LTD tomorrow and want an overdraft with your bank you WILL have to sign documents accepting personal liability, regardless. It also sounds like you're a sole owner so no advantage there either.

 

[acs]

It is the liability question which is upper most in my mind.


I have been a part time Sole trader for a few years. Full time job pays the mortgage etc and the PAYE in that job takes care of the tax from the Sole Trader job.

I am about to retired from the full time job, but a new possible opportunity has opened up for my own business which could go almost go full time.


This should increase revenue but also bring in some other risks which is why I am looking at LTD status. Also LTD will protect any pension, home owner assets that I may have. Ok it may cost me more to go LTD but less of my assets are at risk from the way I see it.


It may also be the time to separate my personal tax from “company tax” by going LTD.

I have been reading a good book about starting a LTD company and this has allowed me to get some things straight in my mind and given me a load of other questions.


I have 3 accountancy firms lined up over the next few weeks so let’s so advice and typical costs I can get from them.

 

[TECCS]

yeah i went limited just for the cover of liability. talk to and accountant they will tell you pros and cons, costs etc. its just stupid things like you have to have a firector and you are an employee of the company so have to draw a wage etc.

 

[acs]

Ok so a few accountants later and I think I understand the differences now. Not sure which way to go yet but accountants seem to cost around £75 / month to do the basics for HRMC and Companies house if you do your own book keeping.

One useful resource I have found which explains much about running both as a sole trader and as a LTD is :-
https://www.theaccountancy.co.uk/resources