Limited Company

T.C.

I have an existing client who wants to start a new business and has been advised by the bank to start a limited company. It will just be him in the business with maybe a couple of employees later on. The bank manager (who is obviously not an accountant) suggested that a limited company would give him cover against the business failing. However, if they were to lend to him they would want a 'document' signed to say that he would be personally liable for any debts to them.
So is there really any benefits for him starting a limited company?

Monsoon

Banks pretty much always take a personal guarantee from directors these days so in terms of banking there is no limited liability. The limited liability would extend to creditors though, and being sued if anything went wrong (which includes employees). Does he own his own house or other assets?

Brief article here on some other considerations
http://www.dormerfinance.co.uk/index.php?option=com_content&view=article&id=17

If he's going to make more than 20k profit and it's his only income, it may well be more tax efficient to be Ltd.

T.C.

Yes he owns his own house. I don't work on limited company accounts so can you tell me how much more you charge for a limited company than a partnership. Not sure how much work is involved. He is hoping to make more than £20K and it is his only income, but who knows.

Monsoon

Depends how much you charge for a partnership! I have a mental block with partnerships (don't even ask!) so avoid them as much as possible...

Ltd Co accounts and CT600 for a moderately straight forward Ltd Co with a good TB, £5-600 ish.

Add directors payroll and P35 filing, add personal tax return, add annual return.

T.C.

Thank you for your help.