Ltd or Sole

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:08AM in AAT student discussion
I have been asked by a friend, who is an electrician is he better to to go Limited or stay being a Sole Trader?<BR><BR><BR>Thanks

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Ltd or Sole

    Sole trader - pro = less paperwork to complete - con = if you get sued you could lose everything.<BR>Ltd Co - pro = if you get sued you dont lose everything - con = got to register with company house, complete CT600 and anyone can look at your accounts.<BR><BR>Very simplified answer and maybe others will add lots to this.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Ltd or Sole

    It depends on his profit.<BR><BR>So long as the corporation tax plus any personal tax in dividends is lower than the tax payable as a sole trader then limited is the best bet. If profit is around, say, 30K he would be about 1600 better off as a company. There would be an increase in the accountancy fee and some form filling throughout the year. <BR><BR>A little care is needed to ensure that no assets attracting a gain on disposal are acquired, i.e. buildings should be bought personally and rented to the company. Also cash balances should not be allowed to build up or else there is a danger of it being treated as an investment company on dissolution, with consequent loss of business taper relief on the payout.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Ltd or Sole

    Thank you, I am going to pass the details on to him.

Categories

Privacy Policy