LTD company or not.. advice please

[adiandvic]

Iam starting up a company, but I need some advice, is it worth paying to become a LTD company or not.

What are the benefits? Is it worth it. The company is net based and wont be trading for around another 5-6 months, if I do a ltd compnay now but dont trade do I have to submit accounts etc etc.

any help welcome, all this baffles me.

[spikeyhead]

Briefly, as a Ltd Co you'll pay less tax but fill in more forms

and if it goes bust you won't lose your house.

Get a good accountant, its well worth it.

[plasticpig]

http://www.businesslink.gov.uk pretty much explains it all. For a QUANGO they are actually pretty good.

[Flipatron]

If you are going down the Ltd company route I'd suggest getting the ball rolling now. The VAT application can take months alone.

[SS HSV]

adiandvic said:

Iam starting up a company, but I need some advice, is it worth paying to become a LTD company or not.

What are the benefits? Is it worth it. The company is net based and wont be trading for around another 5-6 months, if I do a ltd compnay now but dont trade do I have to submit accounts etc etc.

any help welcome, all this baffles me.

Depends on any number of factors; if you go Limited then you will have a whole heap of paperwork and your records will become public and obtainable via a websearch for £2. As mentioned above there are certain tax advantages of earning just £400 odd per month as a minimum wage employee and using Directors Drawings for the remainder.

Your accounts for a limited company will require a chartered accountants stamp every year and if you are VAT registered you can expect an annual bill of between £600-2000 for the priveledge.

It is no problem if you do not plan to start trading until 6 months, infact it is a far better way to get everything together if you can do so, rather than throw yourself into a new venture lock-stock. This way you will be able to get into your business routines first and the official start also gives you time to build up yourself in the market place.. wherever that is

[Brown and Boris]

I can see only two advantages: payments in share dividends can cut the tax bill but Darling is slowly nibbling away at the dividends advantage. The accountancy costs for limited co are a lot more than the sole trader/partnership. The other one is clearly the liability issue but depending upon the risk of racking up debts and losing the house that may not be significant if the venture isn't lending or creating liabilities and is properly insured.

The paperwork isn't too bad (you would have to register for VAT whther you are limited company or sole trader if you pass the threshold). As a company with an employeethe company (you) have the monthly PAYE and NI to calculate and sort and the annual PAYE returns to put in. You also have the companies house returns twice a year ( annual return (easy) and annual accounts).

Horses for courses but I would only do it afer taking advice from an accountant and then only if the advantages are significant enough to counter the paperwork it creates.

[zac510]

I've setup a couple of companies via accountants and they seem to be able to do it 'same day', bank account a few days later and VAT rego a few months later. You can trade the whole time.
Being a net-based company I suppose you will have the advantage of being able to claim all of those related expenses too.

[Eric Mc]

SS HSV said:

adiandvic said:

Iam starting up a company, but I need some advice, is it worth paying to become a LTD company or not.

What are the benefits? Is it worth it. The company is net based and wont be trading for around another 5-6 months, if I do a ltd compnay now but dont trade do I have to submit accounts etc etc.

any help welcome, all this baffles me.

Depends on any number of factors; if you go Limited then you will have a whole heap of paperwork and your records will become public and obtainable via a websearch for £2.

Not quite - some aspects of the company - names and addresses of directors and registered office for example and a VERY limited disclosure version of the accounts can be viewed - but very little else.

As mentioned above there are certain tax advantages of earning just £400 odd per month as a minimum wage employee and using Directors Drawings for the remainder.

[b]The concept of "Directors Drawings" does not exist in company law or Corporation Tax law. A director can only remunerate himself from his company by means of salary or salary in kind - both of which will require accounting for the PAYE and National Insurance arising on such payments.
However, a SHAREHOLDER can be paid dividends from the profits and reserves of the company. Dividends are still subject to Income Tax but not National Insurance - which is the reason why they are utilised by owner managers of small companies whenever feasible [/b]

Your accounts for a limited company will require a chartered accountants stamp every year and if you are VAT registered you can expect an annual bill of between £600-2000 for the priveledge.

Absolutely not. There is no legal requirement for small limited companies to have any sort of input or certificate signed by ANY sort of accountant - chartered or otherwise. However, because limited company accounts are pretty complex, it is advisable that an accountant prepares them as most lay persons will not be aware of all the disclosure requirements and specific formats needed for formal limited company accounts. There is no requirement for an accountant to be qualified to prepare such accounts - although you would assume that qualified, practising accountants are more likely to know what they are doing. Chartered or Certified accountants (who are in practice) are equally qualified for this type of work

It is no problem if you do not plan to start trading until 6 months, infact it is a far better way to get everything together if you can do so, rather than throw yourself into a new venture lock-stock. This way you will be able to get into your business routines first and the official start also gives you time to build up yourself in the market place.. wherever that is

Edited to correct the glaring inaccuracies.