need some advice i'm in plumbing and heating and last year just missed the VAT £60000 mark. problem is i was on my own then. this year i have two other guys working with me as we have expanded into building and gas and oil. i have been told to make my company ltd to get out of being VAT registered do you agree? what does limiting your company involve whats the cons and pros. any help would be great

doesn't make a difference if you're a ltd co or sole owner as VAT is based on turnover. If you or co. make £60k+ you'd need to register in both instances.

 

Benefit of being a ltd co is that you limit your personal liability in case the business goes down.

Isn't the difference down to what you are liable for? If you are a ltd company and the company goes into debt, they cannot chase you for the cash as it is ltd to the company. If you are not ltd then they can chase the owner for the cash?...something I read...may or not be correct...

Isn't the difference down to what you are liable for? If you are a ltd company and the company goes into debt, they cannot chase you for the cash as it is ltd to the company. If you are not ltd then they can chase the owner for the cash?...something I read...may or not be correct...

 

 

that's what I mean about limiting your personal liability. If you are a sole trader, creditors can apply to have your personal assets seized to pay for debts, where as a company is only limited to it's assets (barring any wrongdoing by directors) hence the term limited.

 

Think of a ltd co as a person, who has rights and liabilities that is attended to by it's agents ie management.

Plus it costs you more to do accounts for a Limited Company and you have to register with Companies House http://www.companieshouse.gov.uk and file Annual Return and Statutory Accounts. But you do get that protection. I should toddle off to http://www.businesseye.org.uk/index.html and find your local office - it's free!

The biggest advantage of a limited company for a small business is the lower tax rates.

 

As a sole trader you will pay tax at 40% of any profits above around £32k (excluding your personal allowances), regardless of whether you actually draw that out to live on.

 

As a limited company corporation tax is zero for the 1st £10K and 19% thereafter. So you work out how much salary you need to live and draw that.

 

But to save tax, you take your income as follows:

 

First you have a minimum salary of around £4800 per year - just below the personal tax and NI limits - so you pay no PAYE or nationl insurance. Then you take the rest as dividends. As long as you don't exceed gross income of around £36k you won't pay any more personal tax. The company will still pay 19% corporation tax though.

 

If you do exceed gross income of £36k you would pay high rate tax on the dividends drawn at 22.5% of the grossed up amount (or 25% of the net dividends drawn) over the £36k threshold All income below £36k will not attract any more tax. Dividends are deemed net of a 10% tax credit when you receive them and high rate dividend tax is 32.5% of the gross amount (so 32.5% - the 10% deemed paid if that makes sense).

 

I'm a bit vague on exact allowances and threshold rates now as I gave up being a tax manager in an accountancy firm last year but the principles are the same!

 

Hope this helps,

 

Richard :)

F'king accountants :rolleyes::D

need some advice i'm in plumbing and heating and last year just missed the VAT £60000 mark. problem is i was on my own then. this year i have two other guys working with me as we have expanded into building and gas and oil. i have been told to make my company ltd to get out of being VAT registered do you agree? what does limiting your company involve whats the cons and pros. any help would be great

 

YES :dance: Did it two years ago..07775633561 if you need more info bud. ( Thick plumber ) :duffer:

doesn't make a difference if you're a ltd co or sole owner as VAT is based on turnover. If you or co. make £60k+ you'd need to register in both instances.

 

Benefit of being a ltd co is that you limit your personal liability in case the business goes down.

 

Sorry sole trader -15k. ltd + 10 IN BONUSE DIVS AND THE 15K TAX BACK THAT THEY WILL PROB SCRAP SOME TIME SOON.....

Sorry sole trader -15k. ltd + 10 IN BONUSE DIVS AND THE 15K TAX BACK THAT THEY WILL PROB SCRAP SOME TIME SOON.....

 

thats me told lol

F'king accountants :rolleyes::D

 

Wondered when you'd show up on this thread mate :tongue:

 

Richard :dance:

It also looks better to the customer if they know you are a poroper company and not cowboys?? (Exceptions noted).

It also looks better to the customer if they know you are a poroper company and not cowboys?? (Exceptions noted).

 

 

All Plumbers are cowboys. I have seen them on the tellyvision riding around on horses, with the large wool ponchos, guns, hats and leather boots.

 

 

Or was that a western?

thanks for the help guys