Setting up a company

jsmoke

jsmoke

jsmoke

Soldato
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For software related, I'll be doing it part-time, the occasional work at first, an additional job.

I assume sole trader with self tax assessment is the right option over limited company?

If so any other tips, it's really as straightforward as choosing a name, applying for self assement then registering?

Any ideas for a name also?
 
There is a tipping point in earnings as to whether it's better to go sole trader or ltd company, I think it's about £35k per annum and above you're better off ltd.

Any ideas for a name also?
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jsmokesoft
 
dl8860 said:
There is a tipping point in earnings as to whether it's better to go sole trader or ltd company, I think it's about £35k per annum and above you're better off ltd.


jsmokesoft
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Yep I was never great at names. I won't be earning more than £35k, a few £k a year would be a bonus. I believe you don't even need to register initially for up to 6 months.

AppsAsaurus or AppsAlicious or Apps'r'us, maybe?
 
The easiest thing is just to use your name.

If you use anything else but your given name you risk trademark infringement so before you pick any other name you need to do a search.
 
You have to consider liability on sole trader vs. Ltd company though. Sole trader means he carries all the liability of any debt or legal issue personally, rather than the business.

I always setup a company, it's costs nothing in the UK and is so easy.
 
I went sole trader initially, until it become much more cost effective to go limited.
As mentioned above there's a trigger point in earnings where it becomes more worthwhile to be limited. Accountants fees are bit higher looking after a limited company compared to a sole trader as there's a bit more to do in terms of admin, but it's still worth it once you hit that trigger. Bring in the missus as a shareholder to top up her salary, there's loads you can do when you reach that point.

Depending on what you are doing and what risk there is speak to an insurance broker and get some good liability insurance (not expensive in scheme of things) and a decent accountant you can trust, given time he will save you money and time. If you open a business bank account you'll get free banking for 12 to 18 months as well. Good to keep it separate from your private/personal account (just for record keeping ime)

Do you have any friends or family who run their own business - you may get recommendations on accountants and the like locally. I'm a dubious sod and I don't like putting my trust in someone I don't know.

And some software to track expenses, purchases, sales, profit etc - small steps and all that.

Good luck :)
 
nantucket66 said:
I went sole trader initially, until it become much more cost effective to go limited.
As mentioned above there's a trigger point in earnings where it becomes more worthwhile to be limited. Accountants fees are bit higher looking after a limited company compared to a sole trader as there's a bit more to do in terms of admin, but it's still worth it once you hit that trigger. Bring in the missus as a shareholder to top up her salary, there's loads you can do when you reach that point.

Depending on what you are doing and what risk there is speak to an insurance broker and get some good liability insurance (not expensive in scheme of things) and a decent accountant you can trust, given time he will save you money and time. If you open a business bank account you'll get free banking for 12 to 18 months as well. Good to keep it separate from your private/personal account (just for record keeping ime)

Do you have any friends or family who run their own business - you may get recommendations on accountants and the like locally. I'm a dubious sod and I don't like putting my trust in someone I don't know.

And some software to track expenses, purchases, sales, profit etc - small steps and all that.

Good luck :)
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What's the difference between the missus getting paid through the company and you paying her directly?
 
Kemik said:
What cover? If you take out loans most banks will require you give a personal guarantee. Setting up a limited company for this is overkill.
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Have you looked into the differences between the two or are you just stating things for the sake of it? Look into it, what the difference is for any liability between sole trader and UK ltd.
 
jsmoke said:
What's the difference between the missus getting paid through the company and you paying her directly?
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She is already in full time employment (not via me), so with her as a shareholder I simply top her income up over and above what she earns in her day job via dividend up the 20% earning threshold if I'm describing that correctly. She pays normal 20% tax on her PAYE wage and 7% on what the business pays in return for a bit of admin and invoices and the boring stuff I'm not so good at to let me concentrate on the stuff I am good at. Good way to top up the household income and keeping the main earner away from 40% tax.

As previously mentioned liability cover for any business is a must in my opinion. Think of the worst possible scenario you could be in and throw it at the insurance broker and even a solicitor and see what's what.

A tradesman drops a hammer on a stone floor and smashes a tile, tile is no longer available so the whole floor needs replacing and that's when you discover the floor is expensive Italian limestone or whatever. Or you plug your laptop in to a clients mains and the power transformer blows up and it kills everything on the ringmain.......unlikely extreme scenarios maybe, but if something bad happened it could easily take you down depending on your circumstances.

I pay about £300 a year for my liability insurance and I've got a silly level of cover (which comes by default). Touch wood I've never needed to use it, but I know people who have. I know an IT guy who accidentally dropped an ink cartridge or toner on a silly expensive pale coloured Axminster carpet, it needed replacing as the ink went everywhere and it was in a really big room and the carpet had only been down for a couple of weeks. He looked after networks and was just doing his client a favour by installing a new printer (which he didn't even supply)

Like all insurance nobody wants it, but it's better to have it and not need it than the other way around!
 
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randomshenans said:
Have you looked into the differences between the two or are you just stating things for the sake of it? Look into it, what the difference is for any liability between sole trader and UK ltd.
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I'm a Chartered Accountant so I would hope I know the difference between a sole trader and a limited liability company. Look up piercing the Veil of Business Incorporation. Try getting a significant bank loan using a company as a owner/manager and see if the bank asks for a personal guarantee.

You will only have your liability limited to your initial capital invested if you don't do something fraudulently or where the court believes you were using the company to hide behind when ripping off customers/suppliers.
 
Ltd company is also less tax efficient for smaller revenues especially if you have other employment too, because you pay corp tax on revenue (I doubt you'll have many expenses) and personal income tax again when you take money out. If you're at the 40% threshold already for other income and earn more from your ltd, you're paying corp tax and then 40% income tax again. Alright you get £2k of dividend allowance but that's a lot less than £5k from previous years. Ltd makes sense if you can pay yourself low amounts as salary and retain money in the company to take out when tax efficient, perhaps as entrepreneur's relief if you wind up.

OP I doubt ltd is the way to go for you.

If you're worried about liability you can always pick up PI/PL insurance at a fairly cheap price.
 
Does the sole trader tipping point take into account your earnings elsewhere or is completely separate?

I want to register to do freelance work as well as my day job but not sure what's best.
 
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