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Lorrainelovesplants

business legal entity

Sorry, dont know what to name this subject - Ill explain.

If your business is as a sole trader, ie you are the business, can you still employ someone or does this mean you are then a company?

I need to know if I have to change the legal status of what I do if I take on a part timer.
Falstaff

You can employ people all day long and still be a sole trader Very Happy
vegplot

Search: business types legal definition uk

in your favourite search engine
Hairyloon

But you will need Employer's Liability Insurance.
dpack

and a basic understanding of paye /ni or accounting for them as sub contractors

either is fairly simple
Lorrainelovesplants

I already have employers liability.

I will take advice on PAYE etc - this is the stuff that has put me off for a while....
dpack

iirc it is fairly easy , they have a tax code and ni number,the amount they get paid and the tax code determine how much tax and ni should be paid ans the ni number makes sure it is recorded to their/your tax records

i think the tax office should have an "easy guide to paye/ni"

from what i remember it takes a few mins with a calculator and a few more to enter the numbers on the forms/in your accounts

tis probably all paper free these days
vegplot

I already have employers liability.

I will take advice on PAYE etc - this is the stuff that has put me off for a while....


That's straightforward if you have good software. I can highly recommend FreeAgent which not only manages invoicing, billing VAT returns, tax but also payroll.
Lorrainelovesplants

Im asking another question now.....

As Ive been a sole trader for the last 10 years and the business is FINALLY turning around...Im thinking about if I should change its status.

Ive been told as a cider producer, it might make sense for me to become limited.
So LLP, partnership, Ltd - what are the differences and pluses and minuses.
dpack

ltd needs an audit every year which costs money ,however the amount it costs can be easily recovered by using the company to pay for things that a sole trader or employee has to buy from their own pretaxed money .

with good accounting advice and making use of the advantages on stuff you needed to spend out on anyway ltd can be a good way to trade .another advantage is that although most loans need security unsecured debts or liabilities are the companies problem rather than your problem if it goes toes up at some time .

the main disadvantage is paying for an audit and the need to get good advice re the best way to account for in and outgoings .there is usually a break even point on turnover/profits above which being a sole trader is not efficient.
vegplot

Im asking another question now.....

As Ive been a sole trader for the last 10 years and the business is FINALLY turning around...Im thinking about if I should change its status.

Ive been told as a cider producer, it might make sense for me to become limited.
So LLP, partnership, Ltd - what are the differences and pluses and minuses.


LLP's are primarily for solicitors and accountants. It is tax transparent i.e it doesn't pay corporation tax or capital gains that liability falls to the partners as self-employed persons.
vegplot

ltd needs an audit every year

Small LTD companies are exempted from the need to have an audit but they do have to have accounts prepared by an accountant.

Quote:
Your company may qualify for an audit exemption if it has at least 2 of the following:
- an annual turnover of no more than 6.5 million
- assets worth no more than 3.26 million
- 50 or fewer employees on average
dpack

that has changed since my time ,we could do the books/accounts in house but they had to be externally audited.

i spose if the bookeeping is tidy getting the accounts drawn up by an accountant would not be too costly .
i recon shop around for some quotes .
sean

At LLPs level she prolly wouldn't need accounts prepared by an accountant either. Ty Gwyn

Ask Companies House to send you the relevant info on company types. Lorrainelovesplants

Beleive it or mot I already do my accounts and pass them to the accountant to finalise. Ive been happy with them for a couple of years - they save me tax....

I think I will need to have a chat with them, but wanted some down to earth info so I at least had an inkling of what he would be talking about.

So what's the difference between partnership and ltd then?
Ty Gwyn

With an Ltd you`ll save yourself even more Tax. vegplot

Beleive it or mot I already do my accounts and pass them to the accountant to finalise. Ive been happy with them for a couple of years - they save me tax....

I think I will need to have a chat with them, but wanted some down to earth info so I at least had an inkling of what he would be talking about.

So what's the difference between partnership and ltd then?

Limited Liability + Partnership = LLP . It's in the title. My original post gave you a path to follow but if you didn't want to do that here's a direct link https://www.gov.uk/business-legal-structures/overview

A limited company is much less likely to be investigated by HMRC than a small business and you can pay yourself through dividends (caveats apply) where tax is payable at only 10%. Your accountant will give you facts rather than opinion.
Falstaff

Partnership : - you and he can each pledge everything you own as between you - without specifically stating that !

LTD Co - You and he can pledge everything "In the Company" - that does Not necessarily include your house !

Limited Partnership - don't worry about it !

You need to talk to a proper accountant (One who is on your side - probably a one man band)

Taxation as "dividend" can save few quid - but Corporation tax does start with the first pound of profit - there are NO "Personal Allowances" and you HAVE to pay yourself as an employee as well !

Nobody can answer those questions without knowing rather more tahn you may wish to publish here ! Laughing
vegplot

Taxation as "dividend" can save few quid - but Corporation tax does start with the first pound of profit - there are NO "Personal Allowances" and you HAVE to pay yourself as an employee as well !

The secret is to not make a profit and I'm breaking the law by not paying myself minimum wage.
Nick

Just don't declare how many hours you do. Mistress Rose

We have had a Limited Company with husband, son and myself as directors and shareholders for a number of years now. For us it makes it easier and of course you do have limited personal liability.

For a small company, you have to have your accounts looked at, but not audited by an accountant, and to have ours dealt with from computer programme and then preparation of and submission of reports to HMRC and Companies House, it costs about 400-550 inc. VAT. The Companies House return is quite easy, so we do that ourselves and have to pay 13 doing it online.

We use TaxCalc to sort out the NI and Tax, but it isn't necessary if you only have one or two employees.

I would look at the government web site and discuss this with your accountant before deciding how you want to go.
Lorrainelovesplants

Thanks all - Ill speak to my cousin (dodgy accountant - taught me how to do my books) and then make an appointment to speak to my accountant. Lorrainelovesplants

Well, Ive had an ineteresting chat with the accountants.
We have decided to go for Ltd co. There are many reasons.
They will arrange all this for me for a fee. I was a bit surprised - just to set it all up (no accounting or anything) will cost me just over 300.

Surely I can set up as a ltd co a lot cheaper than this?
Ty Gwyn

Well, Ive had an ineteresting chat with the accountants.
We have decided to go for Ltd co. There are many reasons.
They will arrange all this for me for a fee. I was a bit surprised - just to set it all up (no accounting or anything) will cost me just over 300.

Surely I can set up as a ltd co a lot cheaper than this?


25.00 it was a few years back,check out with Companies House if it has increased.
Lorrainelovesplants

But am I missing something?

Bit of a difference between 300 and online application 15.

What exactly is the difference? Surely its the same thing?

I did ask him what I would get for the fee, and he mentioned registration, and sorting out a bank account. Surely I can just sort a bank account at the bank?
Nick

Solicitor's time, and, I imagine, their liability insurance to make sure it's all done properly. Lorrainelovesplants

Just spoken to a guy at Business support on the .gov.uk pages on setting up a business.
Apparently this is the normal fee for an accountant to do this (I should have been an accountant obviously).
So he said just fill in the online application and contact HMRC to let them know of the change.
wellington womble


Taxation as "dividend" can save few quid - but Corporation tax does start with the first pound of profit - there are NO "Personal Allowances" and you HAVE to pay yourself as an employee as well !



But you can pay yourself just the personal allowance, which is untaxed by the company as it's an expense and untaxed for you, then take rest as dividend taxed at 10 percent instead of 20 or 40.

Are allowable expenses different for limited companies? Surely a sole trader should also be able to take of expenses before profit? I am.

A limited company will also allow you set up a pension scheme controlled entirely by you. You can decide where to invest and it can also loan up to 50 percent of the fund to you, at market rates. If you have pension schemes already, you may be able to transfer them and access some of the money for the business (if this is wise or desirable).
Lorrainelovesplants

My situation is complex as I already get a pension and also have a PAYE job. There are reasons why limited is the way forward now.

I just dont want to pay 300 for something I can do myself.
Ive just made an appointment at the bank to open a new business account and am waiting for my dodgy accountant cousin to phone me with advice (not my actual accountant you understand).
Lorrainelovesplants

wow, this really is confusing..

Ive found this site/page online...http://startups.co.uk/choosing-a-name-for-your-limited-company/
where you can literally form a company online for either 20, 30 or 40 plus vat. Which would you choose (if any)?


Professional - Ltd Company Formation Package
3 hour online formation
Full trading ltd company - limited by shares
Digital documents

Mem & Arts
Certificate of Incorporation
Share certificates
Printed Certificate of Incorporation
Bound Memorandum & Articles
Company Register (unbranded)
Registered Office (optional)
Online access to Admin portal / Co Sec system

To add a HSBC Business Bank Account - see bottom of page. 39.99 + VAT

Executive - Ltd Company Formation Package
3 hour online formation
Full trading ltd company - limited by shares
Digital documents

Mem & Arts
Certificate of Incorporation
Share certificates
Printed Certificate of Incorporation
Bound Memorandum & Articles
Online access to Admin portal / Co Sec system

To add a HSBC Business Bank Account - see bottom of page. 29.99 + VAT

Starter - Ltd Company Formation Package
3 hour online formation
Full trading ltd company - limited by shares
Digital documents

Mem & Arts
Certificate of Incorporation
Share certificates
Printed Certificate of Incorporation
Online access to Admin portal / Co Sec system

To add a HSBC Business Bank Account - see bottom of page. 19.99 + VAT
wellington womble

I'd be very interested to hear what he says. vegplot

I'd do it myself via Companies House.

https://ewf.companieshouse.gov.uk//runpage?page=welcome
Lorrainelovesplants

Ive just spoken to a very nice Welsh lady at Companies House.

basically its an online registration. She CANT give advice (but her tone of voice changed a lot when trying to spell things out to me without advising me...
So when I asked - " so, it says I need to give details of the shareholders and the share capital what does that mean?"
she said Are you going to be the only shareholder?"
me - "er....yes?"
"Then you have to decide what you want your share capital to be - what the share is worth - the liability"
me - " well, whats the usual thing?"
"I cant advise you that, BUT YOU COULD MAKE IT FOR AS LITTLE AS 1"
Me-"Does that mean my business is worth 1 then?"
Her - "No, its what the liability is. If your business goes down then you as the only shareholder is liable for 1"
Me - "so, Im not giving the share amount as what I value the business at?"
her - "I cant advise you that, But you can always issue MORE shares when your business becomes more profitable"
Lorrainelovesplants

So, yes, Im going for online reg as a private limited company with shares.
There will be one share and I think I have to make it 1.

Is this a correct interpretation?
Or should I ask my helpful, very rich accountants? Laughing
vegplot

We did 100 shares @1 each split between two directors equally. wellington womble

If you did it now, would that mean you need to get your accounts done for this year, despite being a ltd for only a few days of it? Or would it be worth waiting a week?

Edit - ignore me. You said you already had them done anyway.
Lorrainelovesplants

The accountant said it didnt matter when I started.

Having slept on it overnight, Ive started to have creeping doubts...

Am I kidding myself? Do I need the hassle? And then the contrary - Its no more hassle than now - just different. Good opportunity to formalise the business and get it profitable.

Sleepless night, and off for a whole day of maths at Penzance...groan.
vegplot

And then the contrary - Its no more hassle than now - just different.

It's better not just different.
Mistress Rose

As there are three shareholders in our company; husband, son and me, we each have one share at 1. Our accountant set it all up for us at the beginning, including a name of our choice, and hasn't suggested that we increase the shareholding at all. I would speak to your cousin, but don't lose sleep over it. If you don't feel up to the hassle now, you could look at it again in a couple of months having discussed it with various people and got the information together.
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