LTD

[gordy71]

Was speaking to a customer the other day who was raving about how he has just made his company Limited. He couldnt really explain what this intails as i dont think he quite understood himself! However he claimed it was saving him thousands per year and advised me to look into it.

Are any of you guys LTD, and can you please explain the pros and cons. Also what are the financial benefits if any? Thanks

 

[Evans Electric]

I,m not an expert but if you are a one man outfit , forget it. There are also benefits in being a sole trader . Without going into it ,think of Del-Boy.

Good answer from Johninlondon though.

 

[maccarooni]

Lovely jubbley.

 

[NozSpark]

By being Limited it reduces your liabilities in the event of liquidation and bankruptcy to the amount of capital that has been invested into the company. Therefore you don't have to loose the house unless its secured against loans on the company. The saving on tax is done by paying out profits as dividends instead of through Paye, this way you save national insurance and also depending on the tax rates and size of the company this can be of a considerable amount. With being Limited you also have to have annual audit and this can cost a fair amount of money. Seek professional advise before you decide on which course to take.

Have you actually read a wholesalers credit account application form???

They hold the person signing the form personally liable for all and any debt that the company is liable for even if the company goes into liquidation.

BTW I'm a sole trader and don't have any wholesalers accounts...

 

[SLIPSHOD & SLAPDASH]

The Ltd bit is not so limited these days. When opening any credit account all directors have to sign a personal guarantee against any debts. You cant just close a Ltd business and runaway either. The auditors will look to see if any money /property transfers or other underhand things have gone on and hound you down. You also have to pay Corporation tax & have audited accounts yearly. Its not all bad though, we are Ltd.

 

[Sidewinder]

As Slips says really, when a Ltd. Co. goes these days the creditors will often clawback their debts from the directors, trust me I know!

There will also be investigations into the previous years trading accounts by the liquidators.

Though you only have to have audited acconts over a certain turnover threshold.

It does have certain benefits though.

 

[sprocketflup]

You cant become limited if you are a one man band as you need at least one person to be the company secretary and one to be the main director ( ive got round this in the past by asking my mum to do it lol)

You also have to have a yearly AGM which has to be directed properly ( minutes taken etc) there are tax advantages and disadvantages, also regarding pensions etc. The limited company is a legal entity in its own right and as such you may relinquish some control.

its a complicated subject, and going limited may work for you depending on your situation, best bet is to talk to a proper accountant who will be able to look at your circumstances and advise accordingly.

Good luck whatever route you choose

---------- Post Auto-Merged at 10:32 ---------- Previous post was made at 10:30 ----------

Also I have met a guy (more than one in fact) in the past who just got a thrill out of calling himself an MD

Downside is, hes behind bars now coz he didnt do things properly the twot

 

[Doc Hudson]

A bit more detail about some of the nuts and bolts of becoming Ltd can be found at companies house;

Guidance - incorporation and names (GP1)

Doc H.

 

[Manator]

You cant become limited if you are a one man band as you need at least one person to be the company secretary and one to be the main director ( ive got round this in the past by asking my mum to do it lol)

This is not now true, the regulations were relaxed a little to allow only 1 director to become Ltd.

Like others have said there are some real benifits of becoming Ltd and there are some real dangers.

Proper correct advise given by people who know what to do is always the best advise to follow.

 

[Sidewinder]

I can 2nd Manators coments as I am director & sole employee of a Ltd. Co. & there is no Co. Sec. there is no longer a requirement for this in law.

 

[sprocketflup]

Oops - my bad, sorry

 

[batty]

My accountant talked about it a few years back but said government were going to cut back some of the advantages of being ltd but personally if its more paperwork which I think it would be I would steer clear. I have just taken on a sub contractor so have more paperwork with that god I hate paperwork.

 

[Cirrus]

I have just gone Ltd after 4 years of being a sole trader. The advice was from my firm of accountants. My costs have increased as we now need employers liability ins and my accountancy fees including payroll for 2 directors have jumped to

 

[muffin]

i thought there was a max turnover and you have to be limited, does this still stand and if so whats the amount?

andy

 

[Sidewinder]

No max turnover before you have to go Ltd AFAIK.

I have a customer who was employing about 30 guys big factory of his own, not Ltd. & I know a landlord who is not Ltd. and turns over between

 

[ADS]

Another bonus, I suppose, is that your personal 'status', when filling forms, loan applications etc. is 'employed', as opposed to 'self employed'........so you wouldn't have to produce accounts, just your own payslips

 

[Cirrus]

Not exactly tue ADS as although you are employed, you are a company director and will be required to provide company accounts in most situations.

 

[ADS]

Not exactly tue ADS as although you are employed, you are a company director and will be required to provide company accounts in most situations.

Can't say I've ever seen that question on a loan/credit card/car finance application form.

If you set up 'Sparks Ltd' and are MD. 'Sparks LTD' then employs you as an electrician - all legit, cards in, stamp and tax paid - you're employed.

It's no different than if I set up 'Sparks LTD' and I am MD. Then 'Sparks LTD' employs you as an electrician.

You're classed as 'employed' either way - so you can tick the 'employed' box - because you are!

 

[sprocketflup]

Can't say I've ever seen that question on a loan/credit card/car finance application form.If you set up 'Sparks Ltd' and are MD. 'Sparks LTD' then employs you as an electrician - all legit, cards in, stamp and tax paid - you're employed.

It's no different than if I set up 'Sparks LTD' and I am MD. Then 'Sparks LTD' employs you as an electrician.

You're classed as 'employed' either way - so you can tick the 'employed' box - because you are!

I concur with that - but I have been proven wrong once already this thread

 

[Cirrus]

Agreed, you are 'employed' but anyone issuing credit realises that company directors tend to 'own' the company and it doesn't always follow that they are solvent.