[LBWCS]

thanks for replies everybody. So basically financially wise, are we talking about the gap of 9% ni, which obviously the bigger the profit, the more the savings?

[PoleKing]

Yes. And as a sole trader after £32k you move Upto 40% tax.
Accountants fees could be c.£1000p/a, other than that there are minimal additional costs.

[Perfect Windows]

Not just the 9% if you're married.

In my opinion, the biggest difference is in the use of tax-free allowances.  For easy maths, let's say the first 10K of income is tax-free (which it will be next year).

Then if you're working, earning £20K and your wife isn't earning, you're paying 20% tax on £10K, so £2K.  If you're both earning from your limited company, her first £10K and your first £10K are tax-free, so you pay no tax.  

Similar (but more complex) arguments apply if you're close to the next tax threshold (£32K), even if she is working as long as she's not actually at that threshold - you can bring some of the income into her 20% tax rate rather than your 40% rate.

You do need to discuss this with your accountant rather than with window cleaners.  However, do bear in mind that if your fees will go up with your accountant, he has a minor conflict of interest.  Get him to put the benefits down on a piece of paper for you and make sure you're happy with what he's explaining.

Vin

[dannymack]

Cheers Crystal pmsl !!! That's the best way less headache but I do have to work all the work out then do around  80 invoices which can take around 6 hours having to add on things bringing in 6 weeklys, schools 3 monthlys then there the invoice numbers to change dates ect ect. Mind you the wife then writes all the jobs into the vat book

The less maths I do the better lol !!! 👍🇬🇧🇬🇧🇬🇧

[LBWCS]

Not just the 9% if you're married.

In my opinion, the biggest difference is in the use of tax-free allowances.  For easy maths, let's say the first 10K of income is tax-free (which it will be next year).

Then if you're working, earning £20K and your wife isn't earning, you're paying 20% tax on £10K, so £2K.  If you're both earning from your limited company, her first £10K and your first £10K are tax-free, so you pay no tax.  

Similar (but more complex) arguments apply if you're close to the next tax threshold (£32K), even if she is working as long as she's not actually at that threshold - you can bring some of the income into her 20% tax rate rather than your 40% rate.

You do need to discuss this with your accountant rather than with window cleaners.  However, do bear in mind that if your fees will go up with your accountant, he has a minor conflict of interest.  Get him to put the benefits down on a piece of paper for you and make sure you're happy with what he's explaining.

Vin

My wife is self employed with another job so her free allowance is already used. How much do people pay for employers liability as I assume this is a must when you go ltd?

[Crystal-clear]

If the wife is on less then £30k she could be a share holder and get say £10k a year dividend for cheaper (up to the higher rate bracket) you can get £40k cheaper but all these savings are pointless unless you are making a minium of these sort of profits also I would say not to go LTD just to save you money but more to develope into a serious business that's making or in direction to make these sort of profits and with the aim to push for more
good post by vin speak to an accountant I'm sure you will find out its not worth if without higher end profits

[PoleKing]

Not loaded or anything Crystal but you say 'don't go limited just to save money'
Why is that?

[Crystal-clear]

Not loaded or anything Crystal but you say 'don't go limited just to save money'
Why is that?

well just cos if you have a uk average profit of say £30k youre only looking at £1600 saving before all the rigmarole,and extra expenses
i dont think its worth being a company director and being responsible for a LTD for that small amount of money being self employed is so simple compared to being LTD there are savings and maybe one could consider it but i feel going LTD should be a move if you plan to be big at least and pay your self a £30k Dividend have staff making you profits and pay your admin Mrs another say a £20k dividend or up to her higher tax bracket leave £20k in the company for next year maybe this way all the rigmarole of owning a LTD company will be worth it as the savings could be several Thousand but for a few hundred quid saving personally id stay self employed.so IMO its really to be serioulsy looked at if you are making over average income or at lleast looking to be moving in that direction thats when the savings to rigmarole ratio become worth it ,
hopefully gocardless will aid me in taking over the world and being LTD lol... have 11 customers now on it whoop whoop  

[PoleKing]

Not loaded or anything Crystal but you say 'don't go limited just to save money'
Why is that?

well just cos if you have a uk average profit of say £30k youre only looking at £1600 saving before all the rigmarole,and extra expenses
i dont think its worth being a company director and being responsible for a LTD for that small amount of money being self employed is so simple compared to being LTD there are savings and maybe one could consider it but i feel going LTD should be a move if you plan to be big at least and pay your self a £30k Dividend have staff making you profits and pay your admin Mrs another say a £20k dividend or up to her higher tax bracket leave £20k in the company for next year maybe this way all the rigmarole of owning a LTD company will be worth it as the savings could be several Thousand but for a few hundred quid saving personally id stay self employed.so IMO its really to be serioulsy looked at if you are making over average income or at lleast looking to be moving in that direction thats when the savings to rigmarole ratio become worth it ,
hopefully gocardless will aid me in taking over the world and being LTD lol... have 11 customers now on it whoop whoop  

Fair enough.
I'd concur.
£70k would definitely be worth going ltd IMO.
The gocardless will get there.
Mines slowed down a bit but nearly at my target.

[Crystal-clear]

Wierd bunch customers are sometimes I spoke to 30 slow payers who are really nice and have been with me years 11 have come on 19 still pending for around 10 days been emailing them reminders every day 3 have come back to me saying they do not want to setup a direct debit one has emailed me back "stop sending me these emails I do NOT want to setup a direct debit with you" lol I asked her why did you give me your email and aggree on the phone? Waiting for responce its as if they feel bad saying no to me as if they draw the line with direct debit but will pay me when they please if I clean there windows , another really good customer turned bad shouted No I do not want to, he owes since 2 months back and he won't post date cheques I told him I'm trying to move into the future and stuff he didn't care said keep it the old way or no way some of the other 19 have sent over the bacs payment electronically after a few reminders but still not set it up they don't want to tell me this until it comes to the crunch looks like ill be having a serious cull soon as gocardless is the only direction I'm intrested in , its what will bring back the fun factor for me

[Ian Lancaster]

when you go ltd?[/color]

It's a must whether you are Ltd or not!!

If you employ then you have to take out employers liability insurance. So if you stay as a Sole Trader (or partnership or whatever) and employ your dad, you have to register and have E.L to cover him.

If you go Ltd then you are employed by your own company and have to have E.L to cover your dad, yourself and anyone else who works in your company (wife as director etc)