[paul alan]

My accountant wants me to go limited, I dont know if I want to.

It seems he would get more work from me and therefore is in his interest, I'm assuming that's why he wants me to do it.

He reckons that me earning 4k per month "you'll pay loads of tax-we'll send you limited", I had a dig around and apparently since 2016 you dont really get much benefit tax wise.

It just seems like he wants to complicate things for me so he can earn more?

Are there any benefits of being limited or should I just say "I'm ok as I am thanks"

[Shrek]

My accountant wants me to go limited, I dont know if I want to.

It seems he would get more work from me and therefore is in his interest, I'm assuming that's why he wants me to do it.

He reckons that me earning 4k per month "you'll pay loads of tax-we'll send you limited", I had a dig around and apparently since 2016 you dont really get much benefit tax wise.

It just seems like he wants to complicate things for me so he can earn more?

Are there any benefits of being limited or should I just say "I'm ok as I am thanks"

This is a very good question, I think it is more tax efficient to be limited but would be interesting to find out by how much

[Stoots]

Ive just gone Ltd last week.

The letter from companies house was nice...

On 4k a month, after accountant fees you are right, there is little in it either way, however if you are looking to grow it becomes more efficent on higher earnings.

There are other benefits, including paying yourself tax free dividends. Also if your wife was to be a shareholder there are some benefits as well.

A few other points

1. limited liability
2. can look more professional
3.You actually have a seperate entity so you can sell shares or the business much easier if you so wish.

For me personally i just want to build something that is a seperate entity, a proper business if you like that is independant of myself.  I also would like to just have a salary and dividends and then know whatever is left in the company can either stay there or be used for growth, i know you can do that with a sole trader but its nice to know that money is company money.

Also a few personal financial reasons were the main thing that swayed me.

[Shrek]

Being limited- can your Mrs or partner be a shareholder and not do any window cleaning? Just like being a silent partner but receive dividends?
Also , I don’t actually need money for growth , id prefer to use it to pay my mortgage off quicker

[Marc Stock]

I turned Ltd last year.

Was the best thing i have ever done.

Me and the misses each get £15,600 on paye; this covers our living costs and we pay tax on that too so we are building up state pension.

Last year the tax free div allowance was £5k so last year i was able to extract that tax free.

This year the allowance for dividends is 2k; so i have some tax free funds to extract if i want this year too.

Plus my goodwill was valued at 10k (nominal value for transfer) so the ltd company owes me 10k. I can and have charged my company interest on the money it owes me first 1k is tax free. And if i want to i can leave this owing me indefinitely, and charge interest every year to my company that ita owes me.

Just a word of advice,  if you have a vehicle  that is old transfer your tangible assets at nill value; or you will loose out on your personal tax. You must have an old van not worth much to do it. Transferring a van thats worth pobabbly 500 quid at trade in value nill value is ok; but not a 2 year old one worth 8k..

Ask a tax expert though.

 All this has been done by my accountants this year and thwy have saved me around 8k in tax; although they sent me a 2k bill that i need to settle on my accounts signoff this monday.

I am averaging 4.7k a month turnover now. And if i was self employed as sole trader that would become a headache.

[Matt.]

Being limited- can your Mrs or partner be a shareholder and not do any window cleaning? Just like being a silent partner but receive dividends?
Also , I don’t actually need money for growth , id prefer to use it to pay my mortgage off quicker

Yes to the Mrs question, silent partner, director company secretary what e er position u want her to have. And don't use business money to pay off mortgage pay it to u or the Mrs first then pay it off, maybe dividend payment at end of year each then bag some off mortgage 

[Matt.]

At 48000 I would say u should be thinking if not already thought about being limited, it's not just the accountant trying to fiddle u, he's probably seeing the possibility of a 10k increase in ur work making it just on vat threshold....... Go limited mate

[Shrek]

Being limited- can your Mrs or partner be a shareholder and not do any window cleaning? Just like being a silent partner but receive dividends?
Also , I don’t actually need money for growth , id prefer to use it to pay my mortgage off quicker

Yes to the Mrs question, silent partner, director company secretary what e er position u want her to have. And don't use business money to pay off mortgage pay it to u or the Mrs first then pay it off, maybe dividend payment at end of year each then bag some off mortgage

Thanks Matt , that’s very helpful- cheers pal

[Stoots]

I turned Ltd last year.

Was the best thing i have ever done.

Me and the misses each get £15,600 on paye; this covers our living costs and we pay tax on that too so we are building up state pension.

Last year the tax free div allowance was £5k so last year i was able to extract that tax free.

This year the allowance for dividends is 2k; so i have some tax free funds to extract if i want this year too.

Plus my goodwill was valued at 10k (nominal value for transfer) so the ltd company owes me 10k. I can and have charged my company interest on the money it owes me first 1k is tax free. And if i want to i can leave this owing me indefinitely, and charge interest every year to my company that ita owes me.

Just a word of advice,  if you have a vehicle  that is old transfer your tangible assets at nill value; or you will loose out on your personal tax. You must have an old van not worth much to do it. Transferring a van thats worth pobabbly 500 quid at trade in value nill value is ok; but not a 2 year old one worth 8k..

Ask a tax expert though.

 All this has been done by my accountants this year and thwy have saved me around 8k in tax; although they sent me a 2k bill that i need to settle on my accounts signoff this monday.

I am averaging 4.7k a month turnover now. And if i was self employed as sole trader that would become a headache.

Didn't understand half of that but I'll Google it lol

[Shrek]

Corporation tax going down to 17% in 2020 , sounds like a winner

[paul alan]

Thing is from here I will be expanding but my profit wont if you get me, just my freedom. Being a franchisor the profit from any new work will only be 20% to me personally.

its going to be years before/if I go over 4k per month in profit, meanwhile  my profit will go down before it goes up again.

[Stoots]

Thing is from here I will be expanding but my profit wont if you get me, just my freedom. Being a franchisor the profit from any new work will only be 20% to me personally.

its going to be years before/if I go over 4k per month in profit, meanwhile  my profit will go down before it goes up again.

I would probably have a good chat with your accountant tell them your plans to franchise and get him to explain exactly why you should go the ltd route.

And I would seek a second opinion from another firm of accoutants (usually you get a free initial consultation) preferably one that has franchise knowledge and see what they say.

I would have thought if you are wanting  multiple franchisees then having limited liability would be a good idea incase it all goes tits up but I'm only guessing.

You need specific advise to your situation and plans imo.

[Marc Stock]

Agreed with above.

If you are franchising; you most definitely want to go Ltd.

Better to keep your business and personal seperate.

If you are a sole trader; with contracts for franchising you are putting all your personal liabilities at risk.