Accountancy: Why being a limited company is best for you
Setting yourself up as a limited company as opposed to a sole trader can be incredibly advantageous. No matter what type of business you are running, it’s essential to have a legal structure. A sole trader is a self-employed individual who is the only owner of their business. Limited companies are structures with their own legal identity and exist separately from their managers/directors and owners/shareholders, even when they are only run by one person who acts as both a director and shareholder.
Become a separate entity
One of the disadvantages of setting yourself up as a sole trader is that your business won’t be regarded as a separate entity from yourself if you run into financial problems. This means you are personally liable if your business goes into debt and you could lose personal assets. You may also find it hard to raise finance if you are a sole trader due to the way that investors normally place more faith in limited companies. This could result in serious obstacles compromising any plans for expansion.
Reduce your tax liabilities
Once you start earning big as a sole trader, you may find yourself paying more tax than you would if you were a limited company. Your personal assets won’t be at risk if you become a limited company, and you will be paying Corporation Tax on your profits as opposed to Income Tax, which is set at a higher rate. You may also be able to take advantage of a series of tax-deductible costs and allowances which you can claim against your profits.
If you do become a limited company, you will have greater responsibilities. You will have to file a yearly annual return as well as your annual accounts, which can be time-consuming. However, you can outsource these tasks to trusted professionals who will handle everything competently in the background whilst you focus on what you do best – keeping your business ticking over.
Transparent, flat rates
At One Click, we can help you transform your business into a limited company. We offer a flat rate of £80 + VAT each month, with no hidden charges to worry about. We can help you with your monthly and quarterly returns and give you advice on taking income from your business without putting it at risk. If you are earning or expect to earn over £36,000 from this point on and IR35 does not apply to you, it may well be advantageous to set yourself up as a limited company.
Getting in touch
One Click Group has many years of experience behind us and specialise in providing accountancy services to contractors and freelancers. Whether you’ve already decided to become a limited company or simply wish to find out more before you make your choice, we are waiting to hear from you. Get in touch today by calling us on 0345 557 1287 or using the form on the website.