Harry Monk:
Personally, I think the decision as to whether to be a sole trader or a limited company is one of the most important early decisions to make, if you need to change later because of expansion then the whole O licence application has to be gone through with again, from the newspaper advert onwards.
If your already in business, an application for another o/licence can be run alongside an existing one, and if a new one was needed urgently an interim licence would automatically be granted to someone with an existing good record.
It’s still quite a ballache and expense though, just for the advert and the O-Licence fee you’re talking over 500quid so you might as well try and get it right from the start. Plus there’s the new bank accounts to open, and most places you have a credit line will require a new application (fuel cards being the obvious one), and anything you have with outstanding finance has to be transferred over, etc. etc.
Paul
Suppose it depends on the margin applied for on the original application, how many large Ltd concerns that have built up a fleet of trucks over several years are still doing it under their original O/Licence margin?
Harry Monk:
repton:
Big Joe:
Harry Monk:
Big Joe:
Harry Monk:
and that you can use your relationship with your limited company to your advantage when planning tax affairs, in the same way that Google/Starbucks/Amazon etc exploit the relationship between their different companies, albeit on a much smaller scale.
with 1 truck your funny.
Whilst I’m not familiar with how the tax affairs of someone who is self employed work I am let to believe that you are generally better off in this regard as a limited company. The scope for tax avoidance might not be quite on the same scale as the companies that have recently been in the news but the principles are the same and if you do it right you can end up paying very little tax.
Paul
Pretty much answered it as I would have done. I thought the second point was faintly bizarre, in that it clearly implies that if you only operate one vehicle then you may as well pay thousands of pounds a year more in tax than you have to.
Theres nothing bizarre about it Harry, I’ve been self employed since I left school 35 years ago, and have run as a sole trader, been in partnerships and run as Ltd companies in various enterprises. One thing I’ve always done is employed a decent down to earth accountant and taken his/their advice.
The usual answer to the question over Sole Trader/Partnership - v - Ltd was, unless the profits exceeded a certain level (£60k last time I asked), then it wasn’t worth the extra cost of administration for Ltd status as the tax savings against being a Sole Trader/Parneship would be negligable as theres just as many tax loopholes available to either status.
But…
like I said before, if I was daft enough to expand and employ others to drive a fleet of trucks, then there would be no question about it being run as a Ltd concern.
Big Joe:
Theres nothing bizarre about it Harry, I’ve been self employed since I left school 35 years ago, and have run as a sole trader, been in partnerships and run as Ltd companies in various enterprises. One thing I’ve always done is employed a decent down to earth accountant and taken his/their advice.
The usual answer to the question over Sole Trader/Partnership - v - Ltd was, unless the profits exceeded a certain level (£60k last time I asked), then it wasn’t worth the extra cost of administration for Ltd status as the tax savings against being a Sole Trader/Parneship would be negligable as theres just as many tax loopholes available to either status.
But…
like I said before, if I was daft enough to expand and employ others to drive a fleet of trucks, then there would be no question about it being run as a Ltd concern.
Yes, it’s horses for courses I suppose, I’ve been self-employed on a couple of occasions and I didn’t pay much tax then either too. It seems that whether you are a banker or a driver, the only people who pay an eye-watering amount of tax every month are people on PAYE.
It doesn’t really cost me any more to operate as a Ltd Co, I think it cost £15 to set the company up online and took about 10 minutes. My accountant is very expensive but I don’t think he would be much less expensive if I was a sole trader.
I really appreciate the views given on here, whether they tally with mine or not, from present and past owner-drivers and fleet operators, I have a little more difficulty with RobK’s posts which are by far the most opinionated and fixed, despite him having absolutely no experience or knowledge of the subject whatsoever.
Big Joe:
Theres nothing bizarre about it Harry, I’ve been self employed since I left school 35 years ago, and have run as a sole trader, been in partnerships and run as Ltd companies in various enterprises. One thing I’ve always done is employed a decent down to earth accountant and taken his/their advice.
The usual answer to the question over Sole Trader/Partnership - v - Ltd was, unless the profits exceeded a certain level (£60k last time I asked), then it wasn’t worth the extra cost of administration for Ltd status as the tax savings against being a Sole Trader/Parneship would be negligable as theres just as many tax loopholes available to either status.
I did try and point that out to him when he asked an opinion setting up. Liability is much of a muchness for either.
Harry Monk:
My accountant is very expensive but I don’t think he would be much less expensive if I was a sole trader.
An accountant is only expensive if they cost you more than they save you
A good exercise is to do your own accounts, then let the accountant do them for you, if you can come close to the accountants figures…you need a new accountant
Harry Monk:
My accountant is very expensive but I don’t think he would be much less expensive if I was a sole trader.
An accountant is only expensive if they cost you more than they save you
A good exercise is to do your own accounts, then let the accountant do them for you, if you can come close to the accountants figures…you need a new accountant
Basically the deal is that I give my accountant £1,000 a year and he will protect me from the Hooded Claw. And get me £400 a month Working Tax Credits.
That aint too spitefull, I was paying around £800 pa, I was like Joe advised not to go LTD by My accountant, well by a few over the years, the new self assessment thing suited Me down to the ground & I claimed for most everything imagianable over the last 25 years.
fly sheet:
That aint too spitefull, I was paying around £800 pa, I was like Joe advised not to go LTD by My accountant, well by a few over the years, the new self assessment thing suited Me down to the ground & I claimed for most everything imagianable over the last 25 years.
Tax rules just change all the time, one year the best thing to do is to buy a Toyota Hi-Lux and then the next year it isn’t. The current thing seems to be to avoid all liability for tax and claim the maximum in Working Tax Credits because you pay yourself so little in wages.
I don’t make the rules and personally I would rather it was like it was twenty or thirty years ago when you just went out and earned your corn without having to play the system but as HMRC and politicians decide that that’s the way they want it then who is a simple hairy-arsed trucker to argue with them?
Harry Monk:
Basically the deal is that I give my accountant £1,000 a year and he will protect me from the Hooded Claw. And get me £400 a month Working Tax Credits.
The working tax credits you get, will you not mess that up buy paying yourself dividends? Do they not take into account every penny you ‘earn’?
Bit of a joke really, you could pay yourself a sausage roll and a fan belt( ) a week and get the tax credits, but then pay yourself a big dividend at year end/quarterly/monthly/whatever and have way more than would exclude you from tax credits
Harry Monk:
Expensive accountants are better than cheap accountants.
A myth Harry, does yours sell you Tax Investigation Insurance into the bargain if he does then its because he’s pretty sure your not going to get put under the spotlight as he has to pickup his own bill if HMRC come knocking on your door.
I’ve had an accountant or two over the years, some I’ve known that they’re working for me, but one made me wonder when I was clobbered for a lump of tax, a big accounting bill, and paid tax investigation insurance at the start of the year into the bargain. I don’t use that firm anymore.
Harry Monk:
I won’t be paying myself any dividends for at least two years, although I will be paying myself loan repayments, they aren’t taxable.
The only thing there is the interest you charge your LTD company is taxable as it’s seen as a capital gain, unless it’s an interest free loan of course, but then paying tax on the interest as Harry Monk may work out cheaper than making more taxable profit as Southern Star, the accountant will know for sure, but it won’t be much difference, not until your buyout of google or Apple anyway
Not wishing to knock Harry or anyone claiming tax credits. But they seem a bit of a joke. I know someone who went for a job to be told the wage is crap but you can too it up with tax credits.
I can see they may have been introduced with good intentions but seem just a way to keep wages down.
kr79:
Not wishing to knock Harry or anyone claiming tax credits. But they seem a bit of a joke. I know someone who went for a job to be told the wage is crap but you can too it up with tax credits.
I can see they may have been introduced with good intentions but seem just a way to keep wages down.
One company I went in to load at had flyers at the drivers hatch telling people how to claim tax credits, these flyers were aimed at their own drivers , who were on the whole mostly East Euros , a rather sad state odf affairs.
Harry Monk:
Expensive accountants are better than cheap accountants.
Perhaps in some cases but ours is a family friend who (in his professional life at least) makes it his main goal to screw the treasury out of every last penny he legally can. I suspect there is a large element of “mates rates” in the 300+vat he charges us.
fly sheet:
Hows it going anyway is it as busy as when You parked it up?
In a word, dead but then at this time of the year is rarely on fire anyway.
The £ is too strong for the euro export market, and the UK farmers have had a [zb] year because of the weather.
On a plus note from 1st Jan 2013 the UK tax relief on plant will increase from £25k to £250k, thats after they cut it last year from £100k but hardly anyone has made any money so not many will be spending to avoid paying tax.
We’ll see how it goes, I’m a patient man.
Can you tell me if its £250 a year or over two years? I had something in the post about it a couple of weeks ago and it wasn’t the clearest. I read it as over 2 years, I assume to give company’s more time to decide how to spend it, especially on larger items. It would be interesting to see how someone else read it?
I must say it’s interesting to hear people’s difference in opinions, I’m definitely a fan of LTD company’s, and one point made about ltd company’s being more secure, and then someone said that’s what insurance is for. There is a lot more at stake than just the load, it’s truck finance, possible mortgages and other loans that may not be as secure, also anything freak that might happen, insurances company’s love to wriggle out of paying money if they can, we all probably think we are covered by something we are not, or not covered under certain circumstances. As a company expands there are usually more dangers, and anyone who doesn’t want to limit their risk is crazy in my mind!
For me most of Harry’s points and views are similar to my own, the advantages for me, and its just for me… Far out weigh the disadvantages. I’m not knocking sole traders, if it works for you then that’s why you do it obviously, and I would never try to convince you to change.
This thread has been an interesting read to be fair.
ibson:
Can you tell me if its £250 a year or over two years? I had something in the post about it a couple of weeks ago and it wasn’t the clearest. I read it as over 2 years, I assume to give company’s more time to decide how to spend it, especially on larger items. It would be interesting to see how someone else read it?
Its £250,000 per year, but although its available from 1st Jan, if your year end is 31st March your last quarter will only attract only the old rate.
ibson:
I must say it’s interesting to hear people’s difference in opinions, I’m definitely a fan of LTD company’s, and one point made about ltd company’s being more secure, and then someone said that’s what insurance is for. There is a lot more at stake than just the load, it’s truck finance, possible mortgages and other loans that may not be as secure, also anything freak that might happen, insurances company’s love to wriggle out of paying money if they can, we all probably think we are covered by something we are not, or not covered under certain circumstances.
I think we all agree its horses for courses, acting on advice given I’ve always been one man band sole trader on the haulage, and changing just to get Ltd status would inccur needless expense and hassle.
ibson:
As a company expands there are usually more dangers, and anyone who doesn’t want to limit their risk is crazy in my mind!
I entirely agree, depending on others to put your business interests first and keep ones assets safe is akin to betting on Russian Roulette.
repton:
Perhaps in some cases but ours is a family friend who (in his professional life at least) makes it his main goal to screw the treasury out of every last penny he legally can.
Paul
My sort of accountant I bet he doesn’t sell Tax Investgation Insurance either.
I’ve had a bellyfull of the corporate type outfits, which is what my previous guys outfit morphed into (amalgamations then a buyout by a bigger concern).
In my last year with them the bill had reached £1500 per enterprise
Were now with another smaller outfit and back to a more sensible £450 per enterprise less tax and no one trying to sell us Investigation Insurance .
if he does then its because he’s pretty sure your not going to get put under the spotlight as he has to pickup his own bill if HMRC come knocking on your door.
but then at this time of the year is rarely on fire anyway.
I bet he doesn’t sell Tax Investgation Insurance either.
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