is there a limit as to how far you can go being a sole trader before you have to if these are the right words start or should set up as a ltd company as reguards to getting finance increasing fuel limits cards even being taken that bit more seriously when trying to get work.
there is no limit as to how far you can go as a sole trader
one thing to consider, if you are already trading as a sole trader and have a valid operators licence as a sole trader, if you change to a limited company, you will need to apply for a totally new operators licence, also, all your financial history will be wiped out if you change from sole to Ltd, it will be seen as you are staring a new venture
some companies will not deal with sole traders, i have found that myself recently whilst trying to find a company that will hire me a trailer
also, as a ltd co., you will have more difficulty (at first) in getting credit from fuel card companies and such like
As spanky says there is no limit, you can run 100 trucks as a sole trader if you wish.
His points about changing from one to the other are also very true - in the eyes of the ministry and the credit agencies you are starting again from scratch.
My Ltd. Co. has been trading 6 years or so now but even still when I changed from being a relief driver to getting the wagon and being an owner driver 18mo ago the company could not get any credit at all without all the directors of the company providing personal guarantees. That went for the overdraft, the finance on the trailer I bought, the fuel cards, even the finance on the insurance. Even now, 18mo in, we’ve had to provide personal guarantees for the finance on the new unit we have just bought.
That said I personally think that Ltd. Co. is the way to go, it establishes your business as a separate legal entity to yourself and I think it looks more professional to your customers too. Once it has a bit of credit history (so you can borrow without having to guarantee it), it also provides you personally with some protection in case something goes badly wrong and leaves you insolvent. It also makes it much easier to sell the business and move on at some point in the future if you decide that is what you want to do.
Paul
repton:
it also provides you personally with some protection in case something goes badly wrong and leaves you insolvent.Paul
but how much protection does it give if you also have to provide personal guarantees ?
Denis F:
repton:
it also provides you personally with some protection in case something goes badly wrong and leaves you insolvent.Paul
but how much protection does it give if you also have to provide personal guarantees ?
Denis, i think you have taken the quote out of context, but i do agree with your sentiment.
initially, you will have to provide the guarantees, so you are no better off, but after a few years of trading, and have built up a credit history, then you will not have to provide the personal guarantee, thus offering the protection if it all goes wrong
shuttlespanker:
Denis F:
repton:
it also provides you personally with some protection in case something goes badly wrong and leaves you insolvent.Paul
but how much protection does it give if you also have to provide personal guarantees ?
Denis, i think you have taken the quote out of context, but i do agree with your sentiment.
maybe I should have left this with the quote !
Once it has a bit of credit history (so you can borrow without having to guarantee it),
initially, you will have to provide the guarantees, so you are no better off, but after a few years of trading, and have built up a credit history, then you will not have to provide the personal guarantee, thus offering the protection if it all goes wrong
ok, so would you suggest “someone” who has been trading as a partnership for several years change to a Ltd company ?
what would be the advantages and disadvantages ?
Denis F:
ok, so would you suggest “someone” who has been trading as a partnership for several years change to a Ltd company ?what would be the advantages and disadvantages ?
no for the reason already given
shuttlespanker:
one thing to consider, if you are already trading as a sole trader and have a valid operators licence as a sole trader, if you change to a limited company, you will need to apply for a totally new operators licence, also, all your financial history will be wiped out if you change from sole to Ltd, it will be seen as you are staring a new venture
i should be ltd really but cant be arsed with doing it all again
Dito.
sounds like theres no real insentive there then basically starting from scratch again no thanks .how do you go on then as a sole trader when trying to get newer kit i.e having a wagon on drip then trying to get a trailer already had one fuel card co saying i cant increase my limit any further as a sole trader the only way is to set up as a ltd co which doesnt realy make sense as you would have no credit history
lee mat:
sounds like theres no real insentive there then basically starting from scratch again no thanks .how do you go on then as a sole trader when trying to get newer kit i.e having a wagon on drip then trying to get a trailer already had one fuel card co saying i cant increase my limit any further as a sole trader the only way is to set up as a ltd co which doesnt realy make sense as you would have no credit history
i have not had a problem being a sole trader, as for replacing the kit with newer kit, simply talk to your finance company, they will do you a good deal on the settlement figure and also the new rates
as for fuel cards, get more fuel cards and play one off against the other 
.
repton:
That said I personally think that Ltd. Co. is the way to go, it establishes your business as a separate legal entity to yourself and I think it looks more professional to your customers too. Once it has a bit of credit history (so you can borrow without having to guarantee it), it also provides you personally with some protection in case something goes badly wrong and leaves you insolvent. It also makes it much easier to sell the business and move on at some point in the future if you decide that is what you want to do.Paul
I dont agree at about the “it looks more professional” at all, in fact it winds me up! lets have a look at facts rather than looks …
my trading name has been used since the 1950s i have a 100% first time mot pass rate on trucks and trailers for over 10 years now.
fuel cards are no problem nor is obtaining an account with a dealer/parts firm
I also have no hp/finance so no personal guarantee needed
reading from some of your (honest) posts in the past you have been an o/d 18 months and have recently upgraded to a newer motor and now have finance on the truck,trailer and insurance
also you dont have a 100% pass rate,can you explain why your set up is more professional than mine?
moose
Moose:
reading from some of your (honest) posts in the past you have been an o/d 18 months and have recently upgraded to a newer motor and now have finance on the truck,trailer and insurance
also you dont have a 100% pass rate,can you explain why your set up is more professional than mine?
I’m not saying I am more professional simply that to some people it might look more professional. Whether they’re right or wrong is another matter of course, but even if they’re wrong it doesn’t help you if you want to hire a trailer from them or do work for them unless you can convince them otherwise.
For the record though I don’t have finance on my insurance - I did for the first year but paid the renewal in full when it came through without needing finance, and the only reason I don’t have a 100% pass rate is that the trailer was unladen when it was tested and so was slipping on the brake rollers. When I came back with a load on it passed straight away.
Paul
Denis F:
ok, so would you suggest “someone” who has been trading as a partnership for several years change to a Ltd company ?what would be the advantages and disadvantages ?
If you’re already set up as one or the other and it is working for you then changing over is going to be a world of pain and so is probably not worth it. I’m sure an accountant could tell you in tax terms what the advantages of each option are but I’m not enough up on that to be able to offer any advice on that one.
Paul
Denis F:
repton:
it also provides you personally with some protection in case something goes badly wrong and leaves you insolvent.but how much protection does it give if you also have to provide personal guarantees ?
It still provides you with some protection as the limit of your liability is the amount you have guaranteed whereas a sole trader could potentially find themselves with an unlimited liability, although of course your motor and public liability insurance will protect you from that in almost all cases.
As has already been spotted though if you take the full quote I did qualify the statement…
Paul
Ive thought about changing from Sole Trader to limited for a couple of years. Some Contract Hauliers as myself with Tarmac, Hanson and Lafarge are. Ive asked the accountant to go through it with me soon.
He has said in my case its not worth it as there are pros and cons, like others have said, starting from scratch and new Olicence, but I believe there are some income tax benefits which is what I need to discuss. Ive been a Sole Trader for 12 years running 1 truck to 5 at different times.
I have never had any problems getting HP for trucks, including new, or fuel cards. Personally i prefer Credit cards for fuel,and parts, maintenance etc.You get longer credit at the offset and some benefits with the right cards.incliuding 0% interest for months. Also you can spread payments from heavy bills.
repton:
It still provides you with some protection as the limit of your liability is the amount you have guaranteed whereas a sole trader could potentially find themselves with an unlimited liability, although of course your motor and public liability insurance will protect you from that in almost all cases.As has already been spotted though if you take the full quote I did qualify the statement…
Paul
This for me is the crux of the matter, I once had a trailer stolen from a customers premises (a bonded site) where the secrurity company on site allowed a vehicle in, then out, with my trailer complete with load of ‘mixed spirits’, all of which was on their secrity camera system. The site owners (the consignee) naturally held me & their security contractors responsible and once their insurance company settled the claim, at £144,000 with duty, the insurance company came after me & the security co.
I won’t go into the 14 months of legal wranglings, but, my insurance company (GIT) dropped me like a stone, gave me back my premium, and ran for the hills!!! Oh, my motor insurance didn’t cover the trailer as it was dropped!!! (I could drop it in my yard with 50p padlock on the gate, no probs, but drop it in a bonded site with 24 hr security & no cover!!) So, I made a genuine mistake on my original proposal, not for a cheaper premium, just a genuine mistake and no cover for a £144,000 claim!!!
If I had been a limited company, the insurance company wouldn’t have bothered with me, but as a sole trader & home owner they ‘saw a future’ in their speculative claim, so persued it!!!
Ross.
I operate as a Ltd Co (vat reg.), but started out as self-employed, recently transfering my business to Ltd Co after advice from my new accountant, and a very heavy tax bill!!! I do wish I had looked into it in more depth at the start (hence have new accountant!!!), as I would have saved myself a fortune - so Ltd Co purely for tax reasons, but I don’t operate my own truck, at the moment, I just drive for local firms, but not via an agency.
However, I am considering running my own unit, and feel that being Ltd Co will enable me to get finance better & cheaper, more support from my bank, and be taken more seriously for fuel cards, leases / finance, rental & ultimately getting work.
Herongate:
I operate as a Ltd Co (vat reg.), but started out as self-employed, recently transfering my business to Ltd Co after advice from my new accountant, and a very heavy tax bill!!! I do wish I had looked into it in more depth at the start (hence have new accountant!!!), as I would have saved myself a fortune - so Ltd Co purely for tax reasons, but I don’t operate my own truck, at the moment, I just drive for local firms, but not via an agency.However, I am considering running my own unit, and feel that being Ltd Co will enable me to get finance better & cheaper, more support from my bank, and be taken more seriously for fuel cards, leases / finance, rental & ultimately getting work.
being a Ltd Co. has nothing to do with being VAT registered
also, i can’t see how it will get you better finance at cheaper rates too, as a new venture, which you will be with regards to your considering plans, you will find it harder to get finance, fuel cards and support from the bank
shuttlespanker:
Herongate:
I operate as a Ltd Co (vat reg.), but started out as self-employed, recently transfering my business to Ltd Co after advice from my new accountant, and a very heavy tax bill!!! I do wish I had looked into it in more depth at the start (hence have new accountant!!!), as I would have saved myself a fortune - so Ltd Co purely for tax reasons, but I don’t operate my own truck, at the moment, I just drive for local firms, but not via an agency.However, I am considering running my own unit, and feel that being Ltd Co will enable me to get finance better & cheaper, more support from my bank, and be taken more seriously for fuel cards, leases / finance, rental & ultimately getting work.
being a Ltd Co. has nothing to do with being VAT registered
also, i can’t see how it will get you better finance at cheaper rates too, as a new venture, which you will be with regards to your considering plans, you will find it harder to get finance, fuel cards and support from the bank
Wasn’t saying Ltd Co. & VAT reg go hand in hand - VAT reg has it’s perks for Self Employed & Ltd Co.
I went to finance a van when Self Employed, at about the same time I swapped to Ltd Co - got offered better terms from the bank under the Ltd Co - despite it being the same bank that I’d banked with for years as both personal accounts & SE accounts, and was now banking with under Ltd Co; the only difference being I was now under their Commercial Lending arm rather than Personal Lending