What are all your opinions on the pros and cons of being a Sole Trader vs. being a Limited Company please?
I have been working as a Sole Trader for 3 different local company’s for some time now but everywhere I stop on my travels I always seem to end up with someone banging on about how I should set myself up as a Limited Company “because that’s what everyone is doing now Nova’s been shut down”.
Not that Nova or any of the other tax avoidance companies ever affected me, but I see a number of pros and cons for both.
Sole Trader - pros
= No set up costs
= No publicly accessible account information
Sole Trader - cons
= If it all goes wrong you could get your house taken off you
= A large number of agencies won’t entertain you if you find yourself needing to use them as a stop gap. Same applies to most large companies as well.
Ltd Co. pros (basically the reverse of the above)
= Most agencies will use you if you need to use them and you’ve a better chance of sourcing work with the larger companies
= You can’t have your house taken off you if it all goes wrong
= Slightly better opportunites for “tax offsetting”
Ltd Co. cons
= Costs. Company name registration and business account set up and day-to-day running costs
= The matter of your company accounts being available for the world to see
Unless you are specifically wanting to work for an agent(s) (and don’t want to be on PAYE) rather than sourcing your own work, I see no worthwhile advantages of becoming a Ltd Co.
From what I’ve read, seen and heard this past few months, most drivers seem to be more interested in becoming a Ltd Co. for the “status” symbol rather than anything else.
I’ve been a Sole Trader since 1989 and at the moment I don’t see much benefit in changing. If it ain’t broke, don’t fix it.
I wonder if the people who are giving you the advice that everyone is doing it now “Nova’s been shut down” are the same ones who were daft enough to use Nova in the first place? If they are I don’t think I would be listening too closely to any business advice they are giving out.
Think about it…if something goes completely wrong one day…all that time and effort put into working to pay your mortgage…could be gone in a flash…n’ the cost of buying or renting nowadays…forget it…
Ltd co is a piece of ■■■■…there is no day to day running…(that is for me with agency)…1/2hr on Sunday…or when i can get round to it…(actually did the books last night)…and who the hell is going to be digging up your financial records…
Stop being Paranoid
…the setting up is easy as hell…and u just leave the rest to your accountant…u pay more…but i’m happy to pay a few hundred extra…to have piece of mind that i can ■■■■ up…but still have roof over my head…
Stop listening to these fairy tales…n’ use your own brain…
Whilst all is going alright…how does it affect u…■■?
When is goes wrong…how does if affect u…(and your family)…■■?
Just out of interest, what is liable to ‘go wrong’ in a business with one employee, minimal monetary assets, few other financial commitments etc. or am I missing something obvious here?
Firstly,Nova hasn’t been shut down,they are still in business.In fact if I’m correct,the main man at Nova has posted on here previously,when the last round of the rumour machine went into overdrive.
I have decided to go Limited Company,and to date,my only costs have been to set up my company name,and that has cost me £39.My certificate of incorporation arrived in the post today.
I did consider sole trader,but decided that the benefits of Ltd.Co,for me personally,outweighed the benefits of sole trader.
I admit this has always baffled me…but i like to play it safe…
When saying so…let say like i did the other day divert off the given course…in this case it was to go to the Tesco…where the A34 meets the M3…when i should have joined the M3 towards Southampton Tesco depot…
Cutting the crap out…i made an error of observation and ended up going through some tightish town/village…somehow getting back to the M3 (didn’t get me fat free yogurt )…
Now had i had some accident of some sort…especially a serious one…had it been a really awkward company i was working for…and if the agency wanted to be awkward to cover their arses…it could all fall back on me for diverting off the route…it’s difficult to say i missed the M3…and i could say i’d stop for a break…tacho would say otherwise…+ food could be obtained from the depot…basically any silly excuse
■■■■ example…and highly unlikely…but piece of mind is always best…
Hmmm, to some extent I see your point in that instance, though I’m pretty sure it would be covered by the company’s insurance anyway, but I don’t know what sort of agreement you would have signed with the agency - is it much different from a normal driver’s agreement?
I am a sole trader, but not in driving - I work PAYE for that as it suits my needs. My own business involves going to customer’s houses/premises & for that I have public liability insurance - about £100/year - & that’s it. I can foresee no point at which I would be putting ‘everything at risk’ so I still do not really see the advantages of going ‘limited company’ status, especially now that I gather corporation tax has been increased, which hits limited companies, but not ST’s (though I stand to be corrected if this isn’t the case).
Quinny:
I did consider sole trader,but decided that the benefits of Ltd.Co,for me personally,outweighed the benefits of sole trader.
That’s it in a nutshell, whatever the individual feels suits them best, and helps them sleep peacefully is all it boils down to.
Sole trader suits me and apart from anything else I couldn’t be arsed with the extra paperwork involved in a limited company. The main difference is the amount of liability but even as a limited company there are situations where your house etc could still be at risk.
tallyman:
Just out of interest, what is liable to ‘go wrong’ in a business with one employee, minimal monetary assets, few other financial commitments etc. or am I missing something obvious here?[/q
a few things can go wrong but mainly the inland revenue i work for them and many times all it takes is for someone in there first year of being self employed not to put the tax money aside and it just spirals out of control . i am not proud to say i have had the unenviable task of evicting someone from there house after a charging order was issued after the inland revenue said enough is enough and he only owed 12000 to start . a collleague and i have a limited company and for the last 5 years we have paid just over half what we would if we were sole traders
= Costs. Company name registration and business account set up and day-to-day running costs
= The matter of your company accounts being available for the world to see
Another Ltd Company “Con”. It was announced in the budget that tax for small companies is going up. Get an accountant to explain the ramifications of it as basically it is being done with the sole purpose of making sure people are self employed instead of being Ltd Company when the main reason they’re going ltd is for tax avoidance.
SuperSmiley:
Now had i had some accident of some sort…especially a serious one…had it been a really awkward company i was working for…and if the agency wanted to be awkward to cover their arses…it could all fall back on me for diverting off the route…it’s difficult to say i missed the M3…and i could say i’d stop for a break…tacho would say otherwise…+ food could be obtained from the depot…basically any silly excuse
[zb] example…and highly unlikely…but piece of mind is always best…
If you actually had written terms and conditions worth a toss, you’d not be liable for any costs so it’s a non issue.
tallyman:
Just out of interest, what is liable to ‘go wrong’ in a business with one employee, minimal monetary assets, few other financial commitments etc. or am I missing something obvious here?
a few things can go wrong but mainly the inland revenue i work for them and many times all it takes is for someone in there first year of being self employed not to put the tax money aside and it just spirals out of control . i am not proud to say i have had the unenviable task of evicting someone from there house after a charging order was issued after the inland revenue said enough is enough and he only owed 12000 to start . a collleague and i have a limited company and for the last 5 years we have paid just over half what we would if we were sole traders
The chances of one driver running up a tax bil of 12000 is slim at best, it would take two clear years of unpaid tax, probably a bit more.
= Costs. Company name registration and business account set up and day-to-day running costs
= The matter of your company accounts being available for the world to see
Another Ltd Company “Con”. It was announced in the budget that tax for small companies is going up. Get an accountant to explain the ramifications of it as basically it is being done with the sole purpose of making sure people are self employed instead of being Ltd Company when the main reason they’re going ltd is for tax avoidance.
That about sums it up spot on. They (the inland revenue)want sole traders to be just that, sole traders/self employed.
Conor my contract is the same as any other drivers…for all the agencies i work for…
The minute u go wondering off on your own little mission…without permission…your not insured…so unless u can make some solid ■■■■■■■■ excuse up…then first of all…the insurance company can say they ain’t not paying out…(they’ll do anything to save money…especially if it a big money payout)…the company can be awkward…and the agency understandably isn’t going to put themselves in bother…for your naughtyness…+ their insurance will say no also
(Before u say…‘Your not suppose to divert off’…I’m pretty sure most of us at some point have diverted off just a short distance…for whatever reason…we know its a bit of a naughty and hope not to get into an accident…and give that little sigh when we get back on course)…
Being a Sole/T…they’ve got u easy…
LTD Co…they might be able to get u somehow…but it’s a lot more tricky…
As u personally were working for your Ltd company… the Ltd company is liable…so all they can seize is whatever money the company has…
As a director…u still couldn’t get done…because it was as the employee…u where at fault…not as the director…(assuming all your books r clean)
SuperSmiley:
Conor my contract is the same as any other drivers…for all the agencies i work for…
The minute u go wondering off on your own little mission…without permission…your not insured…
Assuming that is actually true then you need to go and work for some different agencies.
The contract the agency I do most work for have with the client specifically says that the agency (and therefore by proxy me) is not liable for any mistakes I make even if it is blatantly my fault (obviously not in those words as it’s in legal speak but that is what it boils down to).
Plus, I would be amazed if any of the vehicle insurance policies that you are driving under state in them that you’re only insured if you’re driving on a set route, that is just plain silly.
repton:
Plus, I would be amazed if any of the vehicle insurance policies that you are driving under state in them that you’re only insured if you’re driving on a set route, that is just plain silly.
Paul
They don’t. They’re not allowed to. It’s just another lie reeled out to get drivers to do what they want. It’s the same rubbish as “unauthorised passengers are uninsured” which is also a complete and utter lie as the vehicle insurance wouldn’t comply with the requirements of the Road Traffic Act in covering damages to third parties which is what a passenger is. Whenver companies come out with this line, I just tell them straight that they’re talking rubbish and all they have to do is say no passengers allowed.
Unless the companies have actually allowed you two to see and dictate their agreed insurance polices…then u may find…they may have had fine tuned them to help bring the cost down…(and avoid any liablity)…so when they say such n’ such is not insured…i take it as gospel…
As said the example i gave earlier is pretty naff…and you would get away with it…but if u are sent to Tesco’s Southampton n’ end up having an accident on some residential area…(where your uncle lives)…in Baskingstoke…(and u’ve been before so… “I got lost excuse!” ain’t going top work)…then that would be a little hard to explain to the insurance company…such would be more of a private purposes thing
Pretty much wondering off on your own little mission is a private thing
If u deliver a pizza 4 your mate that is a commercial thing…insurance can tell u to get lost…
If the insurance has to payout a large sum…their going to investigate fully without question…and the company ain’t going to take the risk of putting a fraudulant claim to cover your ■■■…cos such would be a difficult one to justify from a comercial practice point view …same for agency…
Ok this example goes to the other extreme…but people do divert off home…and other places…
Whilst doing the job at hand u can ■■■■ up any which way you want…even playing on a mobile whilst driving…and as with my earlier post example of a short divertion to get some food…or it can be shown that u were still aiming for the required destination then…it wouldn’t normally b a problem…but if a company has clear state that you must not divert off for your own little missions…or carry passengers…then ■■■■■■■ up…can ■■■■ u up
Read the small print …(that is sometimes not even written in your contracts)…better still use your brains…and u may realise they’ll always find a way around it…
