Advice on setting up a limited company

There is still an advantage to being limited for dividends but balance that against the costs of having to produce a year end report. Its nowhere near as expensive as Cyclone suggests though. It has cost us roughly £600 the first few years, a shade more recently. We do all our own accounts and pay our accountant extra to advise and deal with other issues such as what we can and can't do re HMRC, they do all the communications and form filling on our behalf. This is inexpensive when you consider you are buying expertise and taking time up dealing with HMRC if you do it yourself.

It depends on your business type and customers how sole trade and limited affects you and your customers. We sell business to business and our customers perceive there to be a difference between sole traders and Limited. There perceptions aren't always justified but that's our experience from talking to them.

Here it is on Government website, see for yourself:

https://www.gov.uk/set-up-business/overview

I pay my accountant £75/month these days, but larger firms charge twice that. £900 is about as cheap as I've ever found, given that they do my personal return, annual return, vat return, payroll notification, p11d, company registration and notice of interested persons.

On top of that my annual insurance costs £450, although you'd probably need some level of insurance even as a sole trader.

Why would you pay a monthly fee when the year end report is only done once a year, not monthly?

Company registration, do you mean setting up the company in the first place? That doesn't need doing every year, I'm confused as to why you are adding that to ongoing fees for running a limited company.

VAT returns. We do ours on line, our accounting software calculated them.

What has insurance got to do with what type of business you are running? You should have insurance regardless of whether you are a sole trader or a limited company.

When I phoned around accountants £600 was a pretty standard price for producing the year end report. As I said, ours have gone up slightly but not as much as Cyclone is suggesting. If you want the account to do additional work them of course that will cost.

We work in different industries, it's normal for IT contractors to have accountants who are paid monthly, most of my colleagues pay as much or more than I do. The most popular accountancy for people starting out is this one;

http://www.sjdaccountancy.com/

They charge £140/month, which is why I left them 2 years ago as the prices just kept going up.

I was thinking of the annual confirmation

https://companieshouse.blog.gov.uk/2016/05/27/changes-that-affect-you-confirmation-statement/

My accountant does my vat, all I do is pay the bill. I also don't have or use any accounting software.

Perhaps I'm wrong about sole traders, but I assumed they had lower requirements for insurance.

There's a detailed analysis here of the tax benefits available to ltd companies.

http://www.ukbusinessforums.co.uk/articles/the-2017-budgets-impact-on-the-tax-position-of-a-sole-trader-vs-a-company.569/

The tax saving for a ltd company is relatively small.

The current government seem to be attempting to remove the financial benefits of running ltd companies for individuals basically, the benefits are already small and expected to get smaller, if the current government attack on the self employed and contractor market continues... Things might change, many government IT projects are now in critical states because of the HMRC attack with IR35 on the public sector, which has seen contractors quitting in droves to go back to private industry.

You make it sound like you are a sub contractor rather than running the typical limited company. Your accountant is also doing your VAT. This isn't necessary if a company is doing their own accounts on a software package. As I said, all our transactions are entered on our accounts software so VAT returns are calculated by the software and paid on line direct from that. I would expect most businesses doing a reasonable amount of transactions will be using software for their accounting. I know some micro businesses still do it manually but its very time consuming.

We have been running our business since early 2009. Granted, there has been some changes but there are still benefits. We only take a salaries up to the taxable amount, the rest we take as dividends.

Insurance depends on what business you run, your qualifications and experience (to calculate the risk) and turnover.

Edit - if you are a director of your own limited company you are an employee so technically not classed as self employed. I have checked this out a number of times. It makes a difference when applying for mortgages and credit etc.

I run a close service company, I'm an IT contractor. It's the most common form of limited company in the country!

I would expect most small businesses (which a sole trader probably is) to join the VAT flat rate scheme, which makes it all pretty simple, although the advantages of that scheme have just been removed for the IT industry as well.

I do exactly the same re salary/dividends, the advantage is calculated in black and white on that link I provided, it's small and getting smaller.

I'm in IT, and a limited company, and pay my accountant (yearly) to do end of year accounts and CT return. I'm hard to please, but generally very happy with my accountant, and would be happy to recommend them if anyone is looking for an accountant.

How much do you pay them?

Does that mean that you calculate your own quarterly VAT and monthly payroll notification?

I run a close service company, I'm an IT contractor. It's the most common form of limited company in the country!

I would expect most small businesses (which a sole trader probably is) to join the VAT flat rate scheme, which makes it all pretty simple, although the advantages of that scheme have just been removed for the IT industry as well.

 

I do exactly the same re salary/dividends, the advantage is calculated in black and white on that link I provided, it's small and getting smaller.

You missed the point I was making. Most companies are buying and selling goods and services so will carry out lots of transactions, hence managing their own accounts and VAT returns. Most of these that I know don't use flat rate VAT scheme. The flat rate scheme, in my experience, tends to be used by individuals or tradesman with only a couple employees.

A lot of businesses that call themselves small businesses are actually micro businesses.

Here are various ways of defining size of business:

https://www.thecompanywarehouse.co.uk/blog/what-is-an-sme

We're talking about a sole trader though, so he'll have zero employees, the business size is going to be very similar to mine!

How much do you pay them?

Does that mean that you calculate your own quarterly VAT and monthly payroll notification?

I think they charge £450+vat per year for limited company accounts (I keep my own records, they prepare and submit accounts and return to HMRC). I'm not registered for VAT, so don't know if that would be extra with them. I used to do my own PAYE (using HMRC's basic PAYE tools, not that hard) but recently switched to their payroll system (had a few issues submitting my own PAYE RTI thing when HMRC's servers were down).

They're a small-ish setup, I think around 4 or 5 employees, and the chap who looks after me is friendly, approachable, seems pretty fair and decent and professional.

We're talking about a sole trader though, so he'll have zero employees, the business size is going to be very similar to mine!

A sole trader business owner can have employees. I know of businesses that have been running for years with several employees and several vehicles.