Disadvantages of Going Limited
If you are considering forming a Limited Company you already know that there are a few slight downsides to being your own boss and working through your own limited company means more administration than working as a sole trader. Although the Advantages of Going Limited out way the disadvantages of going limited, it's still probably best to know what challenges my lye ahead. Find below a review of some of the most commonly mentioned issues:
It is more costly to start up as you will have to pay to form a limited company - Easy Accountancy can help form your company and offer you one of the lowest fully-inclusive prices in the market. Forming a limited company only takes about five minutes and you can check availability of names instantly by clicking the above link.
There is a certain amount of paperwork involved, usually about 10 - 15 minutes per month - To be honest there isn't that much more paperwork than working as a sole trader but you're accountancy fees will increase slightly as you'll need to fill annual accounts. However, hiring a good accountant will help with the admin side and of course be on hand to help with any additional questions. A good suggestion is to choose an accountant who doesn't charge by the minute/hour but instead charges a fixed monthly fee with unlimited access to your accountant. This means you can ask as many questions you like without fear of being charged any extra, this is particularly important when first going limited as you're bound to have lots of questions.
You have to file your accounts at Companies House each year, which will be on public record. Your accountant will handle this for you.
You have to file accounts, company tax and corporation tax calculations with HM Revenue and Customs every year. Again your accountant will manage this for you.
Accountancy fees are generally more expensive, but then again your accountant will be doing more work plus as any accountant will tell you - going limited is one of the most tax efficient ways of working, so with any luck you will also be paying a lower percentage of tax. Easy Accountancy offers one of the lowest accountancy fees around with fees starting at just £30 plus VAT month which includes unlimited access to your own dedicated accountant, click the link for a free free quote.
If you're income is less than £20,000 a year, it maybe best to stay as a sole trader. However, it would certainly be worth contacting an accountant and asking them for their advice (of course we'd be happy to offer free support to help you with this, just call or email us).
If your still not convinced that going Limited may be for you and that it may just be too complicated, visit the following pages that will help give you some helpful information on some of the areas you may have been wary about:
- Industry Advice - One of the main concerns for small businesses is finding work. Our Industry Sector talks about how to find work, typical rates of pay and a breakdown of our most popular industry sectors.
- VAT Basics for a Limited Company - Normally complicated, this easy to read jargon free guide shows how VAT works with a Limited Company.
- Limited Company VAT Schemes - Which scheme is for you? The various VAT schemes that will help lower paperwork and cost for your Limited Company.
- Sole Trader or Limited Company - See all the advantages of disadvantages of both business options here.
- Advantages of going Limited -Even though you may have already read this page, it’s worth reading through this page again to remind yourself why you were considering going Limited.
For more information or a general chat about your business plans please call us on 0500 234111 / 01442 275767.