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Posted By Jim GB
Anyone out there know the pros and cons? Which is better for a new consultancy?
Sole trader sounds a bit risky to me!!
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Posted By Paul Leadbetter
Jim
Now there's ambition; only just setting up and already thinking of becoming a plc (although I assume you mean limited company). There are some tax advantages to being a limited company (although you had better be quick as Gordon Brown is trying to get rid of them) but there is more paperwork to keep on top of and accountancy fees can be higher. As a sole trader, you could lose everything (including your house) if something goes horribly wrong but as a limited company only the company assets are at risk. Mind you, as long as you have sufficient professional indemnity insurance, you should be OK as a sole trader.
Paul
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Posted By Smurfer
According to my accountant, the tax advantages come in being a sole trader/partnership (I'm in the latter category), rather than Ltd. For example, I can offset 90% of my car expenses (including fuel) against tax. If I was ltd, then even as a director I'd be looking at the company car tax system... Also you'd need employee liability insurance - as a sole trader you don't because you dont employ anyone, but as a ltd company, even directors are employees.So if you do anything 'risky' e.g. asbestos surveys, it may be costly.
However, the advantages of ltd mean you limit your liability - just walk away when insolvent, but it doesn't stop you getting sued... The new ltd partnership may make a difference but i've not investigated this yet)
As Paul says, keep up the PI and PL and all's well, unfortunately they're not cheap.
as for PLC - you're living in cloud cuckoo land!! ;-)
My advice - speak to an accountant because it may depend on the type of work you're doing
Andy
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Posted By Geoff Burt
Most of us start out as sole traders and then move over to Ltd as the turnover increases and you take on employees. There are pros and cons for both.
But as pointed out its essential you talk to your accountant.- although they do seem to have different views.
Reminds me of Safety Professionals!
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Posted By Paul Leadbetter
It is much better to take the car out of the business and for the company to pay mileage on travel rather than to have a company car. If the limited company acquires assets from the sole trader then the company has to pay back the sole trader; this is also tax efficient (so I am told).
Paul
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Posted By Jim GB
Whoops the ‘P’ was a mistake, well spotted!!
Thanks for the info. I think sole trader will be the initial route.
What amount of cover would anyone recommend as a minimum, bearing in mind the business is initially going to be part-time and aimed at providing services for small to medium size organisations in lower risk environments?
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