Posted By Paul Leadbetter Liesel You need to talk to an accountant; there are some tax advantages to working as a limited company at the moment but these will reduce and then disappear over the next couple of years. Paul

Posted By Clare Gabriel Some larger organisations do not trade with sole traders - not sure exactly why but it does happen. I am a limited co, and VAT registered - on the advice of my accountant - and as long as you have a good accounts program like SAGE or QUICKBOOKs the VAT element is no big deal - some just do not like acting as an unpaid civil servant to the chancellor!!!

Posted By Robert Randall Hi Liesel, I am a limited Company and VAT registered. The main advantages that I obtain are a higher profile for the business (companies don't like dealing with sole traders) and that I can reclaim VAT on purchases. You could start off as a sole trader and then, if you want to attract more clients, become limited since it looks better to the potential new client when you advertise. Regards, Bob R

Posted By holmezy Liesel, in response to Andy's point. Yes, you can be a limited company as a sole trader, rather than just a sole trader. The "protection of personal assets" still applies for the limited Company aspect. A sole trader is , in effect, the company, so houses, cars, tools, any other assets are all up for grabs should a claim arise. Whereas if you set up a limited company, then you become an employee of that company and draw a salary, to pay for YOUR house, YOUR car,etc Any claim would be against the company or its assets, ie cash, premises etc. If you are a one man band, earning over £50k then I'm guessing your accountant should advise you to go limited for tax reason, vat reclaim etc. Many small limited company directors pay themselves a tiny salary to minimise the income tax, then they are allowed a tax free payment of the profits, or something like that. Get in quick, cuz the government are closing some of these tax "loopholes" over thecoming years. Holmezy Strange.......this thread is more company set up and accounting, yet no-one has compained that its not H+S and gone off on a rant!

Posted By holmezy Liesel, No, the exposure is still the same. If you give poor advice or are negligent in your duties then it makes no difference. Either the sole trader or the company is liable. Some companies see small sole traders as "not worth chasing, little to gain" but I suppose it depends on the outcome of the poor advice you have given!! You mentioned that the client might not like what you have told him and may try and sue. As long as you advice him correctly then it doesnt matter if he likes it or not! Holmezy

Posted By R Joe The key issue is that in the case of a sole trader the contract the client has (and there will always be one, even if it's unwritten - which is not wise) is with YOU. With a limited company it's with the company. Being sued for breach of contract will therefore be against the sole trader or company respectively. Have a look at the article in April's SHP - 'Don't Lose Your Shirt' it covers this issue - and concludes limited status offers important protection in this regard. Irrespective of which way you go make sure the contract side is tied up sensibly with clear, written confirmation of what you're providing and how it's success will be judged. Sloppy expectations are a real danger and some decent T&Cs are also worth looking at. A final point, don't forget you could be sued up to 6 years hence so will need run on liability insurance even if you only do a bit of work - which could cost more than the bit of work! It's not all bad news - just that it pays to get set up properly. Hope this helps a bit. RJ

Posted By Garry Homer So far as the increased paperwork for running a limited company, this does not matter unless you are run off your feet. One day a month should keep all in order if you have a good accounts package as previously mentioned. I prefer the green one. If you can manage to set-up cells in excel to do calculations, that program is sufficient to take care of your PAYE you will do monthly. The accounts program will provide the year-end figures in a format that is very similar to what you need to prepare for companies house. All you need to add to this is the minutes from the AGM and statements that you fully accept you duties under ........ The required words can be found on the companies house website, or from another set of accounts presented to you as a shareholder etc. Takes no more than another day to put together and post off. Firms are around who will set up the company for you. Garry