To be or not to be, a limited company, that is.
I’m going back and forth at the moment over the idea of incorporating into a limited company rather than just sticking with sole trader status.
Mostly it sounds complicated and expensive. It seems to involve a lot of paperwork, giving too much money to an accountant and, for some bizarre reason, having to buy headed stationary.
Is this what HMRC thinks separates out a legit company from a bogus one – a ream of Basildon bond? I don’t even have a printer. Although, the accountant did point out to me that, being as it’s an allowable business expense, I should totally get one.
When you talk about setting up a limited company most people think you’re doing it to reduce your tax bill. I get quite affronted by this actually – I am entirely happy to pay tax and, from what I can tell, that’s a complete misnomer these days anyway. Changes to tax bands and dividend allowances mean you’ve got to earning serious money for there to be any real benefit… i.e. don’t be a journalist
My reasons are far simpler and less controversial than tax avoidance. Firstly, a couple of publications I write for have mentioned that in the future they would prefer to deal with a limited company than a sole trader for regulatory reasons.
Secondly, as a homeowner, the limited liability part of being a company appeals. I know I could achieve this protection with the right insurance policies but there is always a worry with insurance about whether it will pay out when you need it to.
Insurance can also be incredibly s-l-o-w, a fact to which I can attest, being as we had a leak in our bathroom THREE MONTHS ago and there is still a hole in the floor and half a wall missing.
I set up a couple of meetings with accountants – you’ve always got to shop around, guys – and I swear my brain actually ached for a full day afterwards, just trying to understand some of the words they said. Key points I came away with:
- This is going to be a lot of hassle
- Accountants are expensive
- DON’T GET IT WRONG OR YOU WILL GO TO PRISON
So here I am, stuck somewhere between “Urg, can I be bothered?” and “Mmmm, my very own fancy stationary.”
What do you think?