Starting My Own Business in the UK
Hello everyone,
I’m seeking advice on how to start my own business, particularly regarding company setup.
I plan to take a gradual approach while continuing my in-house job. Would it be more advantageous to open a limited company with an accountant, or should I consider starting out as self-employed? I’d appreciate any insights on the logistics of both options. Thank you!
RCadmin
Starting your own business is an exciting venture! Here are some points to consider when deciding between setting up a limited company (Ltd) or registering as self-employed:
Limited Company (Ltd)
Pros:
1. Limited Liability: Your personal assets are protected if the business incurs debt.
2. Tax Efficiency: Corporation tax rates can be lower than personal income tax rates, and you can take dividends, which may be more tax-efficient.
3. Credibility: Having a company can enhance your professionalism and credibility with clients.
4. Easier to raise capital: It can be easier to attract investors or secure funding.
Cons:
1. Complexity: More paperwork, legal requirements (like filing annual accounts), and possibly more expensive to run.
2. Initial Costs: You will need to register the company, which involves some costs.
3. Dividends and PAYE: You will need to manage your salary and dividends, which can be more complex than self-employed taxation.
Self-Employed
Pros:
1. Simplicity: Easier setup and fewer ongoing obligations; you’ll complete a self-assessment tax return instead of annual accounts.
2. Less Overhead: Generally lower costs to set up and operate, which may suit your situation while still working full-time.
3. Direct control: You have full control over your profits and how you manage your finances.
Cons:
1. Liability: You are personally liable for any debts incurred by the business.
2. Higher Tax Rates: You’ll likely pay more in taxes as profits rise since personal income tax rates can be higher than corporation tax.
3. Perception: Some clients may view self-employed individuals as less professional than a limited company.
Recommendations:
I hope this helps you make an informed decision! Best of luck on your business journey!