Sole trader or Ltd Company

Cynical

LE
Book Reviewer
@RumRationReject
I did say equity funds, not debt., i.e. investment from Business Angels which is much more likely to be available if the investee is a Ltd company as it will then almost certainly qualify under SEIS and EIS schemes.

If you are going for debt, @bobthebuilder is correct, the directors will need to give a personal guarantee, which is why many start up directors ensure that their house is in their wife's name. Yes a sole trader can raise extra funds by extending your mortgage.

EL insurance is not a complete solution to the risks of employing people; the limit of the policy is not the limit of your potential liability.
 
As a business consultant, we found that clients look for some form of professional " respectability", so started as an LLP. Had to have good professional indemnity (Towergate ate good brokers, especially if your consultancy activities are a bit hard to define). We're now a limited company for personal tax and Vat reasons. Re cloud-based accounting, we've been using QuickFile for two years now. Very easy to use and is completely free! Great forum where you can get help from both other users and professional accountants. Our accountants are very impressed with it and now recommend it to other small businesses.
 
An LLP can be a very tax advantageous business model, because it gives the tax advantages of sole tradership with the arms length safety if limiting. It works very well if you have personal costs that you could offset as a sole trader, but can't as a company (like depreciation on a private car), or if the business has big capital allowances that can be offset against a partners unrelated salary.

This is complex stuff; seek advice from an accountant.......
 
Absolutely - although the best start up advice we got was from Co-operatives UK legal team. My business partner and I knew we wanted an equitable split of profits and a workers co-operative was the best way of doing this. To be fair, during the course of the previous year, we had both helped small industry groups set up two cooperatives - one as a limited company and one as an Industrial and Provident Society! However, it is worth mentioning that co-operatives get free banking, and it only cost us £100 for the legal team to draw up the partnership agreement and register it with companies house. You do need a minimum of two partners for an LLP though.
 
Resurrection of a 2015 thread, but a question for the people less dim than me about these things. (I promise to read/absorb the comments on this short thread but I'm assuming nothing has changed since 2015)

I recently took early retirement aged 60 after working for 16 years for the local Council. 10 months later the Traffic team I worked for still hasn't found a suitable replacement for my role despite several advertising campaigns and I've been asked whether I'd be interested in returning on a 'project by project basis until someone turns up' as they are way behind on delivery of numerous projects... (I told 'em I was irreplaceable...)

I've no intention of returning to the work/life drudgery I thought I'd escaped, or of cranking in loads of hours, so it may only be a couple of days a week, but as my expertise is fairly specialised and GIS/traffic law related I suspect they may be waiting for that 'someone' for a farly long time.

I can see there being at least 12+ months of 2 day weeks work if I say I'm interested. I assume the Ltd Co. is the only suitable option for me as I'd only be looking to provide my services to a single employer (the Council) and it would likely be for over 6 months?

Thing is, I may set myself up a Ltd Co. and then the bean counters baulk at the daily/hourly rate I'm proposing so it may come to nothing... but the other concern is the combined efforts of an accountant and HMRC looking at my Army pension and Council pension may gobble up any monies I earn if It's only one or two days a week I sell myself for.

I know, I know.... part of the advice given will be 'go speak to an accountant' but the combined heads of Arrse can also be a fine resource to use
 

ugly

LE
Moderator
Resurrection of a 2015 thread, but a question for the people less dim than me about these things. (I promise to read/absorb the comments on this short thread but I'm assuming nothing has changed since 2015)

I recently took early retirement aged 60 after working for 16 years for the local Council. 10 months later the Traffic team I worked for still hasn't found a suitable replacement for my role despite several advertising campaigns and I've been asked whether I'd be interested in returning on a 'project by project basis until someone turns up' as they are way behind on delivery of numerous projects... (I told 'em I was irreplaceable...)

I've no intention of returning to the work/life drudgery I thought I'd escaped, or of cranking in loads of hours, so it may only be a couple of days a week, but as my expertise is fairly specialised and GIS/traffic law related I suspect they may be waiting for that 'someone' for a farly long time.

I can see there being at least 12+ months of 2 day weeks work if I say I'm interested. I assume the Ltd Co. is the only suitable option for me as I'd only be looking to provide my services to a single employer (the Council) and it would likely be for over 6 months?

Thing is, I may set myself up a Ltd Co. and then the bean counters baulk at the daily/hourly rate I'm proposing so it may come to nothing... but the other concern is the combined efforts of an accountant and HMRC looking at my Army pension and Council pension may gobble up any monies I earn if It's only one or two days a week I sell myself for.

I know, I know.... part of the advice given will be 'go speak to an accountant' but the combined heads of Arrse can also be a fine resource to use
I’d consider a salaried post where you get a good whack for those two days and they look after the liabilities
WithIR35 you are better off getting a salary
 
Resurrection of a 2015 thread, but a question for the people less dim than me about these things. (I promise to read/absorb the comments on this short thread but I'm assuming nothing has changed since 2015)

I recently took early retirement aged 60 after working for 16 years for the local Council. 10 months later the Traffic team I worked for still hasn't found a suitable replacement for my role despite several advertising campaigns and I've been asked whether I'd be interested in returning on a 'project by project basis until someone turns up' as they are way behind on delivery of numerous projects... (I told 'em I was irreplaceable...)

I've no intention of returning to the work/life drudgery I thought I'd escaped, or of cranking in loads of hours, so it may only be a couple of days a week, but as my expertise is fairly specialised and GIS/traffic law related I suspect they may be waiting for that 'someone' for a farly long time.

I can see there being at least 12+ months of 2 day weeks work if I say I'm interested. I assume the Ltd Co. is the only suitable option for me as I'd only be looking to provide my services to a single employer (the Council) and it would likely be for over 6 months?

Thing is, I may set myself up a Ltd Co. and then the bean counters baulk at the daily/hourly rate I'm proposing so it may come to nothing... but the other concern is the combined efforts of an accountant and HMRC looking at my Army pension and Council pension may gobble up any monies I earn if It's only one or two days a week I sell myself for.

I know, I know.... part of the advice given will be 'go speak to an accountant' but the combined heads of Arrse can also be a fine resource to use

You'll be a prime target to be inside IR35, so remember that on the subject of your daily rate and make allowances for it
 

Rab_C

LE
Resurrection of a 2015 thread, but a question for the people less dim than me about these things. (I promise to read/absorb the comments on this short thread but I'm assuming nothing has changed since 2015)

I recently took early retirement aged 60 after working for 16 years for the local Council. 10 months later the Traffic team I worked for still hasn't found a suitable replacement for my role despite several advertising campaigns and I've been asked whether I'd be interested in returning on a 'project by project basis until someone turns up' as they are way behind on delivery of numerous projects... (I told 'em I was irreplaceable...)

I've no intention of returning to the work/life drudgery I thought I'd escaped, or of cranking in loads of hours, so it may only be a couple of days a week, but as my expertise is fairly specialised and GIS/traffic law related I suspect they may be waiting for that 'someone' for a farly long time.

I can see there being at least 12+ months of 2 day weeks work if I say I'm interested. I assume the Ltd Co. is the only suitable option for me as I'd only be looking to provide my services to a single employer (the Council) and it would likely be for over 6 months?

Thing is, I may set myself up a Ltd Co. and then the bean counters baulk at the daily/hourly rate I'm proposing so it may come to nothing... but the other concern is the combined efforts of an accountant and HMRC looking at my Army pension and Council pension may gobble up any monies I earn if It's only one or two days a week I sell myself for.

I know, I know.... part of the advice given will be 'go speak to an accountant' but the combined heads of Arrse can also be a fine resource to use
I am a Ltd Co but with the amount of work you’ll be doing would also advise to go “inside” IR35. Your employment may fall inside IR35 anyway and what it costs for accountants and company registration etc it just isn’t going to be worth it for 2 days a week.
 

Blogg

LE
I am a Ltd Co but with the amount of work you’ll be doing would also advise to go “inside” IR35. Your employment may fall inside IR35 anyway and what it costs for accountants and company registration etc it just isn’t going to be worth it for 2 days a week.
IR35 is a complete bastard because it tends to drive the requirements and behaviours of those in procurement and legal functions when doing work for larger companies and institutions who do not want to find themselves on the hook for PAYE/NIC. And it has got worse.

So for many years my current employer would only deal with those contractors who provided their personal services via Limited companies.

But for some time now they don't have the option: employee or nothing because the risk is too high and that has led to some dumb outcomes, so even getting a contract signed off for a world renowned expert to write a one off report on the Widget Market in Nowherestahn mean solemnly "proving" through Procurement numpties that this is not potentially within scope of IR35

They have reduced that to a initial gateway test of any potential UK suppliers of anything being a VAT registered limited company or LLP. Sole trader or partnership? Won't even consider it.




 
Well it looks like IR35 has already kyboshed my thoughts of extra pin money as I ain't going back 'working for the man' at 60.

The council got a good wodge of my working life for not the greatest salary in the world despite the GIS process I developed for traffic management saving them a huge amount of money. They haven't been able to replace my GIS/traffic law expertise and so I was willing to go back on a semi-instructional basis to teach someone the ropes, but not as a full timer who can get ferked about by local Councillors with their own small-town political agendas again. I want to be able to pick and choose then ride off into the sunset once 'the knowledge' has been passed on.

Oh well. Full time retirement then.
 
Well it looks like IR35 has already kyboshed my thoughts of extra pin money as I ain't going back 'working for the man' at 60.

The council got a good wodge of my working life for not the greatest salary in the world despite the GIS process I developed for traffic management saving them a huge amount of money. They haven't been able to replace my GIS/traffic law expertise and so I was willing to go back on a semi-instructional basis to teach someone the ropes, but not as a full timer who can get ferked about by local Councillors with their own small-town political agendas again. I want to be able to pick and choose then ride off into the sunset once 'the knowledge' has been passed on.

Oh well. Full time retirement then.
Could you not state you are willing to do two days a week on a full time contract? Plenty of people in my company are employed as full time staff on reduced hours and paid pro rata.
 

ugly

LE
Moderator
Could you not state you are willing to do two days a week on a full time contract? Plenty of people in my company are employed as full time staff on reduced hours and paid pro rata.
But at a much higher rate
 

exbluejob

On ROPS
On ROPs
Book Reviewer
I 'retired' at 59 as I had my MoD pension and another pension coming at 60. However after 18 months I was offered something which interested me and the cash was OK. Seen the project through for 5 months However I got clobbered with higher rate income tax etc. So set myself up as a consultant with a limited company, got an accountant (doesn't cost a fortune) and off I went. I'm fortunate as IR35 doesn't apply to me, all my work is 'overseas', although 95% of it is from home. I do a few hours a week, generally around 4 days a month unless they need me to go on site somewhere, in which case it'll be however many days (usually 3 - 5) which really hikes up my income as I'm not cheap. So far I've worked in Holland, Kuwait, Indonesia (few trips out there), Qatar and now Dubai (did work there for over 4 years), next month 3 days in Istanbul, July 5 days in Madrid. I only take on projects that interest me and people who employ me want my specialist knowledge and skills for a few months or a couple of years but very part time, they've no interest in employing anyone full time just for a few weeks of work. Besides which they need experienced people with a narrow skill set so they're content to pay top dollar.
 

Blogg

LE
Well it looks like IR35 has already kyboshed my thoughts of extra pin money as I ain't going back 'working for the man' at 60.

The council got a good wodge of my working life for not the greatest salary in the world despite the GIS process I developed for traffic management saving them a huge amount of money. They haven't been able to replace my GIS/traffic law expertise and so I was willing to go back on a semi-instructional basis to teach someone the ropes, but not as a full timer who can get ferked about by local Councillors with their own small-town political agendas again. I want to be able to pick and choose then ride off into the sunset once 'the knowledge' has been passed on.

Oh well. Full time retirement then.

Not quite. You can form a company which then contracts with Council to provide X Y or Z Services/Training courses as contractually specified but not your own services as what might be seen as being a quasi employee.

HMRC have a "tool" to "help" you with that but it is shit

 
Could you not state you are willing to do two days a week on a full time contract? Plenty of people in my company are employed as full time staff on reduced hours and paid pro rata.
I suppose part of it is that I left having had a retirement party (low key Covid job but a gathering anyway) but I also got a whole load of (unexpected) leaving presents from colleagues across the Council. I even got a signed card from a bunch of residents on a road I introduced a load of yellow lines on...!

It's just me maybe, but I'd feel a bit weird going back within a year as a full timer. I may just sack the idea...
 

exbluejob

On ROPS
On ROPs
Book Reviewer
It's just me maybe, but I'd feel a bit weird going back within a year as a full timer. I may just sack the idea...
I would humbly suggest they'd be delighted to see you back as a consultant! ( plus relief that they're not going to get screwed over to do the job). You really should leverage your highly desirable knowledge.
 

Truxx

LE
You dont have to use an accountant. Its a fallacy started by accountants who on the whole are lazy feckers!
I binned mine a couple of years ago. I found myself doing all the work and paying my accountant through the nose for the privilege

As for the question, when I see up my business I set up as both a sole trader and a Ltd company, keeping the latter dormant.

12 years later it is still dormant and I o ly keep it so no one can nick the name
 

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