Starting My Own Business in the UK
Hello everyone,
I’m seeking some guidance on launching my own business and setting up a company structure.
I plan to start gradually while continuing my in-house job, and I’m trying to determine whether it would be more beneficial to open a limited company with the help of an accountant or to start as self-employed. Any advice on the logistical aspects of both options would be greatly appreciated! Thank you!
Hi!
Starting your own business is an exciting journey! Here are some factors to consider when deciding between setting up a limited company (Ltd) or starting as self-employed:
Limited Company (Ltd)
Advantages:
1. Limited Liability: Your personal assets are protected; in case of business debts or legal issues, your liability is limited to your investment in the company.
2. Tax Benefits: Limited companies can sometimes benefit from lower tax rates on profits. You can also pay yourself a salary and dividends, which can be more tax-efficient.
3. Professional Image: Operating as a Ltd can enhance your credibility and attract more clients.
Disadvantages:
1. Cost: Setting up and maintaining a limited company can be more expensive due to registration fees and ongoing accounting costs.
2. Complexity: There are more regulations and filing requirements to comply with, such as annual accounts and confirmation statements.
Self-Employed
Advantages:
1. Simplicity: Easier and cheaper to set up. You just need to register with HMRC and keep track of your income and expenses.
2. Less Regulation: With fewer compliance requirements, it’s easier to manage your tax affairs.
Disadvantages:
1. Unlimited Liability: You are personally liable for any debts your business incurs.
2. Tax Rates: As self-employed, you may face higher tax rates compared to a limited company after a certain income level.
Other Considerations:
Starting small is a great approach. You could begin as self-employed and transition to a limited company as your business grows.
Best of luck with your venture!