Limited Company or not - Anyone with an opinion please?

[GoldRapt]

I was wondering how many people are Limited Companies and if there are opinions on if they are good or a pain.

Reason for asking is that I have been approached today to do some contract work for three months.

The offer is that I can be on the books as PAYE at £x per hour OR I can register a Limited Company and they will pay me £xx per hour.
The difference gross is about £2k.

As a L.C I can claim mileage and parking as expenses, which are quite a lot these days.
As PAYE I will have all my taxable expenses taken care of but will have to pay out the above.

Obviously I will have to get a bank account for the L.C as opposed to a Trading as.
Hmm, I wonder if accountants charge more if your a L.C ?

Anybody with any thoughts please?

[Reg]

I think you'll need a chartered accountant who could swallow that extra £2k in fee's if you become Ltd at least in PAYE the company has all the hassle.

[GoldRapt]

That's a point to consider but my accountant didnt cost me anywhere near that last time I had an L.C

[Reg]

Is your accountant chartered because that can make quite a difference.

[GoldRapt]

Thats another point, but I thought all accountants were chartered ?

[John G]

It does seem a lot of hassle for a 3 month contract. When I first started everyone advised that I should be ltd - me, being me, I totally ignored them and went for a soul trader then a partnership. It seemed to be a right hassle with paperwork etc to be ltd, whereas setting up a soul trader was simples - mmh!

[bms]

As a sole trader you can claim 40p a mile for travel (but not to and from normal place of work). A limited company will have legal implications for registration, annual returns which will cost (unless you can do yourself - the only the annual return fee charged by co house). The main benefit is tax - you pay corporation tax at 20% rather than income tax at 20% plus national insurance on income (could be 40% if you are a high earner). Any profit can be taken as a dividend which brings tax credit into play at 10%, but company has to pay corporation tax at 20%.On the 2000 difference, once you have paid to set up company, traded, completed annual return, dissolved company then tax saving won't be much.Speak to company about doing this work as an independent consultant. You can still claim all allowances without hassle of ltd co. Many accountants offer some advice free - or speak to your local business advice service. I don't think this makes a significant financial benefit for you. No legal come back on my comments!

[John G]

If you set your home as normal place of work you can claim all mileage

[Stitch Up]

Turf Accountants aren't Chartered

[GoldRapt]

The offer is PAYE or L.C.
Mileage and parking would be a legitimate expense as an L.C contracting to another company, can't be claimed on PAYE.
The contract will be for 3 months hence possibly making the set up of an L.C not worth it, however sometimes 3 months contracts turn into 12 month one's but not having a crystal ball.........

Hadn't considered the costs of disolving a company, thought it was just a submission. (companies house is all online these days).

An interesting conundrum. Helpfull answers, of course with none of us being lawyers there's no combacks