Fulltime employee with LTD wanting to move to self-employed status


S

steve.anon

Hi All,

Here's my problem. 10 months ago I had a low-paid full time day job and
opened an LTD, hoping it would soon become my main activity.

A few month back I found a new day job that pays a lot better, while at
the same time the business with my ltd dried up. I still have a few
things coming in, but nowhere near enough to sustain my family. I wish
to keep the day job.

I decided to take an accountant and he advised that since I considered
the ltd only a 'side' thing now, I should close the company and
continue my weekend business as self employed instead.

The little money I made with the Ltd I spent almost immediately, the
ltd and I share the same account. The ltd is holding the same name as
my full name.

He reckons I would save quite a bit in tax and accounting fees by
switching to self employed. I would only have to pay the NI fine for
not having paid NI as self employed the past 10 months.

He said that having an ltd is only worth it if I plan to work full time
with it, and/or keep the money IN the company for longer than I do now.
He also mentionned that if I went self employed, I could partner with
my wife who is unemployed and distribute the profit in her favour,
therefore keeping me in a lower tax bracket (we have a joint account).

I'm completely lost, what do you think?

Steve.
 
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P

Peter Saxton

Hi All,

Here's my problem. 10 months ago I had a low-paid full time day job and
opened an LTD, hoping it would soon become my main activity.

A few month back I found a new day job that pays a lot better, while at
the same time the business with my ltd dried up. I still have a few
things coming in, but nowhere near enough to sustain my family. I wish
to keep the day job.

I decided to take an accountant and he advised that since I considered
the ltd only a 'side' thing now, I should close the company and
continue my weekend business as self employed instead.

The little money I made with the Ltd I spent almost immediately, the
ltd and I share the same account. The ltd is holding the same name as
my full name.
What does "holding" mean? What do you mean you "share" the same
account?
He reckons I would save quite a bit in tax and accounting fees by
switching to self employed. I would only have to pay the NI fine for
not having paid NI as self employed the past 10 months.

He said that having an ltd is only worth it if I plan to work full time
with it, and/or keep the money IN the company for longer than I do now.
He also mentionned that if I went self employed, I could partner with
my wife who is unemployed and distribute the profit in her favour,
therefore keeping me in a lower tax bracket (we have a joint account).

I'm completely lost, what do you think?

Steve.
I wouldnt recommend pretending never to have had a limited company. If
the money isn't material why don't you stop using the limited company
and go self employed from now.

Your accountant has given you advice and you say you are completely
lost but you don't say how you are lost or if you have asked him to
explain.

I think you'd be better off communicating with your accountant rather
than just us.
 
T

Tim

What do you mean you "share" the same account?
It must be a **Joint** a/c, in the *two* names of himself ("Steve Anon") &
the Ltd Co ("Steve Anon Ltd") ?!!
 
S

steve.anon

Hi, thank you for all the answers - what I meant was, that I've used my
personal account as the company account. All I did was finding a
clients, get them wire the money to my personal account, done.

I understand with hindsight that this may not have been the best idea
in the world, but I'm no accountant.

To answer you Peter, when I said I was 'lost', it's because I talked to
3 accountants already, 2 of them didn't think it was necessary for me
to meet them, and refuse to have a face to face meeting. This one is my
third try, and he comes up with some scheme to pay less tax. I'm
confused, as I do not understand anything to tax, accounts, companies,
etc. I just paid 90 quid to a guy to open one a while ago. I though
that was the right way to do thing at the time, now I realize there is
more to it.
 
T

Tim

... what I meant was, that I've used my personal account
as the company account. All I did was finding a clients,
get them wire the money to my personal account, done.
Who did the clients think they were contracting with - yourself or the ltd
co?

Assuming your clients contracted with the ltd co (not yourself personally),
it sounds like you effectively owe the ltd company a large stash of money
(overdrawn "director's loan"). Oh dear!
 
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P

Peter Saxton

Hi, thank you for all the answers - what I meant was, that I've used my
personal account as the company account. All I did was finding a
clients, get them wire the money to my personal account, done.

I understand with hindsight that this may not have been the best idea
in the world, but I'm no accountant.

To answer you Peter, when I said I was 'lost', it's because I talked to
3 accountants already, 2 of them didn't think it was necessary for me
to meet them, and refuse to have a face to face meeting. This one is my
third try, and he comes up with some scheme to pay less tax. I'm
confused, as I do not understand anything to tax, accounts, companies,
etc. I just paid 90 quid to a guy to open one a while ago. I though
that was the right way to do thing at the time, now I realize there is
more to it.
I always prefer to meet.

Did you make notes of what was said at the meeting. People who
understand things don't but if you don't understand things you need to
make notes and ask questions.

Why don't you understand something if it is explained to you?

There's lots of subjects I don't know about but people can find a
level to explain things to me. Either you are not making an effort to
understand or the accountants are not explaining anything.
 
D

DoobieDo

Why don't you understand something if it is explained to you?

There's lots of subjects I don't know about but people can find a
level to explain things to me. Either you are not making an effort to
understand or the accountants are not explaining anything.

or you're a troll.
 
S

steve.anon

"Why don't you understand something if it is explained to you? "

Right- thread closed... thanks to those who had something meaningful to
say... didn't quite expect to get flamed in an accountancy forum
though... Interesting, and explains a lot.
 
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P

Peter Saxton

"Why don't you understand something if it is explained to you? "

Right- thread closed... thanks to those who had something meaningful to
say... didn't quite expect to get flamed in an accountancy forum
though... Interesting, and explains a lot.
I'm not flaming you. If you have a meeting with someone and they tell
you something you don't understand you should query it.

You seem to be discussing things but not understanding anything. What
was said to you that you didn't understand?
 
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