Running a company - tax situation...

I know the answer might be quite complicated, so can anyone recommend where I can get a (ideally simple!) low down of what the different tax implications are of operating as a sole trader as opposed to a company that employs myself as sole employee?

I'm trying to work out which is the most suitable for myself and the implications, financial and otherwise, of both approaches, but am finding it hard - ideally some sort of bullet point list or at least clear text on this would be much appreciated!

Thanks for any help you can give!

Stephen

Re : Running a company - tax situation

Stephen

Sorry to be the bearer of bad news, but I'm not sure if something as sensible or as clear as that exists, though I really would be delighted to be proved wrong on this if someone can find a good resource

Sasha

Re : Running a company - tax situation

Although this question was posted some time ago, I think it is worth while making some comments which might benefit those considering the options of forming a limited company or trading as an unincorporated business.

There are lots of different factors to consider when deciding between whether to register a limited company or whether to proceed as a sole trader.

Some of these elements are centred on the current system of company tax and how this might change in the future. An example is dividends and how they can currently provide a tax efficient means of taking income from a company.

Should the regulations change in the future it could radically affect what is seen by many as one of the main attractions of incorporating a company.

Another important factor is the individual’s personal tax position and how much profit the sole trader business or limited company is likely to generate.

Simplistically, exceptionally low profits could be covered by an individual’s personal allowances and therefore suggest that a sole trader might provide the optimum solution.

Higher profits which might be subject to 40% income tax if generated by a sole trader business might be more persuasive towards setting up a limited company where corporation tax rates are lower at the top end. In cases where little or no income is taken from the business, again this might be a positive argument for company formation, where the individual is only taxed on monies actually distributed.

I have written a simple illustration http://www.completeformations.co.uk/company-tax-savings.html of how the taxation position could differ between the two types of trading vehicle and whilst its points are by no means conclusive, they do provide a first glance of how a comparison could be carried out based on the specific circumstances of the individual in question.
__________________
Vicky Lyons Company Formation Packages - Free Business Bank Accounts - Company Shop - Notice Board

Re : Running a company - tax situation

Thanks for that info Vicky, that's very useful indeed

Many thanks

Stephen

Re : Running a company - tax situation

Please read my article on the difference between sole traders and limited companies.

http://truemanbrown.blogspot.com/2010/09/age-old-question-sole-trader-or-limited.html
__________________
For efficient accounting services go to www.truemanbrown.co.uk

Re : Running a company - tax situation

There is probably something on the HMRC website about this, as long as you can find it which might take a while!

Re : Running a company - tax situation

When I was started my business, I had faced lots of problem regarding tax management, at that time i really need some experts advice. Now a days situation changes as everything is available at single click so do the advice too.
askvisory is the place where we can get professionals advice easily and conveniently. They provide the connection between experts and their clients who ask for advice of professionals in particular field.