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Self Employed or Limited Business

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  • Self Employed or Limited Business

    Ok, so I am trying to set up my business which will be a mix of selling items I make and holding craft classes. In regards to the legalities of tax and registering I am so lost and have been told different things by different people about how I should define myself.

    So - what is the difference between putting myself down as Self Employed or as a Limited Business? Are there benefits or downfalls to each of these?

    Look forward to your advice
    WitneyRose . . . here to learn and share

  • #2
    Someone recently advised me that unless I had a turnover of more that £7000 a year I should stay as self employed. I dare say that there are others with more experience who can advise you better.

    deb xx
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    • #3
      My understanding is that it is best to start as self employed as a sole trader unless other people are involved in your business, it is the simplest form.
      If you set up a limited company you need to have at least 1 director and a secretary for the company.

      The tax office can be very helpful (when you get through to them!) and Business Link have some good stuff online.

      CatkinJane - Handmade Material Things


      • #4
        I agree with Catherine if you are starting small stick to self employed easier for returns etc and most crafters start that way.


        • #5
          Yep I was told sole trader meant less paperwork and that's always a winner for me
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          • #6
            Yup. Me too. I was advised to be sole trader. Best advice ever. You can always change later if you grow massively. I have grown but it's still much simpler to stay as a sole trader. Life is complicated enough with the making and selling. Anything to keep the office work simple is a hit with me.


            • #7
              There are advantages to being a limited company if you have liabilities, such as a lease, a business loan, or lots of credit with suppliers. Then, if the company fails, your private assets and money won't be used to pay off creditors.

              For small craft people such as ourselves, we don't usually have that exposure, so I agree with everyone that it's easier and cheaper to be a sole trader.
              I can't be creative and tidy too
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              • #8
                It is best to start as a sole trader and upgrade so to speak in time.
                Beware of insurances if you require them and get some advice on the tax situation pertaining to sales.
                Best of luck with your business


                • #9
                  Thanks everyone! That's a massive help and certainly a step in the right direction :-)
                  WitneyRose . . . here to learn and share



                  • #10
                    My accountant advised me that it really isn't worth it unless you make a considerable turnover. What's more, I have friends who have become limited companies and the amount of extra admin and paperwork is HUGE. I really don't think it's worth it, at least initially. Get used to all the admin you'll need to do anyway as a sole trader first! Good luck
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                    • #11
                      I was advised some years ago that becoming a Limited Company was the only sensible way to go. Big mistake. HUGE!
                      In the end it felt like it was costing me to even think about doing any work. I finally paid an accountant to help me close the company down and that put paid to any profits I thought I'd made.
                      I'm now a happy sole trader and intend to stay that way.



                      • #12
                        Another couple benefits to staying a sole trader is that firstly your accounts aren't publically available (you can download accounts of registered companies from Companies house for just a couple of pounds) and secondly because you are personally liable for your debts it is actually easier to get credit as people know that regardless of what happens to your business you still have to pay them back. By dealing with a ltd company if the company goes under they run the risk of losing any money owed to them, there are several companies who go insolvant every couple of years and then open under another name to wipe their debts off :-( Not nice when you are one of the people they owed money to.
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