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Rakhi Vasavada
Rakhi Vasavada, Financial Advisor
Category: Finance
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Experience:  Attorney and Financial Expert. Have specialization in Financial Laws.Practice experience of over 13 years
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I am currently running a business as self employed. I bill

Resolved Question:

I am currently running a business as self employed. I bill one US based customer monthly for my time and they pay most of my incurred expenses. I work from home. No particular length of contract but the business I am leading is developing very well. When do I either form a Ltd company or accept the offer to join their business is the pending dilemma. If the new business develops well I think I would like a %age benefit. Ideas or numbers where the benefit of moving into a Ltd company become important. Other matters of moving into their company and losing benefits of reducing what I can offset as taxable . Thanks very much
Submitted: 9 months ago.
Category: Finance
Expert:  Rakhi Vasavada replied 9 months ago.

Dear Friend,

Hello and welcome. Thank you for providing an opportunity to assist you.

Please remain online for a while as I prepare your reply.

Expert:  Rakhi Vasavada replied 9 months ago.

I believe going as a ltd company would be more profitable to you.

Given the lower tax rate for corporations, if you work as a business (i.e. ltd company) will be able to take all deductions that are generally available to any business. If you pay your self less, you will also have options to build reserves within the company. This will help you plan taxes properly as well.

In my opinion, you should go for limited company and operate as a business rather than joining the company. Over and above all, it will help you maintain your autonomy as well.

I am sure this would help.

You may please leave a positive rating if this helps as this is the only way we are compensated for assisting you. Alternatively, you may revert back with a reply if you need further assistance or if I have missed out on any aspect of your question.

Warm Regards,

Customer: replied 9 months ago.
Expenses for operating as self employed are further tax deductible though and there are extra costs involved in Ltd company. So I think your answer very brief
Expert:  Rakhi Vasavada replied 9 months ago.

Dear Friend,

No, I have deliberately kept my reply crisp so as to avoid any confusion.

Having said this, costs involved in setting up a limited company are not much. Refer the following link.

https://www.gov.uk/limited-company-formation/register-your-company

Also, as you said, operating as self employed are further tax deductible as well. So, if you look from any angle operating as a self employed OR as a limited company should be preferred as against joining the company as a employee.

Note that if you go as limited company, that will be a separate legal entity than you and you will have limited liability to the extent of your invested capital as against sole proprietorship.

I am sure this would help.

You may please leave a positive rating if this helps as this is the only way we are compensated for assisting you. Alternatively, you may revert back with a reply if you need further assistance or if I have missed out on any aspect of your question.

Warm Regards,

Customer: replied 9 months ago.
Thanks. but also as asked when are the tax breaks where its generally better to be Ltd ?
Expert:  Rakhi Vasavada replied 9 months ago.

Dear Friend,

Hello again.

Tax breaks should not be the sole guiding factor and the basis on which one decides. Having said this, it is the tax bracket which is 20% -- lower than standard tax rates that apply to individuals.

Taking this further, you need to take a holistic view of the limited company as compared to sole proprietorship. Please refer the following link.

http://www.bytestart.co.uk/limited-company-advantages.html

I am sure this would help.

You may please leave a positive rating if this helps as this is the only way we are compensated for assisting you. Alternatively, you may revert back with a reply if you need further assistance or if I have missed out on any aspect of your question.

Warm Regards,

Rakhi Vasavada, Financial Advisor
Category: Finance
Satisfied Customers: 4527
Experience: Attorney and Financial Expert. Have specialization in Financial Laws.Practice experience of over 13 years
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