Freelancers: Sole or Ltd?
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- indian_pole
pros/cons
what's your advice?
- utopian1
- I used to work with that guy in NYC. Thanks, no thanks, for the reminder.MarleyMarl
- craigatkinson0
uk or not?
- UKindian_pole
- ltd ok if earning over 40k ish. Get some directors on board, pay them. Pay yourself shares, dividends...A more complicated return form / bookkeepingcraigatkinson
- Gnash0
Liability is a consideration. Not sure about UK laws but in canada forming a ltd company limits liability to the assets of the company and not extend to personal assets.
- LukeO0
If your freelancing with other studios, and your'll be invoicing over 40k I'd say flat rate VAT registered ltd is the best way to go financially speaking.... you keep a portion of the charged VAT, and the dividend payment you pay yourself through the ltd keeps tax down... though tax laws/loopholes are changing.
DYOR very important though obvs. Speak to accountant. Good luck!
- VAT is separate and an important consideration whether sole or Ltd. But you have to be earning over 70Kish to have to register.fadein11
- But yes this is relevant to my comment below.fadein11
- Keeping a cut of VAT was too juicy to refuse. My accountant doesn't charge too much extra for this. An hour every quarter tallying invoices is worth it imo.LukeO
- yeah I only recently heard of the keep some VAT thing a while ago - will look into.fadein11
- fadein110
If buying print etc. i.e. have financial risk in what you do go limited.
Also there are some tax incentives to being Limited, i.e. pay yourself minumum wage and then pay in dividends but I heard this may not be as easy as it was.
I am sole just because I am lazy and always have been.
- noneck0
There are tax implications for each. Broadly, sole proprietorships are better when you're making less (easier, and lower taxes). Corporations gain the advantage as you earn more (over $100k). Talk to an accountant about this and how it impacts you.
- Knuckleberry0
S Corp
- indian_pole0
Thanks people. I'm gonna talk to an accountant, but I think I'm swinging towards Ltd (with flat rate VAT) - and considering doing my accounting with FreeAgent.
- microkorg0
With LTD you can't get your personal assets taken as payment if the company goes tits up or someone sues the company.
One of the drawbacks of going LTD is that you have to record things like board meeting minutes and jump few a few more hoops like that.
A good accountant will probably have templates etc for you just to batter out.
Thoroughly recommend using FreeAgent.
Used it since we set up a company 6 years ago.I think that the VAT is 60k before you can register.
- dee-dubs1
Few comments above not true re VAT in UK.
You HAVE to register your company for VAT once your turnover goes over a certain threshold (currently around £80k) but you can voluntarily register if you wish if your turnover is below this.