Setting up your new company
Company Set Up: Sole Trader or Limited Company?
One of the most important things to consider at the outset if you are planning on starting your own business is whether to set up as a sole trader or limited company.
It’s important to note that there are two types of company set up for you need to consider. Sole traders who are one man/woman businesses or Limited Companies which give impression you are a more established larger company with ambitions to grow.
Here is an overview of overview both in simple terms.
The quickest and easiest to set up, you can sign up online via the .GOV website for tax, self-assessment and National Insurance, along with VAT if it’s applicable (for yearly turnover over £85K).
You run your business as an individual and are self-employed, there is less paperwork and the accounting process is simpler.
You can keep all your business profits once you have paid the taxes already mentioned though you are personally liable for any losses your business makes.
The main bonus being that your business affairs are separate from your personal ones. Therefore if your business gets into financial difficulty, you only lose money invested. Company Directors pay themselves a salary through payroll and top up with dividends (profit) from the business. You can be a one person business and as director you are responsible for any legal and financial decisions your company makes.
Again the process is simple to get you set-up via the .GOV website.
There isn’t a right or wrong option, which you choose depends on your personal circumstances and vision for the business. I decided to set-up as a Ltd company as I always had aspirations to grow though you can set-up as either and then worst case scenario you can always transition to the other if circumstances change.
On this basis I would suggest that after you have done some research its well worth having a conversation with an Accountant to validate your thoughts and make sure you get it right.
Looking back I made some school girl errors at this point so my advice would be to make sure you take time to look into this properly before you set-up.
If you are looking for more tips and advice on setting yourself up as a VA then why not download our FREE guide which has been designed to support you through the set up of your VA business. Visit https://www.subscribepage.com/va-business today.