What is Best to Be Under Self Employed.?. Sole Trader,Ltd Co

[MACY]

Hello there,
I am really confused regarding the self-employed thing.. i've been to the accountant but cud not understand much... in fact im buying an established business in uk and that is a retail shop.. now the confusion is shud i register myself for the sole trader, a company or some sort of contractor... i need to prove my 20k income in order to claim the remaining points for my application.. but i cant really decide wt to do... i want to take an easiest route in the self employed... im sure there are many of u who been through this situation... i will really appreciate ur help in this matter.. thnx in advance..

[Sky_High]

I think your accountant should expaln this in much more details. Although it depends upon proposed earning from the business but mostly LTD is best option for tax savings (Go for a combination of salary + Dividends). However in this case and in the case of sole trader, you have to prove that business is makeing enough money (Profit) and you also have to show your bank statements(Bus + Per). However if you go for LTD and salary only option (no dividend) than HO will be less interested in business and they will be more interested in your personal bank statements and payslips. Make sure you transfer same omount of money each month from your business account to personal and ask your accountant to prepare payslips for you. This is expensive option as you have to pay not only Employee tax and NI but Employer tax and NI. For 20K, this cost could be 6K (again depends upon few factors). + Tax on profit of company.

[email257525]

hi

What do you mean by first case (combination of salary and dividends)

Is it takeing minimum salary from own limited company also taking more as dividends?

I want to apply for tier 1 G,
I am working full time for an employer, also have my own ltd company, what is best option for me economically? Easiest and acceptable by HO. Also should help on the time of extention

Would be greatful if some one can leave their email address to get help and guidence

Thank you in advance

[MACY]

I think your accountant should expaln this in much more details. Although it depends upon proposed earning from the business but mostly LTD is best option for tax savings (Go for a combination of salary + Dividends). However in this case and in the case of sole trader, you have to prove that business is makeing enough money (Profit) and you also have to show your bank statements(Bus + Per). However if you go for LTD and salary only option (no dividend) than HO will be less interested in business and they will be more interested in your personal bank statements and payslips. Make sure you transfer same omount of money each month from your business account to personal and ask your accountant to prepare payslips for you. This is expensive option as you have to pay not only Employee tax and NI but Employer tax and NI. For 20K, this cost could be 6K (again depends upon few factors). + Tax on profit of company.

Dear Sky High thanx for ur reply... one thing i want to understand, u said that going for a ltd company is a gud option but at the end u said that the tax will be as much as 6k on this option.,,.. and second wt is the tax difference in sole trader...wt shud i talk to my accountant.. plz explain it little bit.. thnx..

[Sky_High]

Sole Trader VS LTD => LTD is cheap option
LTD Earning through Dividends and Salary VS LTD Earning through Salary only (No Dividend) => Earning through salary + Dividend is cheap option.
(In sole trader + LTD option where you are earning through salary and dividends, HO will be interested in more details of your business and profitable trading).
Sorry every one if I am off the immigration topic now.....MACY when you go to your accountant ask/do these following things
Get an idea of your sale / profit for next year (VAT point of view and better tax planning)
Discuss all three options with him (Sole trader and TLD salary and dividend option). Mostly first appointment is free however some could charge you 25/50 pounds for an hour consultancy. Once you/your business can prove the profit of 20K home office will be happy with any option. An accountant on borad at the early stages of business will make sure that you have all necessary documents (e.g payslips, P60, tax returns, dividend papers etc). Always go to ACCA or ICAEW accountant. Do not go to a firm more than 2 partners (For small business they could be very expensive). For payslips and dividends paper work, you can go to your local bookkeeper/payroll service prover and they may do it for you as little as 10 pound per month.
Before meeting with accountant, it also worth to read Tier 1 guidance notes to get fimilar what support documents you need to support your case. Best Wishes