Costs of going from sole trader to Ltd

I'm thinking of going Ltd in the next few years, not to save tax or anything, but just to 'officialize' (probably not a word) my business in my mind and also in others thoughts. I will hopefully be trying to get a few more commercial contracts also, and I think that being Ltd is seen as more trustworthy by other companies etc.

At the moment I am still running my business as a part time thing, because I have to look after the kids before and after school, as my missus works full time in a school. This means that I am not made of money, and do my own accounting etc. I realise that getting an accountant to deal with the transition would be sensible as it means transferring all the assets of the business that I now own into the company, payroll for me as director and a few other things I probably don't know about.

Now, being from Yorkshire, I'm a tight wad, so I am wondering if anyone can give me an insight into how much I should expect to pay and accountant to take care of this? I will be contacting some soon, but I just want to be armed with an idea of the costs involved.

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  • PRO
    Our annual ltd company costs are £850-£1K pa. best to talk to an accountant as the rules and benefits have changed over the years and it looks like the government is removing any tax advantages over time between self employed and employed. From what I remember the accountant suggested at over 30K profits best to be in a ltd company but that was before dive taxes, removal of goodwill valuations etc. I wonder what’s coming this Wednesday to hit the self employed or micro business owner!
  • PRO
    Thanks for the info everyone. Some food for thought there.

    I guess I'm looking at around 1k per year then. These business costs do add up as you grow don't they, I just had to rent a storage container to keep all my kit in.
  • PRO

    Hi Graham,

    I'm taking my business limited in the coming days / week or two with the help of an accountancy firm. They don't know this yet but I'm going to outsource my HR their way too. The costs of the accounting is in line with the figures already stated. Team of 3 including myself at current so I'm looking to ship out as much office work as possible to keep me outside. 

    'Officalising' and streamlining some costs makes for good winter work. You'll have to give me a nudge next month if you want to know how I'm getting on and my own pros and cons. 

    Took on a unit this year too, £195pm onto the costs that other businesses may / may not pay for. Pricing really does have to increase to reflect that I'm running a very different business to 3-4 years ago! All I can do to make sure the customers keep taking it is to present the business as professionally as possible.  

    • PRO
      I just went back from Ltd to sole trader and resulted in more commercial work than ever
      Main reason for the change is the chancellors made my tax less efficient after the chancellors budget this year. My accountant said 15% of all his clients had been advised to revert
      Too many people going self employed at a lower tax level so chancellor has changed the level
      I'm no tech I just do as my accountant advises
      He claims postage
      Washing allowance for clothes etc etc
      Things I wouldn't dream of claiming for
      It makes no difference to be been Ltd or not but he always ensures my tax bills are low so he's worth every penny
      I wouldn't worry about the increase in costs for been Ltd as its all tax deductible
  • PRO

    My accountant has advised holding off going Ltd for the last few years. So have stayed sole trader with multi employees and vans. Can't be making enough money! Had one moment on liability when I wished I was limited, but increased PL insurance to cover said scenario.

    I'm not sure it makes a big difference either way. I guess if you're targeting mainly commercial contracts, then perhaps, but for domestic mainly, I've never seen any impact.

    Maybe in a year or so, will swap, but no rush at the moment. Do have a shell company set-up and waiting though.

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