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Upgrading from "sole-trader" to "LTD"

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  • 18-11-2013 12:12pm
    #1
    Ctrl Alt Del
    Registered Users Posts: 357 ✭✭


    Hello,

    Been trading as sole -trader for almost 3 years.
    I work in IT with minimum or none at all exposure to creditors or debtors,so financial risks are near to zero as a LTD compared to a sole-trader.

    I guess is time to upgrade to LTD due to :

    -better financial outcome
    -better cash flow management
    -proper wage's system,taxes, PRSI
    -better employment type as working for a company rather than for myself !?
    -better bank relation as LTD rather than sole-trader

    The long term is to get a second partner/staff something and move up the ladder !

    Anyone with advise on why i should do it or not,please !?

    Thanks in advance.


Comments

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    #2
    Graham
    Moderators, Society & Culture Moderators Posts: 17,642 Mod ✭✭✭✭Graham


    Your accountant should probably be you first stop, he'll be able to tell you in financial terms whether it's a good idea or not.


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    #3
    CompanyBureau
    Registered Users Posts: 93 ✭✭CompanyBureau


    Have a look at our blog article on this:

    http://www.companyformations.ie/blog/sole-trader-v-limited-company/


  • Options
    #4
    srsly78
    Registered Users Posts: 7,157 ✭✭✭srsly78


    OP some of your imagined reasons are a bit wild.

    Bank account: Business banking is a complete ripoff and will probably cost you a fortune (~e500/year), and cause lots of headaches (need 2 signatures), along with abysmal online facilities. Yes - worse service that what you get from a normal personal current account. There are a few threads on this forum with lots of complaints, and some subtle suggestions that you should use a normal personal account for your "personal expenses" relating to the limited company. Note that the banks will not let you open another personal current account if you mention a limited company...

    Employment type - erm why does this make any difference? Either way you are still self-employed. Administering a limited company just an extra headache with additional accountancy fees.

    Cash flow management - Ok it's better than being a sole trader, but there are additional restrictions depending on the type of business you operate. "Service companies" pay huge corp tax (45% I think). This means any money you try to "keep in the kitty" gets hammered. Even a normal company will pay 15%.


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    #5
    ImDave
    Registered Users Posts: 1,096 ✭✭✭ImDave


    One benefit from personal experience in this sector, is that you may be better being a limited company than a sole trader when it comes to new business acquisition, such as applying for tenders etc. It can sometimes inspire greater faith within a client organisation being a limited company as opposed to a sole trader.

    The banking side of things, as sysly78 points out, isn't much better, possibly worse with some banks. Only advantage may be if you are applying for credit in some shape or form, but with personal guarantee's being asked in many cases, it doesn't make much difference anymore.

    There may be greater advantages from a tax perspective, but you need to seek the advice of an accountant or tax advisor for the best information for your personal situation on this.


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