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Limited vs sole trader

  • 03-11-2017 12:25am
    #1
    Dtp1979
    Registered Users, Registered Users 2 Posts: 12,840 ✭✭✭✭


    If this is posted in the wrong place then please move mods.
    My accountant has recommended I go limited. I’m currently a sole trader tradesman.
    I just want to weigh the pros and cons of each, and which is more financially beneficial to me. My accountant is old, and only knows one language...accounting. I’m not an accountant and don’t understand accounting terms. I need this to be explained in layman’s terms. Please be patient :)


Comments

  • #2
    L.Jenkins
    Moderators, Computer Games Moderators, Technology & Internet Moderators Posts: 19,241 Mod ✭✭✭✭L.Jenkins


    Running an LTD would offer you more protection should the business run into a spot or bad luck, but on the down side, you'd have filing obligations with Revenue and the CRO. A small price to pay to cover your own in the unlikely event of a down turn.


  • #3
    Dtp1979
    Registered Users, Registered Users 2 Posts: 12,840 ✭✭✭✭Dtp1979


    L.Jenkins wrote: »
    Running an LTD would offer you more protection should the business run into a spot or bad luck, but on the down side, you'd have filing obligations with Revenue and the CRO. A small price to pay to cover your own in the unlikely event of a down turn.

    Financially speaking which is better?


  • #4
    srsly78
    Registered Users, Registered Users 2 Posts: 7,157 ✭✭✭srsly78


    How long is a piece of string? You pay accountant for advice, get him to explain things more clearly to you. There are pros and cons to both, so it really depends.


  • #5
    L.Jenkins
    Moderators, Computer Games Moderators, Technology & Internet Moderators Posts: 19,241 Mod ✭✭✭✭L.Jenkins


    Dtp1979 wrote: »
    Financially speaking which is better?

    From what I see, but it could be through rose tinted glasses, the ltd is better with respect to your take home pay. The expenses you can claim is higher and executive pensions are a bonus.


  • #6
    noelo
    Registered Users Posts: 239 ✭✭noelo


    L.Jenkins wrote: »
    Running an LTD would offer you more protection should the business run into a spot or bad luck, but on the down side, you'd have filing obligations with Revenue and the CRO. A small price to pay to cover your own in the unlikely event of a down turn.
    Recently payed a lot (A LOT) of income tax as a sole trader this and last year, somehow wish we went Ltd earlier now the money is gone. Perhaps if we were limited sooner we would still have that money to invest in more jobs. Probably better to go Ltd in my opinion if your trying to build a business company.


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  • #7
    L.Jenkins
    Moderators, Computer Games Moderators, Technology & Internet Moderators Posts: 19,241 Mod ✭✭✭✭L.Jenkins


    noelo wrote: »
    Recently payed a lot (A LOT) of income tax as a sole trader this and last year, somehow wish we went Ltd earlier now the money is gone. Perhaps if we were limited sooner we would still have that money to invest in more jobs. Probably better to go Ltd in my opinion if your trying to build a business company.

    Did you set up the LTD in the end?


  • #8
    thegolfer
    Registered Users, Registered Users 2 Posts: 346 ✭✭thegolfer


    Every situation is different, and assessment of the business is key.

    What are the cash flow requirements of the business, what are the cash requirements of the owners.

    Is the business in a high-risk litigious sector.

    Yes LTD over partnership does have higher costs, however as previously stated more protection for you rests in limited form.

    LTD provides for better tax planning and retirement options in directors pension plans and also passing on to future successors.

    Just because the LTD may cost you sat € 1500 more than a sole trader structure, may, in fact, save you tens of thousands annually.

    Get your accountant to do a cost-benefit analysis going forward. LTD V Soletrader This should be very simple, based on this year or last years business figures.

    If he is worth his fee then he will prove it to you with a pen and paper exercise and demonstrate the protection and savings you can make.


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