Ltd Company or Partnership?

Miss OMMC

Just to give an overview of the business setup:

Husband is a Sole trader

Turnover 2019 = 316,000
Net Profits = 135,000

Employees = me (married since Oct 2019) Salary = 35000

Now that we're married I believe I lose PRSI and PAYE tax credit.

The business is online sales of products that we make. We get paid at the time of sale. The only debt is a small business loan approx 20,000

We have no plans to employ anyone else. We may increase product range which will increase sales but not by any major amount. We're happy to maintain current income. Levels of taxation are an issue however.

Can our taxes be reduced by changing to partnership or Ltd company? We're reluctant to go Ltd as we have such a simple set up that we don't
want things to be unnecessarily complicated. However, for tax purposes Ltd may be a better way to go.

We're going to speak with our accountant but any additional advice would be appreciated.

davindub

Miss OMMC wrote: »

Just to give an overview of the business setup:

Husband is a Sole trader

Turnover 2019 = 316,000
Net Profits = 135,000

Employees = me (married since Oct 2019) Salary = 35000

Now that we're married I believe I lose PRSI and PAYE tax credit.

The business is online sales of products that we make. We get paid at the time of sale. The only debt is a small business loan approx 20,000

We have no plans to employ anyone else. We may increase product range which will increase sales but not by any major amount. We're happy to maintain current income. Levels of taxation are an issue however.

Can our taxes be reduced by changing to partnership or Ltd company? We're reluctant to go Ltd as we have such a simple set up that we don't
want things to be unnecessarily complicated. However, for tax purposes Ltd may be a better way to go.

We're going to speak with our accountant but any additional advice would be appreciated.

You'll need to speak to an accountant but quick answer is, if you intend to draw a similar salary to taxable profit, no benefit in ltd.

If you want to retain cash in the business and pension benefits for directors, probably ltd has tax benefits. But you will also need to plan for Cgt/ stamp duty on entry and exit from the Ltd.

mrslancaster

Years ago I was told that it you sell any product or service & your business could be sued, its more risky being a sole trader. If a sole trader is sued they could lose a lot but if Ltd then it's the company that's liable.

Not that anyone expects to be sued but it happens.

JohnRock

If you're only taking a salary of €35,000 then it would make sense to start a limited company as you can keep more of your funds in the company and invest in other opportunities in the future. More info here on the benefits of a limited company but it's v a sole trader not a partnership.

pedroeibar1

Use the search function or just look at posts just a few days old!