The best business entity for the UK?

[cmiddlebrook]

In chapter 22 MJ talks about business entities (S-Corp, C-Corp & LLC) that protect your assets and allow you to draw income before tax and tells of the horror of sole proprietorship.

I have been a sole proprietor for 7 years :/

Do we have equivalents in the UK? Many years ago in one of my early business I had a Limited Company which had asset protection but I actually can't remember how the salary stuff worked.

Anywhere I can go to read up on this stuff for the UK so I can make an informed choice?

 

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[Gruby Phil]

https://www.gov.uk/browse/business/limited-company

 

[cmiddlebrook]

Is the Ltd Company still the best route for those in the UK then? Or are there other choices to consider like in the US?

 

[Gruby Phil]

I don't know your situation (what your company would do etc.) so I don't want to give you wrong direction. Generally cost of running LTD is higher then self-employment (and you have more responsibilities as well) but I personally will move my business to UK this year and LTD is what I will end up with. Here is short comparison between limited company and self-employment:
http://ihorizon.co.uk/self-employed-limited-company/
http://www.freelanceuk.com/running_business/self_employed_or_limited_company.shtml

 

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[cmiddlebrook]

Ok thanks, I shall have a read through those. Are they the only two options for the UK then?

 

[Gruby Phil]

No All options- here you go:
https://www.gov.uk/business-legal-structures/overview

 

[cmiddlebrook]

Ahh awesome! Thanks for your help

 

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[Dread]

Yes, Ltd company is your best choice. There are other options but Ltd is the standard and best choice in the UK. Its much simpler over here than it is in the US. It costs under £25 to register a new company online and you get digital documents by email and it takes generally just a few hours.

 

[tafy]

Unless your making more than 50k a year profit then its easier to go Sole Prop and cheaper, if your making more than that then go Ltd company so the tax rate will only be 20%. Then you have to take your earning out as dividends or wages whatever is best for the tax.

 

[Dread]

In reply to tafy's post, I'd always advise against going Sole Trader, you are personally liable for everything you do, which isnt a good place to be. It also makes it more difficult to keep your business and personal expenses separate.

If you setup a Ltd company, spend £10k trying to make the business work, the biz rings up an additional £10k in debts to suppliers, taxes, etc and you then decide its not working, you shut the company down and walk away. If you were a sole trader, you would still be liable for that £10k and your personal credit would be killed.

Always setup a Ltd company, it protects you, costs very little and only takes about 30min to do online, and you'll get your documents in hours. Its very simple and cheap and you'll be protected.

 

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[tafy]

Yep Ltd company is great if it all blows up with lots of debt, it will cost a couple of hundred more per year for the accountant but its worth it for the personal protection.

 

[GlobalWealth]

Obviously I'm a bit biased (I'm on the offshore business), but if your business has no physical connection to the UK - no office, employees, etc - then you can easily move the company offshore and save yourself a lot of money on tax, simplify your reporting, and virtually eliminate your liability.