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Should you be limited or self employed?

Limited Company or Self Employed?

Tax Benefits of Being a Limited Company 2012-13

Dis-advantages

Comparison for Different Profit Levels - 1 self employed person (no other earnings assumed)

Profit Self Employed Tax Ltd Company Tax Our View
£10,000 £732 £498 Stay self employed
£15,000 £2,182 £1,498 Stay self employed
£20,000 £3,632 £2,498 Consider change
£25,000 £5,082 £3,498 Change
£30,000 £6,532 £4,498 Change

Comparison for Different Profit Levels - 2 equal partners involved (no other earnings assumed)

Profit Self Employed Tax Ltd Company Tax Our View
£10,000 £275 £0 Stay self employed
£15,000 £275 £3 Stay self employed
£20,000 £1,465 £894 Stay self employed
£25,000 £2,915 £1,894 Stay self employed
£30,000 £4,365 £2,894 Change

Our Summary View

There are other non financial factors to consider for example reputation and limited liability.

However on the financial factors we recommend looking at a limited company structure to save tax when you are confident that 12 months of profits will exceed £21,000 for sole traders + £28,000 for partnerships with 2 partners. We recommend that you need to gain by a clear £600-700 minimum after extra fees (ie tax saved to be £1,250+ to incorporate). If you have other income then we need to look at the factors involved.

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