Hi all, firstly I want to thank all our clients for their business in April. So far, we have managed to process over 400 CIS Tax Returns and as I write this blog, 75% have already paid out!
We welcome 62 new customers in April alone, and I thank our current clients as nearly half of these were recommended to us! This is particularly pleasing for myself and the team as it makes all the hard work worth it and means we are doing something right.
Upon review, it appears that overall Construction Industry Scheme Registered sole traders are earning up to 15% more this year than last and because of this, I want to talk about the option of becoming a limited company which at a certain level of income, becomes a bit of a no-brainer. It sounds scary I know, but with our help, the only difference you’ll notice is the extra money you have in your back pocket!
So here, in brief, are our Top 3 benefits of becoming a limited company:
1. More Take Home Pay
The main advantage of running your business as a limited company is that you are likely to pay less personal tax than a sole trader. If you are the director and shareholder of a limited company, you may choose to take a small salary and draw most of your income in the form of dividends.
By doing this you can minimise the amount of National Insurance Contributions (NICs) you have to pay because limited company dividends are taxed separately, and are not subject to NICs.
As a sole trader, your entire income is subject to NIC rules. Running your business as a limited company could, therefore, help you to take home more of your earnings.
2. Limited Liability if it goes wrong
Running your business as a limited company means you have the reassurance of ‘limited liability’. This means you will not be personally liable for any financial losses made by your business. A limited company can, therefore, give you added protection should things go wrong.
Those running a business as self-employed do not enjoy such protection from financial claims if things go wrong with their business.
3. You look more professional
In some businesses and industries, having a limited company can provide a more professional image. If you are doing business with larger companies, you may find that they prefer to deal only with limited companies rather than sole traders or partnerships.
Over the next few weeks, I will be getting in touch with a number of our clients, who I believe will really benefit from becoming a limited company and as part of our discussions will demonstrate the savings they could make by taking the leap.
As part of our Limited Company service, we would be happy to produce a free tailored quote to demonstrate how much you’d save based on last year’s earnings.
Gaz the Tax