Closing down LTD company to open sole trader due to cost?
Discussion
Hey Everyone,
As a side gig I do copywriting for various magazines. It's not (usually) overtaxing but it's becoming a question of effort v reward of late. On an average year my income from thisis maybe £5K (Historically as high as 20K but no longer as I have neither the will nor the motivation anymore) but there are no real overheads except one...
My accountant is taking £1500 p/a to draw up my personal tax (normal office based job) and company tax. I feel that is a little excessive as there is no debt, no stock, no finance, no assets and approx 10-15 transactions a year (payment are grouped together into batches and payed a month or so in arrears) and the mobile phone bill. As it stands I am paying my accountant 25% of the gross take for what he does.
I'm thinking it would be vastly simpler to just close it down and declare the end of year additional tax as the prevailing rate. This is doubly so since the tax raid to change the dividends one can now receive tax free.
Therefore, my questions essentially are:
1) Given that no tools or investment is needed other than laptop and memory, is there any reason to stay LTD?
2) How difficult is it to do your tax returns in such a scenario. I assume its as simple as filling out a form to say "Additional income" and detailing items in that?
Cheers
As a side gig I do copywriting for various magazines. It's not (usually) overtaxing but it's becoming a question of effort v reward of late. On an average year my income from thisis maybe £5K (Historically as high as 20K but no longer as I have neither the will nor the motivation anymore) but there are no real overheads except one...
My accountant is taking £1500 p/a to draw up my personal tax (normal office based job) and company tax. I feel that is a little excessive as there is no debt, no stock, no finance, no assets and approx 10-15 transactions a year (payment are grouped together into batches and payed a month or so in arrears) and the mobile phone bill. As it stands I am paying my accountant 25% of the gross take for what he does.
I'm thinking it would be vastly simpler to just close it down and declare the end of year additional tax as the prevailing rate. This is doubly so since the tax raid to change the dividends one can now receive tax free.
Therefore, my questions essentially are:
1) Given that no tools or investment is needed other than laptop and memory, is there any reason to stay LTD?
2) How difficult is it to do your tax returns in such a scenario. I assume its as simple as filling out a form to say "Additional income" and detailing items in that?
Cheers
For that level of profit I doubt it's worth trading as a limited company & you don't seem to be in a high risk industry where you could be liable for things going wrong. There's a separate section of the SA tax return you need to fil in but it wouldn't be onerous for your level of business.
I do my own tax return, sole trader.
I'm a bit lax when it comes to paperwork. I keep 3 piles on the go throughout the year:
Income receipts
Outgoings bills - parts, insurance, consumables, etc.
Mileage logs (on weekly postits) for house calls
In June, when I've received all the annual bank statements and pension P60s, I spend about 2 hours filling in the mileage log book and the accounts book, half an hour writing down all the numbers on a piece of paper and doing the sums, then another half hour online doing my tax return.
I like to do the sums (profit, tax owed, NI) on paper first as a reality/cross check before doing it online.
Quite simple for me, as I work on "cash basis", claim the basic WFH allowances, and the 45p per mile. I'm also not VAT registered.
I did have a chat with an accountant some time ago, in exchange for giving him a discount on a job. He couldn't think of anything I was missing out on, so no point in paying someone in my case.
It's pretty simple, just need to make sure you save all the paperwork, or fill out your books regularly if the piles get too big.
I'm a bit lax when it comes to paperwork. I keep 3 piles on the go throughout the year:
Income receipts
Outgoings bills - parts, insurance, consumables, etc.
Mileage logs (on weekly postits) for house calls
In June, when I've received all the annual bank statements and pension P60s, I spend about 2 hours filling in the mileage log book and the accounts book, half an hour writing down all the numbers on a piece of paper and doing the sums, then another half hour online doing my tax return.
I like to do the sums (profit, tax owed, NI) on paper first as a reality/cross check before doing it online.
Quite simple for me, as I work on "cash basis", claim the basic WFH allowances, and the 45p per mile. I'm also not VAT registered.
I did have a chat with an accountant some time ago, in exchange for giving him a discount on a job. He couldn't think of anything I was missing out on, so no point in paying someone in my case.
It's pretty simple, just need to make sure you save all the paperwork, or fill out your books regularly if the piles get too big.
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