Sole trader or limited company? - holistic therapy
Pinky1976 started this topic @ 16:14 on 21/01/2008
Hi there,
I'm looking to start up a holistic massage business soon, I'll probably start with on-site chair massage treatments, and later this year (when I qualify) I will focus more on table massage. Renting a room in an existing practice would be one of the options.
As a second source of income, I would also like to try to make some money via my website: via affiliate programs (massage products etc).
The (perhaps somewhat ambitious) objective is to make up for the loss of income I have incurred by going part-time in my current job, within a year. This loss of income is ~ 16k (per year, before tax)
On the longer term, if all goes well, I may start my own practice and employ (or form a partnership?) with other practioners/staff, and maybe even sell my very own holistic products online one day.
My question is: if all or part of this works out, I guess before long I would be better off having a limited company. So would it be advisable in my case, to already start a limited company straight away? Or should I start as a sole trader and see how things pan out first, and convert later?
Thanks in advance for any advise!
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RE: Sole trader or limited company? - holistic therapy
apr | 21/01/2008 07:56 PM
Hi Pinky,
There are pro's and con's of sole trader vs ltd co. Personal liability is diferrent as is taxation. How much money do you expect to make?
Andrew
------------------------
Andrew Ripley CAT ACMI MIMI
http://www.onestopbusinessadvisers.co.uk
One Stop Business Advisers Limited
Chartered Accountants
Tel: 07900 404 702
Fax: 0871 7143 259
RE: Sole trader or limited company? - holistic therapy
Pinky1976 | 22/01/2008 07:27 AM
Hi Andrew,
Thanks for your reply. I want to make up for that 16k as soon as possible. I shouldn't have a huge amount of costs, so I guess gross profit would have to be 18-20k.
And then I would like to be able to quit my current job altogether, so ideally another 10-12k on top of that at least at some point.
RE: Sole trader or limited company? - holistic therapy
Pinky1976 | 28/01/2008 03:36 PM
Can anyone else give me any advice?
Thanks!
RE: Sole trader or limited company? - holistic therapy
Pineway | 28/01/2008 04:17 PM
Hi
Due to you still being employed by another company of which you will pay tax from and you expect to earn at least £16,000 via your company then for tax reasons trading via a limited company might be a good option.
Why? Well for your part time job you pay tax via PAYE and you may use all your personal tax allowance.
Now on your Limited Company you can take dividends at £34,600 Tax free per year
Which saves you a lot of money in tax; however you will attract incorporation tax on any profits made.
Where if you are to do this via a partnership you would pay tax on the total income for both part time employment and your company.
RE: Sole trader or limited company? - holistic therapy
Pinky1976 | 01/02/2008 02:48 PM
Thanks for you replies. I've decided to see a couple of accountants to discuss this: I have the feeling that setting up an LTD might be a good ides.