Advantages of setting up a limited company?

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clonjess

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Hi, I am currently trading as a sole trader but just last week I got a nasty tax bill and I was wondering is it better to trade under a limited company to minimise tax? I am a mechanical engineer..My accountant was rather vague and said there was no advantage to going ltd..After speaking with other contractors though Im not too sure if I believe him...they dont seem to be paying half of the tax I have to pay and they are on the same rate. I think my accountant dosent want the hassle of a limited company. Can anybody give me any reasons why I should go ltd or even advice on how to reduce my tax bill going forward...Many thanks, Jess
 
This topic has been covered many times here - try using the search facility, the 3rd button from the right.
 
Your accountant is probably correct. Being a professional if you retained profits in your company you would also be charged a surcharge on the profits if these had not been distributed within 18 months of your accounting year end. Companies don't in general save you tax they defer the tax and indeed you may be subject to double tax - corporation tax followed by income tax if these profits are distributed in subsequent years. Listening to stories in the canteen or the cafe is dangerous. A little knowledge is dangerous.
 
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