Sole Trader - Ltd Co. Advice

I am currently working on a long term contract providing professional services & operating as a sole trader. My turnover is 130K euro ex vat per year & the only major expense that I have is a lease on a commercial jeep which is approx 10K per year. Is there any advantage of me changing from a sole trader to a ltd. company. I am aware of the Ltd. liability that everyone mentions but I invoice weekly & dont have any major expenses or "more than likely" would never be sued due to the nature of my work. I would like to hear any other advantages or disadvantages as to whether I should change my status or not.

Thanks in advance.

Limited liability is a non-issue because company law now means that it is of little use to company directors in protecting themselves against being personally liable for company debts. If you are the kind of person who is reasonably well-organised and who can cope with deadlines, and if you have access to good accountancy and tax advice then you should seriously consider forming a company. Otherwise you might find that the additional responsibiliies outweigh the benefits of doing so. Talk to your professional advisor before making a final decision either way.

Thanks for quick reply, I would be consider myself very well organised so would not be too worried about the admin side but could you expand on the ......." you should seriously consider forming a company ". ?

Form a company if it suits you and if there are advantages tax-wise for you.. Only you (and your advisor) can determine this.

Company:
- tax at 12.5%;
- can pay civil service rate exps;
- can structure a self directed trust for pensions;
- extractions to you are limited and generally incur PAYE/PRSI including employers element;
- depending on other income this could amount to increased tax if you in effect had to extract everything as you would have employers prsi + employee prsi;
- ubiq is simply saying 'it depends' and I concur with that.

There is really no advantage in a limited company, other than the ability to put more money into your pension.

The 12.5% tax rate is a mirage. Your effective tax rate will be the same or higher. It will not be lower.

I have seen many well organized people caught by the onerous reporting requirements.

Stay as you are until you have lots of employees or you have a need for huge amounts of working capital or fixed assets in the company.

Brendan

Depending on the industry you work in you may be "forced" down the limited company route. Many IT contractors have to set themselves up as a limited company in order to work through agencies.

>extractions to you are limited and generally incur PAYE/PRSI including employers >element;

PRSI would only be Employee PRSI. Self employed people including PRoprietary Director's of Limited Companies don't pay Employers PRSI.

-Rd