Self Employed - Should I become a limited Company

B

Ben

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Mr. Ben has been self employed for the past 2 and a half years.
He is thinking of becoming a limited company as the tax is supposed to be lower as well the extraordinary fact that the company can give an executive director a pension contribution of one and a half times their salary.
What are the pro's and con's?
His 'self-employed' earnings are €30-€35k per year.
 
I am also self employed but have stayed as a sole trader. I'm pretty sure that in total (when you include corporate tax and salary tax) sole trader tax is less. Being a limited company has pension advantages and mileage advantages if you drive a lot. Otherwise, unless your business owns property, I was advised to remain as a sole trader as the liable advantages of being a limited liability company aren't as potent as they once were. A lot depends on what type of business though.
 
as well the extraordinary fact that the company can give an executive director a pension contribution of one and a half times their salary.
Click to expand...
Can anyone confirm that this is the case? Who limits it to this amount/ allows this amount?
Thanks.
 
Hi Ben,

Try searching the forum for [broken link removed] or sole trader and you will get plenty of hits.

Look out for posts from who makes some very helpful observations.

Finally, what ever your decision make sure to get independent, professional advice from an accountant who is expert in the area.

aj
 
Just a word of warning, some mortage protection policies don't pay out if you are out of work and self employed but will if you set up a limited company and the company liquidates due to no work. Check out your policy.
 
ajapale said:
Hi Ben,

Try searching the forum for [broken link removed] or sole trader and you will get plenty of hits.

Look out for posts from who makes some very helpful observations.

Finally, what ever your decision make sure to get independent, professional advice from an accountant who is expert in the area.

aj
Click to expand...

Just a word of warning, some accountants seem to want to steer their clients the route which will enable them to charge them the maximum fees
( e.g. auditing of limited company etc )
 
rabbit said:
Just a word of warning, some accountants seem to want to steer their clients the route which will enable them to charge them the maximum fees
( e.g. auditing of limited company etc )
Click to expand...

In most circumstances where people are wondering which route to take the size of the business is likely to be under the audit exemption threshold so this will not be that great a factor, there may be a few bits of additional fee generating work they can get out of the CRO compliance requirements but its not as significant as getting audit fees.
 
Thanks Wollie,
Very informative. How does it work in practice. What if you end up providing yourself with an income above the 2/3 - or how do they prevent you from putting this much aside? presumably "they" are the revenue? Do you need to get pre-approval? What happens if salary varies greatly year on year depending on profits?
 
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