* Boost their directors' pensions with it;
I think that the tax disadvantages of a company car outweigh any advantages.* Grant themselves company cars;
As I said : If you intend to retain substantial profits to invest in the current assets of the company such as stocks or debtors, then it may be right to leave profits in the company as they are taxed at the lower rate.* Repay starting capital injected via directors' loans;
* Receive director's loans;
You are wrong. It would be a very foolish director to take a loan from a company.Correct me if I am wrong
Such as? A company can pay €500 in gift vouchers each year or something like that? Maybe so, but absolutely not a material consideration.* Obtain benefits-in-kind (applicable to all employees of a small staff company)
Correct me if I am wrong but it would seem to me that they can also buy a property in the company name and use it for their own purposes as long as those purposes somehow benefit the company.
Self employed people aren't allowed claim mileage. They have to claim expenses from the actual journeys however this does extend to cover maintenance, insurance etc on a pro-rata basis.I think that the tax disadvantages of a company car outweigh any advantages.
I presume a self-employed person can charge mileage for the use of his car.
A small disadvantage is that the annual returns are available for the public to see in the Companies Office. As a small company, this shouldn't matter as all they will see is your balance sheet.
So I feel this is an unnecessary caution as the abridged accounts would not show much commercial detail like turnover, operating margins, expenses, etc.
Change to a limited company when any of the following happens
- You take on more than two employees
- You become very profitable and want to stuff your pension fund
- Your main customer insists on it
Self employed people aren't allowed claim mileage. They have to claim expenses from the actual journeys however this does extend to cover maintenance, insurance etc on a pro-rata basis.
The Ltd co is making a capital gain on an asset but, as it's not development land, the gain is taxed at the corporation tax rate of 12.5% rather than 33% for CGT.
I doubt if this somewhat sweeping statement is even remotely true, by the way.Yet many accountants advise people starting up to go for a sole tradership all times.
I doubt if this somewhat sweeping statement is even remotely true, by the way.Yet many accountants advise people starting up to go for a sole tradership all times.
In all seriousness, how do you think we advise, except on the basis of the facts of each situation and the priorities and profile of the customer and their business?Then please elaborate on how you and others you observe advise.
In short, "the advantages of option 1 are a, b and c. the drawbacks are d, e and f. The benefits of option 2 are g, h and i. Its drawbacks are j, k and l. You will need to decide which option is best based on your own circumstances. The decision is yours. Beware of any advisor who seeks to make that decision for you."Imagine you were asked (and paid, of course) to speak to a gathering of wannabe small businesspeople.
What would you say to them on their business structure and why ?
Not always foolish, Brendan. If the purchase is highly leveraged, buying it through a trading company means that the company only has to pay 12.5% Corporation Tax on the earnings it must make to finance it, while an individual will have to pay 50%+ on the same income.Yes, a company can buy a property but it would be very foolish to do so. You will be back on Askaboutmoney in 10 years saying "I have a property in the company. How can I get it out without paying CGT twice?"
In short, "the advantages of option 1 are a, b and c. the drawbacks are d, e and f. The benefits of option 2 are g, h and i. Its drawbacks are j, k and l. You will need to decide which option is best based on your own circumstances. The decision is yours. Beware of any advisor who seeks to make that decision for you."
Why would I want to do that? It's not up to me as advisor to illustrate or determine the balance of advantage. That's my customer's job.It would be less nebulous if actual common examples were used to illustrate the balance of advantage in different circumstances.
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