Self-Employed People Can Save Money By Forming a Limited Company

Here is our first post on our new website. It took us quite a while to grasp the Internet thing. It’s obvious. But we’d better be late than sorry, so here we are – ready to take on the world of taxation by providing hard working people with professional tax advice and solutions.

If you haven’t already got an accountant then we can save you money. Period. A good tax advisor can save you on an average of £2,000-£5,000 per year, and that’s the starting point. The higher your turnover the bigger the saving will be.

Here is a quick non-partial advice that will save you money from year one. If you are self-employed and earn in excess of £32,000 per year you are paying more tax than you should. By being a person (as opposed to a limited company) you start paying the higher rate of tax (40%) the moment you go over the higher rate threshold.

If you use a limited company to run your small business then you don’t have to worry about paying 40% tax over £32k as long as you do not draw the money from the company account. There are ways of taking money out of your company without incurring the higher rate of tax and additional PAYE liabilities.

The savings you can enjoy in the long run, far outweigh the slightly higher charge to submit your corporation tax at the end of the financial year.

We will expand into the nitty-gritty of the above in our next post.

Until then – stay safe and enjoy life to the max.