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Now an Ltd, should I start a fresh FAC account?
I'm now a Limited Company with a separate set of bank accounts, etc, but have been a sole trader for years. Presuumably I should start with a fresh FAC account for this new legal entity? What are the advantages/disadvantages to a fresh account.
I’m wondering what to do
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Inappropriate?Ah, this answer (How can I change my Company Type from Sole Trader to Limited?) seems to provide the answer.
I’m thinking I should have looked harder for an existing answer
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Inappropriate?A limited company has different expense headings (your drawings as a sole trader will be salary and/or dividends [this is a simplification}) but you will definitely need to use the FAC limited company format.
Make sure that you maximise your tax savings (taking into account IR35 and "income shifting) by choosing the best mix of salary and dividends and possibly repayment of money introduced into the company.
Timing is important when "paying" yourself as is the method of payment especially if you are claiming Tax Credits.
I hope this helps.
I’m passionate about small business taxation!
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Inappropriate?Simon,
Glad you found your answer.
We still have work to do on bringing the profit you made as a sole trader into your personal Income Tax calculation on your Ltd Co account, but it's definitely on our to-do list.
EMPLOYEE
