Hello.
I am about to set up a trading business to run part-time alongside my full-time job. I will have separate bank accounts and plan to keep any profit within the business rather than use it for personal expenditure.
It seems like it would be better to set up a limited company than be a sole trader, given that my full-time job will take all my tax allowances. As I understand it, if I keep earned profits within the capital of the limited company, I am only liable for corporation tax and even then, only above a certain threshold; I would thus only be liable to pay income tax on the money I 'withdraw' from the business as dividends for personal expenditure (aka the Amazon model). Whereas if I act as a sole trader, profits come under personal income, so there is no tax-free element (because my full-time job will have already taken up the tax-free allowance).
Therefore, I hope someone can confirm/deny my understanding that it is better for me to set up a limited company than a sole tradership. TIA.
I am about to set up a trading business to run part-time alongside my full-time job. I will have separate bank accounts and plan to keep any profit within the business rather than use it for personal expenditure.
It seems like it would be better to set up a limited company than be a sole trader, given that my full-time job will take all my tax allowances. As I understand it, if I keep earned profits within the capital of the limited company, I am only liable for corporation tax and even then, only above a certain threshold; I would thus only be liable to pay income tax on the money I 'withdraw' from the business as dividends for personal expenditure (aka the Amazon model). Whereas if I act as a sole trader, profits come under personal income, so there is no tax-free element (because my full-time job will have already taken up the tax-free allowance).
Therefore, I hope someone can confirm/deny my understanding that it is better for me to set up a limited company than a sole tradership. TIA.