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Where Taxpayers and Advisers Meet

Using sole trader allowance before setting up Ltd company?

QuantFox
Posts:1
Joined:Wed Jan 18, 2023 3:32 pm
Using sole trader allowance before setting up Ltd company?

Postby QuantFox » Wed Jan 18, 2023 3:35 pm

Hi all,

I’m about to begin some freelance work, and I’m wondering if it is legal for me to do the first £1000 as a sole trader (therefore taking advantage of the sole trader allowance) and once I reach £1000, set up a Ltd company and pay corporation tax on anything over the initial £1000?

If so, is it fine for me to use the same bank account for the initial £1000, as well as after registering as a Ltd company?

bd6759
Posts:4239
Joined:Sat Feb 01, 2014 3:26 pm

Re: Using sole trader allowance before setting up Ltd company?

Postby bd6759 » Thu Jan 19, 2023 1:17 am

As long as the contracts are between you and your customer and a new contract is prepared between the company and the customer, that will be OK. Not very efficient but it will work.

wamstax
Posts:2018
Joined:Wed Aug 06, 2008 3:39 pm
Location:Operate Nationally but based in Aberdeen
Contact:

Re: Using sole trader allowance before setting up Ltd company?

Postby wamstax » Mon Feb 06, 2023 11:55 am

If you were going to undertake work as an individual and then a Ltd company it would be preferable and probably even required that you have different business bank accounts. BUT I assume that you have already taken advice as to whether a Ltd company is the way forward as if you need the money to live on and spend on personal living then you could end up with it not being financially efficient depending on the expected lifetime of the company and its contracts.
regards and hope this helps
http://www.wamstaxltd.com
Operates Nationally with competitive costs
and email and phone contact (mob 07751720507) can be obtained from websites


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