Self Employment Vs Limited Company
Self Employment Vs Limited Company which is the best way to go? Well there are pros and cons to each. A Limited company means you will have to have all your accounts audited by an accountant which will cost you around £500. However there are substantial tax benefits from being a Limited company as you can save on paying National Insurance Class 4 contributions. Here are some examples:
If you earn £20,000 as a Ltd company you will pay £2,898 total tax, self employed you will pay £1,435 more of a total of £4334.
If you earn £30,000 as a Ltd company you will pay £4,798 total tax, self employed you will pay £2,535 more of a total of £7334.
If you earn £40,000.00 as a Ltd company you will pay £6,698.45 total tax, self employed you will pay £3,749 more of a total of £10448.
Above £40,000 you will look to save around £4,000 - £5,000 more.
Being a Ltd company also protects your personal assets should you business get into financial difficulty. If you’re starting out a capital is restricted and you expect to earn under £20,000 then it may worth sticking to being self employed and then move over to being a Ltd company when have more money available to you.