Is it worth going LTD?

[Octopus]

That seems a bit of an envious post Murdoch, unlike you.

Believe me, if somebody said save 14.5 % of my salary for a guaranteed index linked pension I would sign on the dotted line immediately.

The current contributions don't cover the existing pensions...... So the burden is taken by the tax payers

 

[Midwest]

Believe me, if somebody said save 14.5 % of my salary for a guaranteed index linked pension I would sign on the dotted line immediately.

The current contributions don't cover the existing pensions...... So the burden is taken by the tax payers

You can, just become a police officer. Although I think Theresa May got rid of that particular pay condition a few years ago, so you might have missed the boat.

 

[rolyberkin]

That's gross income not what you declare!

 

[Andy C]

Believe me, if somebody said save 14.5 % of my salary for a guaranteed index linked pension I would sign on the dotted line immediately.

The current contributions don't cover the existing pensions...... So the burden is taken by the tax payers

I do think I made the right decision in 1985 to join the bobbies as the building game then was on its knees.

Murdoch is correct, with Police and Fire Service pensions. The current members pay the pensions of the retired and any difference is taken up by HMCG. Thats why they have recently 2015 changed the pension scheme dramatically for new entrants so the pension deal is not as good as it was. That is one reason why morale has dropped because it used to be 30 years or 55 now its 35 years or 65. The HMCG are trying to force bobbies to retire early and therefore their pension will be deferred to 65.

Index linking is only when you reach the retirement age e.g. 55 or 65. I retired at 53.5 so don't get index linked yet. However index linking lately has meant no increase.

the pension contributions are taken from the gross salary.

 

[FatAlan]

Thought you guys were called Busies up there?

 

[Andy C]

Thought you guys were called Busies up there?

Bizzies, bobbies, rozzers, etc and a few more less desirable phrases should we say. It did pay to have a thick skin. It made it worthwhile when someone appreciated you for the effort you put in, but sadly as with most occupations people are more eager to complain than praise. But thats life.

 

[FatAlan]

I actually prefer the more insulting ones. Badge of honour.

 

[akwoody2]

Hi akwoody2,

I went straight for limited company, but I did get advice from a couple of accountants before I finalised that decision.

The key drivers for limited were the separation of your business and personal financial affairs and the very obvious tax benefits. I was also advised (by the accountants, some potential customers and friends who run their own businesses) that a limited company has an improved image amongst customers simply because it's a traceable financial entity.

If you're looking to do commercial/industrial, you may also find that some companies won't deal with you if you're a sole trader. This is not based on my experience, it was advice I received from people in business (various forms).

There is additional baggage with a limited company in that you are required to submit accounts etc. every year, but a good accountant should handle that for you (at least that's why I'm paying an accountant because if all I had to do was keep track of money, I can do that easily enough myself with Excel). The forming of the company is easy enough, there are loads of company formation places on the internet and they all offer the same sorts of deals. Just be aware of things like registered address. To try and keep my home address off the public register (as much as possible) I use the formation company's registered office service, the problem with that is, my NAPIT assessor nearly ended up at the registered address in London (and when I first got it, TrustMark stated I was in London) as they specifically ask for the Registered Office Address. Total cost was about £150 for setting up the company (yes, you can get it cheaper, but I went for the full package with all the mail redirecting etc. because I wasn't sure about how it all worked). There is a potential hiccup in using the registered office of your formation company... the company registers are supposed to be available for inspection at the registered office. Companies house provides a means of specifying a different inspection address.

Oh and don't be surprised if you get asked to record specific things in your company registers. I had to have a board meeting with myself to approve my decision to use a particular bank (their application process specifically required me to record this decision - with specific wording - in the board meeting minutes and vote on it... was great until the end when to my surprise there was one vote for and one vote against ). Other things that have to go in the registers are things like share holding changes. So if you make your other half a director (obviously keeping the controlling majority yourself), then this has to be recorded and I think there is a financial transaction that has to take place. This is where it gets really murky and an accountant is required to advise on this sort of thing.

One of the downsides comes when you start getting setup with credit accounts with suppliers. Your newly formed business won't have any credit history where as you would as a sole trader because it's you (this is my understanding of it, anyone who knows better, feel free to correct it). This could be a problem although thus far it's not proven so for me. The only ones who were a bit picky were TradeUK who insisted on a direct debit payment approach rather than the usual invoice and pay.

Once the business is setup, you'll need to get a tax reference for it (and you'll end up making your accountant an agent for you so they can talk to HMRC on your behalf) and as you'll be employing yourself as a director, you need to register as an employer if memory serves. Don't worry about being an 'employer'. There is a lot of legislation around being an employer but because it's only you, you don't have to have all the H&S processes and such like in place and you don't have to worry about employers liability insurance (you can hardly sue yourself for negligence). You will also receive a personal tax reference if you haven't already got one (sounds like you may have) as once you are a director of a business, that's it, tax return hell time. So I setup in 2016, my first tax return will be due at the end of January I think, 2018. You may not be aware as well (I wasn't and I was shocked when I heard this given how often you hear about people and companies running up massive tax bills), that based on your tax return for a particular year (I think this is for the company tax only, but I could be wrong), HMRC will send you a bill and expect you to pre-pay an amount towards your next years tax bill.

It's highly likely you'll have been spending your own cash buying tools and equipment etc. before the business started trading. I've been advised that you can claim this back from the business as expenses, so keep full records. Same goes for training and travel. If you're using a vehicle you own, keep a full record of your business related journeys (mileage, to/from/date - again, this can include setup related activities before the business is trading) and then you can claim for your fuel, I think it's about 40p/mile for the first 10K (you can find details of the HMRC website).

And definitely, talk to more than one accountant. I talked to a firm and a local chap (who is fully registered). I received slightly differing advice from both and whilst he is slightly more expensive, he's going to be doing more for me (as all they would do was provide telephone help and take a bunch of spreadsheets from me at the year end and churn those to produce my books - which is no good if you cock it up early on and then have to try and figure out what actually went on 12 months down the line).

Sorry if you know this stuff, just figured I'd post all I can remember of starting up the business in case it's useful for others, but the overriding advice has to be talk to an accountant.

Top post, its a huge amount of help! Thanks.

 

[Octopus]

I retired at 53.5 so don't get index linked yet.

the pension contributions are taken from the gross salary.

So back to my estimate of the pension I needed, was based on me being 66 years old - so for me to retire on £21K at 53 years old would require a pension pot of about £1 million......

 

[Andy C]

So back to my estimate of the pension I needed, was based on me being 66 years old - so for me to retire on £21K at 53 years old would require a pension pot of about £1 million......

Yeah I don't deny I made the right choice to do my time as a bobby. I also chose to stay in the pension when others were leaving. Murdock you are quite right for a private pension particularly during times of austerity you would have needed probably well in excess of 500K to get a pension of 21.5K.

I made the right decision although the job does takes its toll on physical and mental health of most bobbies in some ways unless they are lucky enough (i didn't want it) to work 9 to 5 in boring admin or training type post. That wasn't for me so I stayed from line.

 

[Midwest]

So back to my estimate of the pension I needed, was based on me being 66 years old - so for me to retire on £21K at 53 years old would require a pension pot of about £1 million......

I don't quite understand your post Murdoch. I don't think anybody is arguing that a police pension or any of the final salary pensions is not generous, although I not quite sure what pension calculator you using and question those figures.

The police and other public sector workers receive these good pensions as part their pay & conditions, to attract people into those employments. With poor pay & conditions, no one would join the police service and corruption would increase, as we had in the 50's - 70's.

They are other employments where the employer contributes towards the employee's pension contributions. My brother took early retirement from a bank, and received a healthy pension lump sum of £100,000, a pension to which he made no contribution.

It is up to each individual to plan for their retirement. I know of some builders and others, who have been fortunate enough and able to purchase properties, with buy to let mortgages. They stand to be figurative millionaires when they retire. Yet it is these people who are preventing first time buyers getting their foot on the ladders.

 

[Octopus]

, although I not quite sure what pension calculator you using and question those figures.

Go and talk to an IFA ...... telling them you want to know how much you need in a money purchase "pot" to be able to retire at 53, with £21K index linked ...... then see what they say... The longer you take a pension, the bigger the pot......

 

[Andy C]

Although we have gone off topic thanks to me, one big fear of mine is our children. It must be so hard to live just off a state old age pension. I just encourage any young person that can to plan for the future as soon as you are able soy can live comfortably when you retire at whatever age that be in the future.

 

[Midwest]

Go and talk to an IFA ...... telling them you want to know how much you need in a money purchase "pot" to be able to retire at 53, with £21K index linked ...... then see what they say... The longer you take a pension, the bigger the pot......

But that's just you contributing to your pension, and not taking into account the employers contribution, as in Andy C case. One of the downfalls of working for yourself.

Any how, I go back to my point, why shouldn't public sector workers, not have good pensions?

 

[rolyberkin]

Getting back to the original post, I had registered a company merely to hold the company name. I have been trading as a sole trader with the Ltd company dormant in the background. Have now taken advice from two accountant friends who have both advised me to go down the Ltd route. I have also looked into and taken advice on whether to do my own books or to speak to an accountant and the advice from both has been to use an accountant in the first instance as although it is possible to DIY the books of a ltd company it is not for the feint hearted. For what it is worth.