As a plumbing and heating engineer one of the first things you need to decide is whether to work as self-employed or to trade through your own limited company.
Reduce your tax bills
The self-employed route would require preparation of a tax return once a year to HMRC and although there are less accountancy and tax return requirements, this option does not provide the numerous benefits that come with running a limited company.
Going limited
Going limited is almost always more financially rewarding and engineers could take home 10-15% more of their income with the lower taxes and increased tax planning opportunities that are available.
Perhaps most importantly this option provides engineers with more protection as a limited company is a separate entity from its owners and as such offers financial protection against any claims made against it.
Cobia provide cost effective and hassle-free limited company solutions specifically designed for Plumbing and Heating Engineers and by providing you with a personal accountant, we ensure that running a limited company has never been easier.
We have a range of tailored packages to suit individual needs.
Benefits of going limited
Protect yourself – Your limited company is a separate legal entity from its owners and as such you are protected from financial liability should the company encounter any difficulty or claims made against it.
Reduce your tax bill – No National Insurance due on the payment of dividends hence more tax efficient (However from April 2016 this benefit is restricted to the first £5,000, after that tax is charged at 7.5% up to the basic threshold.
Better tax planning opportunities – If you are a sole trader you’ll pay tax on the whole amount (less tax allowances). However, if you are limited you can choose how much you withdraw each year and only pay tax on what you withdraw. If for example you were earning £60,000 per year you could draw out £40,000 and leave the other £20,000 in the bank account. This might be particularly beneficial if you have had a slower year in the previous tax year and would mean you also come under the tax threshold.
Offset your tools and other business expenses – Claim back any genuine business expenses through your company and increase your take home pay by reducing your corporation tax.
A more attractive corporate identity – Operating as a limited company often gives suppliers and customers a sense of confidence in your business, by being limited it gives the appearance of being slightly larger.
Real time information – Account information produced on a monthly basis means you’ll always be in control of your finances and you’ll be able to access it from anywhere thanks to our award winning online software!
Employer Status – More suitable if employees need to be employed by the business.
With a choice of solutions based around your needs, our accountancy service offerings enable you to determine the best option for you, safe in the knowledge that with Cobia there are no hidden costs! To find out more, contact us today.