Implications on 'side gig' business

Nameloc

Ok, so I have a full time job and am about to start a 'side-gig' business which I hope will eventually become my full time job.
However, I am mid 30's with a mortgage so will keep working full time until I feel confident I sustain myself.

Question I wish to ask, what are the implications on that?
Would I need to set up as a sole trader initially or just go the whole hog and set up a ltd company?
In my contract, I need to tell my employer, but I wont be doing that for fear of being put into an awkward situation. I wont give up the side gig, the business potential is huge and no-one else is doing this.
Also, taxation wise, would I be punished for wages/dividends on that 2nd company?

Obviously, I would prefer to avoid speaking to an accountant at the moment as I am trying to keep early running costs low

jimmii

As long as you declare the additional income you're fine tax wise. As a PAYE earner I think you can even file it on PAYE anytime. Sole Trader makes sense to begin with but it does depend on what you are going to be doing as a home owner an LTD might be better (see Pedros post for more info on setting up).

meijin

If you set up Ltd company, and don't need extra salary for now, you can keep money in the company and avoid extra PAYE tax.

You only pay tax on company profits.

When the company makes enough money, you quit your job and start paying yourself a salary from your new company.

In my opinion it's cleaner to keep things separate from the start.

Hope that makes sense

Nameloc

yes thanks, that does make sense.
So on a ltd company, do I need to have a separate person as the secretary?
I'm a 1 man band and would rather not have anyone involved at the moment

meijin

Nameloc wrote: »

So on a ltd company, do I need to have a separate person as the secretary?
I'm a 1 man band and would rather not have anyone involved at the moment

some accountants offer the secretarial service for Ltd company

Mrs OBumble

Sole trader vs Ltd decision is also influenced by the risk of getting sued and losing your house over it.

Remember - you don't have to be incompetent or actually cause harm to get sued. There just needs to be someone who wants you out of the way and can afford a good lawyer.