solo trader or ltd

scamalert

as title states im trying to apply for enterprise allowance grant until i get established to have safety net at least for first year, and realized there will be few extra expenses where vat can hit me quite hard.


Now to be precise ive no approval yet, and wont be looking for any loans grants, all costs coming out of my savings.done start your own business course but it was bootcamp style 4 days run down.



But as i understand i cant claim vat if im sole trader, where ltd allows it ? correct me if wrong.


also is there any extra drawbacks having ltd as opposed just to being sole trader, as first year will be tough and ill be targeting b2b market and dunno seems like ltd would be a bit more professional when approaching other businesses.


guess what im asking is there more needed for ltd expense wise/difficulty, then just operating as sole trader and doing taxes come end of year.



Since starting real small and might not need extra difficulties with being limited company.


i know all info can be found online but opinions on people being ltd or solo appreciated.

Rulmeq

You can register for VAT as a sole trader.

scamalert

yeah a bit of a knob i am, just read another post about registering for vat, been over the place recently as do part time work, and this move to self employed, getting equipment is leaving me numb as cant focus on single point now im drawing a lot from my savings to get bits and boobs but there is couple items that might hit me harder with vat- so guess to narrow it down if i buy equipment that ill use would i be able to claim vat back on it or is that considered my own expense.

Mrs OBumble

What does your market research say about whether any businesses will buy from you i'f you're just a sole-trader?

Rulmeq

Yep, totally understand, setting up a copmany may become necessary at a later date, but if you are able, then avoiding the added costs in the early stages can give you better cash flow.

If you are buying stuff that is for use in your business then you can claim the VAT back, and you can get your accountant to claim wear and tear from your profits when he's doing your accounts for you. The 2 important things to bear in mind, are firstly can you justify the purchase is for business use (a computer for example could be for your own personal use mostly, with a bit of work related stuff, then you might have difficulty cliaming for the entire thing), the second and probably most important thing is to keep records. Keep every receipt, every invoice, every bank statement for 7 years. Revenue, if they are doing an audit, can ask to see proof of your purchases for a given period, and they don't care that you were really busy.

scamalert

just to follow up on last two replies, my business plan is targeting tradesmen - market is booming with em atm,and service/product id provide em as solo trader would be fine, but also landing contract with bigger businesses would be harder i imagine presenting as sole trader as opposed giving image of LTD company- personally owned shops etc, so another quirk thinking that bigger businesses see me as a small fish, thou single contract of few such type businesses would keep me running well, as opposed for chasing single trade people.


equipment part is used for production and even sourcing it, is pure pain as dimensions weight is off regular charts and only major manufacturers resellers sell it, so easy to justify as for personal need for business.


Receipts and invoicing part that stuck well with me to keep all the records and not an issue, but as mentioned still few months away from registering, and trying to fit all that plus current work and other things makes it tad harder.