Sole trader or company dilemma!

daludo

Hi folks
I currently run a small Electrical Contracting business but I am shortly going to start a new job working directly for a large multinational. I would like to run my business along with my new paye employment. However I'm wondering if it makes more sense from a taxation point of view to dissolve the company and just operate as a Sole Trader? What is the most efficient way of incorporating both? Any thoughts out there?

spoiler

Keep the company as you could basically have someone else do the work and you could still take a salary or use it to but money into a pension fund you will still need to take a salary from the company to put money into a pension fund. If you ran the business as a sole trader you will need to pay tax on whatever profit the business makes. Sole trader are restricted on expenses they can put through compared to companies you could also claim expenses through the company that you can't through a sole trader.

Calahonda52

I would keep the company as you have it set up.
have you cleared the // work with your new employer under the Occupational Hours at work 1974, or what ever it is called vis a vis working more than 40 hrs/week

daludo

Thanks for the replies. I was hoping to keep the company so I'm glad you confirmed that. I hope to employ someone part time so don't invisage working too many hours outside of my new job.

daludo

So am I right to assume that the company advantages far out weigh the sole trader for my situation???

Vinhayes Booker

Hi

I stuck on an issue for a friend regarding CGT on incorporation of a sole trader business.

Sole Trader assets being transferred to New Co Ltd:

Goodwill: €20,000
Motor Vehicles: €4,500
Total €24,500

100 Ordinary Shares at €1.00 were issued for €100.00 to one director who owns 100%. No cash consideration was paid to the sole trader/director. No other assets are currently held by the soletradership.

The recording of the goodwill in the accounts together with any CGT implications for the individual:

Dr Goodwill €20,000
Dr Motor Vehicles €4,500
Cr Directors loan €24,500

Therefore gain on the transfer of the assets is €24,500.

Is there any CGT due on this transfer?
Can Entrepreneurial Relief be claimed in this instance?

Many thanks
Vinhayes Booker

Vinhayes Booker

Thanks in advance

Vinhayes Booker

Aged of the person is under 55 years of age so retirement relief is a non runner

namenotavailablE

Would the credit entries not be Credit Ordinary Shares €100 and Credit Share premium €24400?

If no cash, no Directors Loan, no personal liabilities being taken over by the new company I think full deferral of the CGT would apply.

Vinhayes Booker

namenotavailabl wrote: »

Would the credit entries not be Credit Ordinary Shares €100 and Credit Share premium €24400?

If no cash, no Directors Loan, no personal liabilities being taken over by the new company I think full deferral of the CGT would apply.

I came across is years ago (have since left practice). Directors loan was credited as a result of the goodwill, tax free sum.

I'll keep digging. Thanks for the reply.