Advice on Money
By Julie Lord 17/11/2011
I work for Bluefin, specialist advisers on insurance, employee benefits, wealth management and financial planning for businesses and individuals. We're also proud to be sponsoring the Hera Award at the 2011 NatWest everywoman Awards.
In this blog I will be answering common questions and concerns about money, whether it be about the economy, paying school fees or any other hot topics around money. If you have a question about money, simply email me at julie.lord@bluefingroup.co.uk and I will post regular blogs right here to provide useful advice and insight.
4 Comments
Julie Lord
Hi Wendy
1. Interest rates eh? Well I'm afraid that my crystal ball is looking a bit cloudy at the moment, so my short answer is "who knows?"
Having said that (oh no I'm beginning to sound like an economist!) the MPC voted to hold rates again in February and on Tuesday this week the Bank of England indicated that rates would stay as they are until some time in 2015.
Good for mortgage holders but not so good for savers who are currently losing money in real terms whilst inflation stays at a higher level than the interest they are receiving on their money. Holding a lot of cash has never been a good long term strategy - indeed holding a lot of any single asset class has never been a good long term strategy.
2. Too simple I'm afraid!
If you make any profits at all, arguably you would pay less tax if you were a Limited Company.
However, you have to look at the bigger picture to determine which is the best structure for your business.
One of the most cited reasons for becoming Limited is the liability issue (although if you are going to be naughty and trade illegally/insolvently this will not protect you!)
But there are other good reasons too - prestige, borrowing potential and possible lower taxation. Whilst batting on the sole trader side are the elements of simple accounting, privacy and greater flexibility.
Members can obtain a lot of useful information on the pros and cons of each structure (and perhaps also consider the LLP structure too) by looking at the various company formation websites available.
Hope this helps Wendy - thanks for your questions.
Julie
Julie Lord
Hi Judy
While there are mortgage lenders who specialise in the self employed, most lenders will now be much more likely to deal with the self employed
If you've been involved in a particular industry or sector for years this will be an advantage.
Lenders are interested in seeing how employable you are. To give an extreme example; a plumber is probably in a better position than a successful film director because s/he can show regular, weekly work. However, the film director's few months of work here and there may look patchier.
Mortgage lenders don't always appreciate the ins and outs of different types of business. But some will so shop around.
If you're new to your area of business this may prove a problem until you can demonstrate regular income.
If you're on a "short term contract" it will help if you can show you have a regular contract with the same "employer" ie one which has been renewed. The longer it has lasted the better. Others may want to see a pattern of renewals over a one or even a two-year period.
For more information, www.mortgagesorter.co.uk is a great resource and will also help people for find a specialist mortgage broker in their area for all different types of mortgage.
Two words (not literally!) of warning to all members:
DON'T OVERCOMMIT! Living with too much debt can be very painful
REPAY IF DISASTER STRIKES. Make certain any large loans can be paid back if someone dies or has a serious illness. If this means buying insurance to cover the risk - then do it! you are just transferring the risk away from yourself.
Hope this helps.
Julie
wendy.chamier
Hi Julie
I've a couple questions for you ...
1. Staying with the mortgage theme, is there any indication of how long the low bank rates will last, and will the drop in inflation affect this do you think?
2. With regards to sole traders vs limited company, is there a monetary income level where it would make financial sense to be a limited company vs a sole trader? Or is that too simple?
Many thanks and look forward to reading your posts
Wendy
judyheminsley
Hi Julie
I'm sure lots of everywoman members must be wondering what the situation is for mortgages for self-employed people now? Is it still possible to get a mortgage and under what circumstances?
Looking forward to your posts.
Best wishes
Judy