The Tutor Podcast

Choice of Business Structure


Listen Later

Are you looking to start, scale and grow your tutoring business and looking which is the best way to do it? Join Neil today as he discusses the three business structures your tutoring business could fall under, and the benefits and risks they pose to you. Neil talks through sole trader businesses, limited liability partnerships and limited company business structures, the importance of paying your taxes, and the tax benefits a limited company can offer.

 

KEY TAKEAWAYS

 

  • There are three big decisions you can make when deciding on a structure for your company. The easiest one for many people is operating your business as a sole trader, in essence, you register as self-employed with HMRC and you get on with it. Three is no real separation between yourself and the business aspect of what you do.

 

  • You must notify HMRC on the first day you begin trading, especially if you are in a day job. Pay your taxes and you can sleep at night. You won’t worry about getting found out for tax evasion. You are not likely to be subject to an HMRC audit which is extremely hard. Your tax liability as a sole trader is blended with your day job and you will only pay tax on the total combined incomes.

 

  • Secondly, you could have a limited liability partnership. This is an agreement to operate a business between one or more persons. The limited liability partnership is set up to make a profit. It is highly favoured by people in professions such as accountancy and it is favoured for a reason. It runs different tax regulations than limited companies for instance there is no corporation tax and is owned by the partners themselves.

 

  • A limited company is one of the most popular business structures in the UK. It is a separate legal entity from you. The people who own these companies are stand alones, this gives the owner some separation from the company itself and protects your assets. It is pretty simple to set one of these up via the company's house.

 

  • If there are multiple owners of a limited company you will need to figure out who owns what. Whilst 50:50 looks great on paper, 49:51 sounds better as long as you have the bulk of the shares as then you will get to call the shots.

 

  • There are big tax advantages to having your own company. If you die with a net worth with over £325,000 your children of beneficiaries are going to be paying 40% tax on that. If you put it all in a company structure then there is no inheritance tax until the shares are sold. The heirs only pay capital gains tax if they pay the shares.

 

BEST MOMENTS

“As the owner of the business, you have unlimited responsibility.”

“You could lose a lot of money that way, which means you could get a tax rebate.”

“You get a company number, and off you go Kido.”

“That is a great way of heading off tax.”

VALUABLE RESOURCES

  • Listen to The Tutor Podcast on the Apple Podcasts (https://podcasts.apple.com/us/podcast/the-tutor-podcast/id1369191372)!
    • Build Your Online Course Week 1: https://podcasts.apple.com/us/podcast/build-your-online-course/id1369191372?i=1000477109724
  • Course Planning Week 2: Who Am I?: https://podcasts.apple.com/us/podcast/build-your-online-course/id1369191372?i=1000477109724
  • Who are They? (Know Your Punters): https://podcasts.apple.com/gb/podcast/who-are-they-know-your-punters/id1369191372?i=1000478984529
  • Read the Weird Things Guitarists Do book by Neil Cowmeadow, which is available now on Amazon. Link - https://www.amazon.co.uk/Weird-Things-Guitarists-Do-Misconceptions/dp/1519026579/
  • Contact Neil via this website - com!
  • ABOUT THE HOST

    Neil Cowmeadow is a maverick peripatetic guitar teacher from Telford with over 19 years’ experience in the business of helping people. Learn how to start, grow and love your business with Neil’s invaluable advice and tips without the buzzwords and BS!

    CONTACT METHOD

    [email protected]

     

     

    ...more
    View all episodesView all episodes
    Download on the App Store

    The Tutor PodcastBy Neil Cowmeadow

    • 4.5
    • 4.5
    • 4.5
    • 4.5
    • 4.5

    4.5

    10 ratings


    More shows like The Tutor Podcast

    View all
    Upgrade Your Education Business by Sumantha McMahon

    Upgrade Your Education Business

    2 Listeners

    Marketing Systems for Success by Helen Dickman

    Marketing Systems for Success

    3 Listeners