Sorry. This is such a simple question but I just want to find out from people who have done it and have experience rather than reading about it on unknown sources on the internet.

I am a sole trader at the moment and I am investigating the ins and outs of becoming limited. Asides from the liability, shares are confusing me a bit.

I am the only person making money from the business, but I'd like to give my wife shares in it if i decide to make it a limited busienss. Can I do this? What would happen if i did this? Could she control the business?

I take it if i have shares then I can avoid paying tax?

Shares means you can be paid dividends from the company profits, no shares, no profit sharing basically!

You should chat to an accountant about if this means of running your business is right for you as they will know the ins and out of your particular set up.

However, an amusing read here will explain more.

Hi Stuart

I'm afraid you can't avoid paying tax by holding shares but you could reduce your tax bill in certain circumstances.

Over a certain profit level, having a limited company is normally more tax effective than having a sole trader business as you can take a mixture of (tax free) salary (up to your personal allowance) and dividends from the business.

There are so many variables so it probably is best to speak to an accountant regarding your personal situation and the best route for you.

Kind regards

Zöe