Limited Company for additional work

[OldTimes]

Hi All,

I'm sure the answer is speak to an accountant but I wanted to get some views on the best course of action.........its quicker on here and there seems to be plenty of good advice!

Recently I have finished up contracting through my own limited company (14 years all in) to take up a permanent senior role at a Startup (still fun and risky!). Initially I was planning to close my limited company down and move on but over the last few months its become clear to me that I can make use of my existing contacts to do ad hoc talks and training for fees. As an estimate I think I can probably bring in about £1,500 a month / £18k a year in addition to the full time role.

My question is would keeping my Ltd open and invoicing for the ad hoc work be the best approach? I won't be drawing a salary in my limited company. A few questions that pop in to my head:

1. Is it efficient to run a limited company for that amount, say 12 - 18K per year? (I'd do the books myself)
2. Are there any tax implications to this? Won't draw a salary so would just be dividends out of the profits in the limited company.
3. I have equity in the startup - does this change anything?
4. Anyone do anything similar?

Thanks in advance!

[Darren at Fox-Bartfield]

Limited Company

It is possible that would be beneficial to run it through the limited company for tax reasons, would need more info however as these type of things are very bespoke to your circumstances and requirements.

I take it you're a higher rate tax payer in your permie role?

[OldTimes]

It is possible that would be beneficial to run it through the limited company for tax reasons, would need more info however as these type of things are very bespoke to your circumstances and requirements.

I take it you're a higher rate tax payer in your permie role?

Thanks for the reply - yes, I'm a higher rate tax permie job.

[VectraMan]

I kept my company going for several years like this, and that was only ever a trickle of income. If you really can pull in £1500 per month then I'd say it certainly is worth it. If you're doing your own accounts your costs are going to be virtually zero.

You can deregister from PAYE and VAT, and then pay yourself a dividend as and when it suits you. Or pay it into a pension, or simply leave it in the company coffers for a rainy day.

[Lance]

Thanks for the reply - yes, I'm a higher rate tax permie job.

If you're a higher rate tax payer in the permie job, and as long as that company is squeaky clean then you could consider closing down your LTD.

If you do any small jobs then you can take cash, dependant on the clients' attitude. This might not be good advice but it is not uncommon and considerably lower risk than some harebrained schemes that people on here are attempting.[IT'S NOT LEGAL THOUGH]

Or you could run them through the startup....... seeing as you have equity..... and presumably want it to succeed... and it will aid cashflow... and it might stop you having a conflict of interest.... or getting screwed by a co-director when/if things get tough... just a thought.

[ladymuck]

You could close down the company and just do the extra work as a self employed side line (declare the income each year via SA) but you'd get hit for tax that way.

I'd go with VectraMan's suggestion. Keep it ticking over, leave the cash in there if you don't need it, and just withdraw as dividends when you do want the extra spends. If you deregister for PAYE and VAT then the admin becomes a lot simpler. You'd still have to do an annual SA but that shouldn't be too tough.

[Maslins]

I kept my company going for several years like this, and that was only ever a trickle of income. If you really can pull in £1500 per month then I'd say it certainly is worth it. If you're doing your own accounts your costs are going to be virtually zero.

You can deregister from PAYE and VAT, and then pay yourself a dividend as and when it suits you. Or pay it into a pension, or simply leave it in the company coffers for a rainy day.

This would coincide with my thoughts (though may make sense to stay VAT registered if your clients will typically be VAT registered themselves).

[OldTimes]

I kept my company going for several years like this, and that was only ever a trickle of income. If you really can pull in £1500 per month then I'd say it certainly is worth it. If you're doing your own accounts your costs are going to be virtually zero.

You can deregister from PAYE and VAT, and then pay yourself a dividend as and when it suits you. Or pay it into a pension, or simply leave it in the company coffers for a rainy day.

Thanks - good to know you've done similar. Keeping it open and pulling out a bit via dividends every so often would suit best. I just wasn't sure if there were other concerns I wasn't taking into consideration.

[FrontEnder]

If you don't need to cash, It seems you definitely have more options of doing it through a limited company.

-Draw £5K per year in dividends tax free (unless you're getting them from the startup or elswhere)
-Add it to your pension
-Save it in company and take a tax hit of you need/want access to it
-Leave it in the company and then close it down when appropriate, possibly taking advantage of capital gains/ER
-Leave it in the company and use it for other types of investment

Just off the top of my head

[chopper]

Further to what other people are saying about pensions, instead of making pension contributions from YourCo, then you could use the extra money you are earning in YourCo to ask your permie job to make/increase pension contributions (Which would be made net of employer and employee NICs) - you can then just top up your personal income at lower dividend tax rates. Just a quick and perfectly legit shuffling round for tax purposes.