Accounting queries

**northernladuk** · 31 March 2017, 10:57

I am new to contracting so I'll gladly appreciate some help please. I'll like to find out how important is the running of monthly payroll in regards to limited company contractor. I have just procured the services of a local accountant in my area and asked him if he will be doing monthly payroll as I have heard couple of friends mentioned that to me and he replied that everything( documentations) will be perfected at the end of final year during self assessment and account filing.

IMO you've made a mistake here. I'd check if you have a cooling down period and if so leave as soon as possible. I had a local accountant that gave me nothing to help me and gave me the 'sorted at the end of the year' line and left me in a right mess. It sounds like he's not a contractor specialist. Leave and go get yourself a Contractor specialist accountant that offers freeagent. They'll have a ton of stuff all related to contractors and FreeAgent is the tool for contractors at the moment. It's pretty darn good, particularly for a newbie.

Secondly I'll like to ask the implication of taking money ( transfer money from business account to ones personal account) every month i.e average of £7k ? would this attract taxman attention or has tax implications. My accountant said its OK but I will like a second opinion.

Taking money? What on earth does that mean? Are you talking about paying yourself a salary or paying yourself dividends. This is pretty basic stuff and that answer from your accountant is pretty unbelievable (assuming you asked the same question and he didn't elaborate). This is exactly why you need to get rid. A proper contractor accountant would give you the exact salary you need to pay, the dividend thresholds so you can decide in a clear planning document and help you with questions like this.

I smell a world of pain coming your way at this rate.

**Donvigeo** · 31 March 2017, 11:26

Originally posted by northernladuk View Post

IMO you've made a mistake here. I'd check if you have a cooling down period and if so leave as soon as possible. I had a local accountant that gave me nothing to help me and gave me the 'sorted at the end of the year' line and left me in a right mess. It sounds like he's not a contractor specialist. Leave and go get yourself a Contractor specialist accountant that offers freeagent. They'll have a ton of stuff all related to contractors and FreeAgent is the tool for contractors at the moment. It's pretty darn good, particularly for a newbie.

Taking money? What on earth does that mean? Are you talking about paying yourself a salary or paying yourself dividends. This is pretty basic stuff and that answer from your accountant is pretty unbelievable (assuming you asked the same question and he didn't elaborate). This is exactly why you need to get rid. A proper contractor accountant would give you the exact salary you need to pay, the dividend thresholds so you can decide in a clear planning document and help you with questions like this.

I smell a world of pain coming your way at this rate.

Yes as dividends and salary but with no paperwork or reconciliation until the end of final year

**TheFaQQer** · 31 March 2017, 11:36

Originally posted by Donvigeo View Post

Yes as dividends and salary but with no paperwork or reconciliation until the end of final year

Any payment that is made as salary needs to be reported via RTI. I guess you could do something fancy with directors loans throughout the year and square that away somehow, but you'll have to pay interest once the loan hits £10k so that makes no sense.

I would find a better accountant, and just run the business properly - it's not tricky to get payroll all sorted, and any decent contractor accountant should be able to do it for you. I would have a chat with some that post around here and see what they say and who you are most comfortable with.

If I were looking now, I would give Darren at Dynamo a call. Based on their advertising and spam, I wouldn't be calling Gorilla. I don't know how SJD or Nixon Williams have fared since they sold out. But find someone who you are comfortable with - at the start, you are likely to need some good advice and guidance so you need to have that relationship that you both understand what expectations are.

**northernladuk** · 31 March 2017, 11:36

Originally posted by Donvigeo View Post

Yes as dividends and salary but with no paperwork or reconciliation until the end of final year

Don't even go there. Sack him and get Freeagent before it's too late. It's there in front of you realtime. I'll bet everything I've got when it does come to leaving him you won't get an ounce of information from him leaving you right in the doo doo.

**Patrick@Intouch** · 31 March 2017, 11:45

Structuring of tax affairs should never be left until the end of the year and any decent accountant should be discussing this with you at the very start of your engagement with them.

How can you plan your income and therefore tax liability retrospectively?

**dmini** · 31 March 2017, 11:56

I would have thought RTI would still apply to directors from a quick check on google - and RTI is real time payroll info - you don't supply it, HMRC get upset! This is off the freeagent website....

If you’re the director of a limited company with only yourself as an employee, and the company pays you a salary above the National Insurance Lower Earnings Limit (LEL, or £109/week), RTI will still apply to you. If the company doesn’t pay you a salary at all, but still has a PAYE scheme because, for example, it reimburses you for expenses which you report on form P11D, RTI will also still apply to you. For the months - or years if you have an annual PAYE scheme - when you are not paid a salary, you will need to file “nil” RTI returns reporting no salary with HMRC.

You still need to be on top of systems - raising invoices, expenses, making sure you have enough money to pay any tax left in the company account etc.
I would agree with others here and say you need to get a new accountant and fast - especially if you have done any work in March (new tax year starts April - so PAYE returns etc needed). You need to have one who is going to manage your payroll, all your tax returns and keep you on the straight and narrow! One that uses Freeagent might be a good way forward, or one of the cloud based systems, but its not essential - just means they and you can see what is going on with money. I've used the SJD spreadsheets for many years (without being a customer)
Also get a logon to the SJD site and look at their free downloads - again you do not need to be a customer.

If you don't take some of the advice on this thread I would predict you will make HMRC very happy..... but you will be very very stressed.

Accounting queries