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Is it me, my accountant or my Ltd company?

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    Is it me, my accountant or my Ltd company?

    Hi All,

    I've lost the plot somewhere along the way.

    I've been Ltd since 2005 - and always got myself into a 'pickle' with Corp Tax, VAT etc.

    I'm generally 'tulip' with money, whether personally or in my company.

    I never know how much I should be paying myself, how much dividends I should be taking, how to work it all out, how to be more tax efficient, what type of VAT is best etc...

    I've asked questions of my current accountant, but don't really get the answers I need.

    So is the problem Me? Should I spend more time reading about financial stuff to sort it myself?

    Is the problem my accountant? Should they be more forthcoming with advice? They aren't very 'personal' and just seem 'functional' and process driven.

    Or should I just go Umbrella after all these years and not worry about it all?

    Thanks

    #2
    Are your contracts generally inside IR35?
    What level of expenses do you have?

    If you have significant expenses and are generally outside IR35, look at switching accountants instead. SJD have a spreadsheet-based solution that you may find easier to understand.
    The greatest trick the devil ever pulled was convincing the world that he didn't exist

    Comment


      #3
      I don't have 'mega' expenses - I guess similar to most other IT Consultants/Contractors, and generally I'm outside of IR35.

      I don't think its the spreadsheet vs cloud accountancy thing that annoys me... I like the idea (I'm with Crunch btw) of the cloud console, but I just want something more personal - where I can chat and ask daft questions and not have to wait days for an answer, nor receive one that's been copied and pasted from elsewhere.

      Comment


        #4
        You have a legal responsibility to run your finances properly. Being 'sh1t'at them is not a defense. If that means you step up and read a little and get a grasp of the basics them so be it. Your account should help but can't run it all for you.

        Crunch are one of the better ones and they have a portal to help and that's not enough?

        I'd say you need to step up and do a bit more of your own work before calling them so you can have a quicker more precise chat. If they are going over the basics again and again they are going get hacked off at some point. You'll also learn overtime.

        If that doesn't work over time then go Umbrella.
        'CUK forum personality of 2011 - Winner - Yes really!!!!

        Comment


          #5
          Yeah I was thinking that that was the answer - I probably knew it already!

          I do need to go back to basics... I'll probably thank myself in the long run!

          This forum might be a good starting point I think!

          Comment


            #6
            Hi Peter

            In all honesty it's probably a combination of the two, from the sounds of it you definitely need to understand things more but you probably need more guidance from your accountant too once you know the right questions to ask.

            As a quick guide in general terms you would normally withdraw a payment each month for your net wages from the company account, a second payment for a reimbursement of out of pocket expenses and a final payment for a dividend if you decide a dividend should be declared and paid.

            Assuming you are on a salary of £8,060 with no other income then you can take £34,940 in dividends this tax year (2016/17) and you will pay £2,025 in personal tax on these. If you take more dividends they will be subject to tax at 32.5%.

            Getting back to basics should make things a lot easier going forward and once you understand things better it should be a walk in the park!

            Hope this helps.

            Martin
            Contratax Ltd

            Comment


              #7
              Originally posted by peterc2609 View Post
              This forum might be a good starting point I think!
              It could be a useful start but it isn't a place for a raft of ill thought out poorly researched questions. All you will get is a fairly simple answer so won't learn much.
              'CUK forum personality of 2011 - Winner - Yes really!!!!

              Comment


                #8
                Frankly, if you have been a contractor since 2005 and still can't get to grips with it, you'd be better off as an employee or a brolly user.
                Public Service Posting by the BBC - Bloggs Bulls**t Corp.
                Officially CUK certified - Thick as f**k.

                Comment


                  #9
                  It's the accountants job to help you understand these things. However we do have some clients where the phrase "you can lead a horse to water but you can't make it drink" springs to mind. Some clients simply don't gel with numbers, and can have things explained to them a hundred times, yet they'll either try hard and still not get it, or more often find it a bit tricky so bury their head in the sand in the hope the problem goes away. Unless you do go umbrella/permie, it won't.

                  I personally think it's worth all Ltd Co contractors making sure they understand what their balance sheet means. The vast majority get the P&L (income less cost = profit, pretty straight forward), but to a lot the balance sheet is a mystical jargon filled beast.

                  Comment


                    #10
                    Originally posted by Fred Bloggs View Post
                    Frankly, if you have been a contractor since 2005 and still can't get to grips with it, you'd be better off as an employee or a brolly user.
                    I'm not quite sure I agree, but I definitely get the sentiment. MyCo Ltd was founded in July 2010, so nearly 6 years ago, and I'd say I've only just gotten to the point where I fully understand my numbers. In fairness, what started up as a one-man band grew to a 10-person organisation, and then I had to downsize as we were losing money and we're now down to 5 people. It's been quite the journey.

                    I'm not a natural businessman, but I'm great at what I/my company deliver. But as NLUK says, being crap at finances is no defence, and it's definitely the OP's responsibility to ensure he knows what he's doing.

                    For me, I really struggled for ages to get my head around accruals accounting vs cash accounting. What my accountant was doing was have me enter everything on a cash basis, and then at year end, he'd ask what invoices and expenses had been raised that hadn't been received/paid yet (to ensure we report to CH on an accruals basis). When I recently advised him that I wanted to enter my finances on an accruals basis so that I had a better handle on important things like margins, etc, his reply was less than helpful. So I'm in the process of changing accountants.

                    To the OP I'd say this:

                    You do have a legal responsibility to understand the finances. You may find that an evening class aimed at finances for small-medium businesses is of benefit. Though if that's overkill, then buy a good book, read more on the Internet, and really get your head around it.

                    Go with an accountant who gives you what you need. It took me too long to realise that I wasn't happy with my accountant. He was insistent that I follow his way of doing things, even when I finally realised it wasn't right for me or my business. So change - go with a recommendation on here (I moved to KPMG SBA by the way, but my circumstances/needs are slightly different).

                    As to brolly vs LtdCo - Brollies are a good option if you don't take that much or are struggling/new to contracting. But if you do the first two (learn business finances and get a different accountant, you may find yourself in a much better position).

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