Erratic working and accounting/tax/income implications

[knowsey]

I'm a newbie contractor (sole director and sole employee of ltd. co.) and have set up co. as been asked to work on a 50 day contract ..these 50 days have been randomly allocated over the last 4 months and the contract is about to end. My client may renew or finish; at this stage some kind of renewal is likely. I have an autistic daughter and some family health issues and this sporadic work at present helps me give them the time they need.

I have a few tax, income, accounting problems that I need to address & I hope you can help.

I have been told by my accountant (only contracted to prepare my year end accounts & corp tax return) that I need to sort out my income, pension, PAYE, etc queries myself!

I recently set myself up as online employer PAYE and made myself a first salary payment or £1757 which I will do each month and will bring me to the £8788 limit lower limit for this tax year taking into account national insurance contributions considerations.

The problem I have really is what is the best way to treat the rest of the money(c.£20k) in the company bank account if

(i) I no longer get any work this tax year
(ii) I get no further work next tax year or year after
Assume at some stage I may have to decide to wind co. up or is it enforced. Am I allowed to continue drawing a salary next tax year if I don't get any contracts?


If I do get my contract extended, am I better off ‘tax- or income-wise’ to also set up a pension contribution for me?

Essentially just after the most tax efficient way of managing my income and residual balance in the company. Also if anyone has any other advice to offer much appreciated. Thank you

[Lance]

How much are you paying your accountant?
How much extra does he want to help you get your personal tax right?
Most us pay around £1k + VAT per year for the whole lot.


Whilst you think about that read the guides to the right. Starting with "First Timers" ---------------->>>>>>
Everything you've asked has been done to death and those guides are the starting point.

[eek]

My first suggestion would be to use Freeagent if you aren't already - that will handle all your account and reporting needs except the end of year ones and even they can be done there now.

If you don't want to pay for it open a Natwest Mettle account as that makes it free.

Then it's a matter of making sure you are recorded as a director in the PAYE return and ensuring you keep you income at or around £8788 - I usually round it up to £9000 as it's easier and just results in a small end of year payment.

And then take the rest as dividends once Freeagent has done the calculations and told you what you can take out as dividends. Then pay the corporation tax bill at the appropriate point.

[knowsey]

How much are you paying your accountant? £150 for year, thought I could do rest as studied accountancy about 25 years ago...poss error made there!
How much extra does he want to help you get your personal tax right? not offered and as my contract ends next week can probably do it myself if got the right info
Most us pay around £1k + VAT per year for the whole lot.


Whilst you think about that read the guides to the right. Starting with "First Timers" ---------------->>>>>> great thanks, I'll take a look
Everything you've asked has been done to death and those guides are the starting point.

answers above!

[ladymuck]

It is worth asking your accountant if they will provide the additional services or, at least, quote you for them to provide some guidance. It sounds like you were either sold a deal you weren't clear on the details of or assumed the items not covered by your accountant were simple and immaterial.

You can continue to pay a salary even if there is no income coming in. What you can't do is pay any dividends if you don't have sufficient profits in the company after accounting for all your liabilities. Have you put aside funds for CT as well as your VAT, PAYE and NIC liabilities?

If you have no earnings next year but continue to suffer the expense of paying a salary then there's a chance of getting a CT refund next year. You'll need to check with your accountant around how that will work, which at least does come under the services you're paying for.

[ladymuck]

So your accountant will only do work for you if you have an active contract, or they are only contracted to do work for you until the end of next week?

[knowsey]

So your accountant will only do work for you if you have an active contract, or they are only contracted to do work for you until the end of next week?

Thanks for your comments. This is accountants service to my company from the letter of engagement:

Preparation and filing of statutory accounts and two corporation tax returns, at
Companies House and HMRC, for the first trading period of 28 July 2020 to 31 July
2021.
Filing of one confirmation statement, at Companies House, for the first trading period of
28 July 2020 to 27 July 2021.

Also should mention I am recording all my accounting transactions in quickfile.

[eek]

Thanks for your comments. This is accountants service to my company from the letter of engagement:

Preparation and filing of statutory accounts and two corporation tax returns, at
Companies House and HMRC, for the first trading period of 28 July 2020 to 31 July
2021.
Filing of one confirmation statement, at Companies House, for the first trading period of
28 July 2020 to 27 July 2021.

Also should mention I am recording all my accounting transactions in quickfile.

Quickfile will be a problem, for getting advice, as most of us use Freeagent - been around longer and it does the important calculations (max dividends for instance) automatically.

[ladymuck]

Thanks for your comments. This is accountants service to my company from the letter of engagement:

Preparation and filing of statutory accounts and two corporation tax returns, at
Companies House and HMRC, for the first trading period of 28 July 2020 to 31 July
2021.
Filing of one confirmation statement, at Companies House, for the first trading period of
28 July 2020 to 27 July 2021.

Also should mention I am recording all my accounting transactions in quickfile.

I think you have confused the contract of work that your company has with its clients with the contract you have with your accountant to provide services to your company.

If the accountant wants to earn more money from you by expanding their service offering to you, then the length of any contract with your clients is completely irrelevant.

Personally, I think the tool you're using for accounts is immaterial as long as you can provide your accountant with the information they need in the format they need it.

[knowsey]

I think you have confused the contract of work that your company has with its clients with the contract you have with your accountant to provide services to your company.

If the accountant wants to earn more money from you by expanding their service offering to you, then the length of any contract with your clients is completely irrelevant.

Personally, I think the tool you're using for accounts is immaterial as long as you can provide your accountant with the information they need in the format they need it.

Hi

My accountant is limiting his engagement in his role with me, hence my original post. I'm just trying to operate in the most efficient way to extract money from the company legally given the way and potential timings of the company earning money. the accountant is not trying to get more money or extend his scope, I'm the one asking now the best way to get money out via salary, pension, dividends etc.

Thanks