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Company making a Loss

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    Company making a Loss

    Guys,

    Accounting is by far my weak point, and I've just had to ditch my current accountant (terrible service, unanswered e-mails, calls) so I've no-one to ask.

    I've got no income at the moment, and nothing on the horizon, so it looks like my company will make a loss for the first time this year if I keep taking my salary. But there's a fair five figure sum in the company, so taking salary for a year or two won't be a problem.

    But my questions are :
    if my company makes a loss, there's nothing wrong with that is there. Doesn't it just mean no corp tax to pay?
    And is that Ok, to keep paying a salary, even though there's no turnover?

    ta
    Michelle

    #2
    Making a Loss

    Yes, your company can make a loss.
    It sounds like you have had some good years so this means that there is retained profit in the company from past years.

    During the last downturn after a few good years I made a loss for a couple of years or so - though I was paying myself a high wage so there was quite a bit of National Insurance.

    Your to do list:
    Get yourself a new accountant now, not next year but now. Go with one of the big named accountants that offer services for contractors. You do not have to speak with your current accountant, your new one will do that.

    Notes: You do not have to pay yourself a wage.
    It might be better to lower your wage
    don't forget the VAT / Corporation tax due.

    Good luck.

    Comment


      #3
      I recommend Darren at Upton Accountants. And thats after using a couple of the other contractor accountants...
      Older and ...well, just older!!

      Comment


        #4
        Advice appreciated - yes, I do need to sort out a new accountant, but am just taking a few deep breaths. To be honest, I'm wondering about doing the payroll myself and just getting the accounts / corp tax done. I'd have saved myself a lot of stress this year if I'd been half-running the show myself.

        So anyway, a company loss is Ok. Good, because I think there's going to be one. And yes, I've had a good turnover the last 4 years, so there's money in the company to be taken out. It just feels a little strange paying myself a salary when I know that's putting the company in the red for the year.

        I've read somewhere about losses being carried fwd and offset against future years profits - does that apply to IT consultancy business, or wouldn't that be allowed here?

        What a nice board this looks - wish i'd found it sooner

        Comment


          #5
          Originally posted by mkant View Post
          Advice appreciated - yes, I do need to sort out a new accountant, but am just taking a few deep breaths. To be honest, I'm wondering about doing the payroll myself and just getting the accounts / corp tax done. I'd have saved myself a lot of stress this year if I'd been half-running the show myself.

          So anyway, a company loss is Ok. Good, because I think there's going to be one. And yes, I've had a good turnover the last 4 years, so there's money in the company to be taken out. It just feels a little strange paying myself a salary when I know that's putting the company in the red for the year.

          I've read somewhere about losses being carried fwd and offset against future years profits - does that apply to IT consultancy business, or wouldn't that be allowed here?

          What a nice board this looks - wish i'd found it sooner
          Yes - you can carry the loss over to the following year to reduce your CT bill in subsequent years. Not sure how far it can be carried over, though.
          Best Forum Advisor 2014
          Work in the public sector? You can read my FAQ here
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          Comment


            #6
            You also have the option of carrying back losses for one year and getting some tax back (if you paid tax back last year). Or you can carry it forward and set off against future trading profits - you can do this as long as the company continues to trade.

            You should stop paying yourself a salary, and go down the small salary/dividends route.

            Definitely seek advice from an accountant - no use paying tax when you don't need to.

            Comment

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