Originally posted by northernladuk
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Originally posted by Maslins View Postmore concerningly, the splits stay "live", so there's been a couple of times where we've prepared a personal tax return based on the dividends, client then adds in some backdated expenses they "found", FreeAgent then recalculates the smart user payments altering the dividends. Not good...and clearly makes a mockery of things even if you were a good little boy and printed off your board minutes etc.
I like to keep my dividend, salary and expense payments separate. Your clients would need a pretty strong grip of accounting if they are going to mix them all up like that.Free advice and opinions - refunds are available if you are not 100% satisfied.Comment
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Originally posted by Wanderer View PostHmm, changing dividends does sound a bit naughty. I guess they figure that all the dividends can be set in stone at the end of the year when the company year end calculations are done and who's ever going to know? But what if you have a payment to multiple shareholders and then you start trying to retrospectively adjust the amount of the dividend? Arrrgh, it could get really messy.
I like to keep my dividend, salary and expense payments separate. Your clients would need a pretty strong grip of accounting if they are going to mix them all up like that.
No brainer as well to keep the payments separate.Rhyddid i lofnod psychocandy!!!!Comment
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Originally posted by Maslins View PostThis...separate thread where FreeAgent's being praised...we love it to, but I have a real issue with the "smart user payment" facility, which basically means you take £X and it cleverly splits it for you between salary/expenses then the balance to dividends.
I don't like it for a few reasons:
1) as above, it doesn't really demonstrate that you knew what you were paying yourself and why
2) more concerningly, the splits stay "live", so there's been a couple of times where we've prepared a personal tax return based on the dividends, client then adds in some backdated expenses they "found", FreeAgent then recalculates the smart user payments altering the dividends. Not good...and clearly makes a mockery of things even if you were a good little boy and printed off your board minutes etc.
The fact that the FreeAgent system takes no account of whether the company can afford to pay a dividend is a potential time bomb."The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance." CiceroComment
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Originally posted by northernladuk View PostI don't know what you guys do that allows you to build a warchest up from personal divi money that I can't. I spend most of what I pay myself with some savings, which are savings not warchest.
The warchest is most definitely the profit that I have left in the company after I have taken max divs which builds itself naturally...
I can't be building a 16-18k warchest when I only pay/divi myself around 40K a year :|
Are people kidding themselves that their savings are their warchest? To me they are totally separate. One is for big purchases for me and my family in the future, the other is to cover my income if I am on the bench.
There is always the situation that NWP2C is in where he has spent all but 2 months of his 'warchest' on his new house. That would indicate confusion over savings and warchest and also a problem that it can be spent far too easily on things it isn't supposed to be for.
This way we can take dividends of about £54K (£27K each) without hitting the 40% bracket. So I earn £34K, wife earns £42K
(Of course, if I massaged the share split to take account that wife earns £15K and I only earn £7K then we could both earn £42K but doing so is considered dodgy by HMRC).
Plenty for me. I don't take any more out because I don't want to pay 40% tax (not that theres a huge amount on my rate) so rest stays there like you or goes into pension.
Of course, this model doesn't work if you've got a partner who earns decent salary anyway.
To be honest, I think its wise to extract what you can from the company each tax year up to 40% limit. Don't see the point of keeping it in the company.Rhyddid i lofnod psychocandy!!!!Comment
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Originally posted by northernladuk View Post
There is always the situation that NWP2C is in where he has spent all but 2 months of his 'warchest' on his new house. That would indicate confusion over savings and warchest and also a problem that it can be spent far too easily on things it isn't supposed to be for.
If I want to buy anything I won't touch these savings. I need a new car at the moment but I ain't touching it I'd rather get a loan.
No good using your whole warchest to save a few £ on interest only to find yourself suddenly without contract. Nice car but zero money. I'd rather pay the interest to allow me the flexibilty of having my warchest easily accessible still (of course, you could flog the car).
One disadvantage of taking loan is that it increases outgoings and thus more is needed per month from warchest to pay the loan. But its a balancing act to keep outgoings down if possible and build warchest.Rhyddid i lofnod psychocandy!!!!Comment
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Originally posted by ThomserveBAS View PostMaybe I see things a little more simply than you do then - my "warchest" is to cover an equivalent monthly salary should I be between contracts, where it sits is irrelevant to me. I set a goal of X number of months of good living and have piled all that into ISA's and the best savings accounts I can find whilst giving myself the flexibility to draw from them without having to give long notice periods.
My savings are elsewhere (in regular savings accounts and wherever else I can earn a couple of percentage points above the HSBC rate) - there is no connection between the two in my mind, maybe I'm a bit more disciplined than you give some people credit for?
I want my money to work for me - sat in the business account it does no such thing, so I spend the time (and actually enjoy) looking for the best (risk-free) way to make a bit of money on my hard-earned.
EDIT: And this isn't meant to be as scathing as it sounds, but just because someone does something in a different way to you doesn't make it wrong.
Time to start paying off more credit cards now. They're low rate balance transfer so no rush - see previous post about balancing act.Rhyddid i lofnod psychocandy!!!!Comment
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Originally posted by psychocandy View Post...snip... To be honest, I think its wise to extract what you can from the company each tax year up to 40% limit.
Don't see the point of keeping it in the company.
At the end of the day there are no "right" business models, only the one that works for you. And at my age life's too short to worry about the last 5%Blog? What blog...?Comment
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Originally posted by northernladuk View PostI don't know what you guys do that allows you to build a warchest up from personal divi money that I can't. I spend most of what I pay myself with some savings, which are savings not warchest.
The warchest is most definitely the profit that I have left in the company after I have taken max divs which builds itself naturally...
I can't be building a 16-18k warchest when I only pay/divi myself around 40K a year :|
Are people kidding themselves that their savings are their warchest? To me they are totally separate. One is for big purchases for me and my family in the future, the other is to cover my income if I am on the bench.
There is always the situation that NWP2C is in where he has spent all but 2 months of his 'warchest' on his new house. That would indicate confusion over savings and warchest and also a problem that it can be spent far too easily on things it isn't supposed to be for.
Hopefully will be up to 4 or 5 by the end of the contract!
Again thanks for keeping me in your thoughts.Comment
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Originally posted by NorthWestPerm2Contr View PostI am back up to 3 months warchest
Hopefully will be up to 4 or 5 by the end of the contract!
Again thanks for keeping me in your thoughts.'CUK forum personality of 2011 - Winner - Yes really!!!!Comment
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