New Contractor Trying to Squeeze in under this years tax rules

[transformingninja]

I've managed it over email anyway. Gorilla gave me my first two months membership for free as well.

[DallasDad]

I've decided to go with gorilla. Only problem is that they're only open during office hours which is when I'm on site at the clients but I'm sure I'll get round that. I intend to do most communication via email anyway.

Thanks for the advice all.

Yep don't worry about it just apply common sense and not take the occasional necessary piece of admin to extremes.
If you prefer more privacy lunch times and WFH days are ideal for catching up on admin.

Over the years I have worked with or witnessed several seasoned contractors spending huge chunks of the day, openly in the office, doing personal admin, phoning friends and family and typically were most busy during con calls texting the world and its dog like there was no tomorrow.

[LondonManc]

I've decided to go with gorilla. Only problem is that they're only open during office hours which is when I'm on site at the clients but I'm sure I'll get round that. I intend to do most communication via email anyway.

Thanks for the advice all.

Phone calls, emails both typically allowed to accountants during office hours rather than going in to see them.

[transformingninja]

I've decided to go with gorilla. Only problem is that they're only open during office hours which is when I'm on site at the clients but I'm sure I'll get round that. I intend to do most communication via email anyway.

Thanks for the advice all.

[DallasDad]

OP I am doing effectively the same as you by leaving my Umbrella.
I have recently signed up with Gorilla and during my first chat with them this was one of the discussion points.

I didn't fully understand the implication my permie salary from last year had on dividends but they do!

[Alan @ BroomeAffinity]

Agree with NLUK - about Freeagent not necessarily gorilla :-) although gorilla are well thought of. Either way though, get someone ASAP.

[northernladuk]

Thanks for that. I wasn't being ignorant to the fact that the accounts know better than I do I just figured that if I couldn't squeeze into this tax year then I'd just keep records of everything and get an accountant in a month or so when the money was there. Now that it seems feasible I'll find the money and engage one now as they'll probably pay for themselves in the first month.

Thanks for the advice.

I was looking at either crunch or gorilla. Crunch appears to be cheaper but gorilla use freeagent. Is freeagent worth the extra over crunch's software?

Not used Crunch's offering but as a Gorilla customer I'm converted to Freeagent. Does everything I want (and more) and its backed up with the forums and an my accountant so can't fault it. Well worth it in my one sided opinion book.

[transformingninja]

Thanks for that. I wasn't being ignorant to the fact that the accounts know better than I do I just figured that if I couldn't squeeze into this tax year then I'd just keep records of everything and get an accountant in a month or so when the money was there. Now that it seems feasible I'll find the money and engage one now as they'll probably pay for themselves in the first month.

Thanks for the advice.

I was looking at either crunch or gorilla. Crunch appears to be cheaper but gorilla use freeagent. Is freeagent worth the extra over crunch's software?

[WordIsBond]

Get an accountant before disbursing any funds.

Do you understand how the dividend tax credit works, and how it impacts how much dividend you can take before going into the higher rate band? If not, you need to find out to make sure you get it right, and that's a lot of hassle to gain knowledge for this year that you'll never need again, since the tax credit dies after 5 April. If you engage an accountant, they know all this stuff and can explain it to you.

Do you know why you should or shouldn't give yourself a small salary of £672 a month between now and the end of the tax year? Do you know how that will work with employee NI and employer NI and corporation tax and income tax?

If you don't know all that, get yourself an accountant sooner, not later.

[Hobosapien]

I'd certainly get an accountant sorted out so you can be in the right set up during March when the invoices hopefully start getting paid.

Presuming you're going Ltd with the talk of divvies, so an accountant is an expense billed to your Ltd, and usually you won't have to pay until the accountant invoices your company, and then you can drag your feet on settling the invoice until got some moolah in the company account.

There may be better ways to get a quick payout from your company, such as expenses, or selling relevant stuff (laptop, computer, other kit) to your company as start up assets. More tax efficient than a divvy.

Get an accountant and get him to sort it out for you. He'll be able to explain all the above and the basics of operating via a Ltd where it may currently be gibberish.

[Louisa@InTouch]

The turnover will be calculated based on the date that your invoice is issued. Therefore you could declare the dividend before the cash comes into the business bank account.

So, you can look at the profits and then take a dividend before the new tax year.

Plus, don't forget that dividends are based on when they are declared, rather than when they are paid. Make sure you have the paperwork to show the dividend declared before 05/04/2016 and then you can make the actual transfer at a later date if you wish.

If you are only declaring the dividend, make sure your accounts also reflect the same details

[Louisa@InTouch]

The turnover will be calculated based on the date that your invoice is issued. Therefore you could declare the dividend before the cash comes into the business bank account.

So, you can look at the profits and then take a dividend before the new tax year.

Plus, don't forget that dividends are based on when they are declared, rather than when they are paid. Make sure you have the paperwork to show the dividend declared before 05/04/2016 and then you can make the actual transfer at a later date if you wish.

If you are only declaring the dividend, make sure your accounts also reflect the same details

[northernladuk]

Well I think you need to think your accountant strategy... They may save you more money than they cost before then year end. One of the main things an accountant can do is set you up right so you are in charge going forward. Starting off wrong and it could cost you.

[transformingninja]

Hi

I'm moving from permanent to contractor next week and am looking to see if I can get my first dividend under this years rules.

My first invoice will be issued before the end of the month but the clients payment schedules means that they won't be settled until 5th March. My first question is does the invoiced amount represent company profits from which I can take a dividend or would I need to wait until the cash is in the business account? Could I declare a dividend based on the invoice but not pay it until the cash is in the account or can a company only declare dividends from actual cash it has?

I've projected that next years dividends will take me into the 32.5% bracket so believe that any dividends not taken this year will be taxed at that level (if I take them all out). YTD my paye earnings are £36k with no dividends. I therefore think that, if the option is available, it would be better to take the dividend in this years tax. My final question then is does the dividend tax rate calculated on dividend earnings or total earnings?

I appreciate this is a question for an accountant but I wasn't intending to get one until the business had some cash flowing through it as whilst I'm making the transition my personal reserved are already stretched.

Thanks in advance for any help.