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Previously on "first year contracting / dividents"

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  • northernladuk
    replied
    Originally posted by deeter View Post
    Jesus, NLUK. I do read the guides and contact my accountant regularly; is it so bad I tried the shortcut of polling the forum's collective experience just this once?
    Not quite once though is it..

    https://www.contractoruk.com/forums/...ml#post2620377

    But chill your beans. It was only a little giggle.

    Leave a comment:


  • Maslins
    replied
    You can take dividends mid year. It should be out of retained profits. This means after you've factored in setting any funds aside for VAT/CT etc. You cannot take dividends beyond that.

    Potentially you could take a director loan beyond that, but I'd strongly recommend against it. It's a recipe for disaster, a common n00b mistake that they pay the price for a year or two later.

    Money that should be set aside for taxes is not your money, don't even think of it as your company's money. You're just temporarily holding it. If you go out and spend it, you'll have a very painful next year.

    Leave a comment:


  • vwdan
    replied
    Originally posted by fiddleleaf View Post
    Hi there, I started contracingt just about 7 months ago, and have a question about dividends.
    I have taken about 2/3 of lower % dividents out, but have money in my bank account saved up for tax, just thinking is it worth taking that money out as dividents, as tax doesn't need to be paid for a while and can pay that off from future invoices, so I can still use up smaller % this tax year? Sounds very confusing, but this is my first year, so still trying to get my head around.

    Thank you
    Do not take money out of the company that isn't yours. It's really that simple - it's utterly foolish to do so. In every legal sense that CT liability and/or VAT belongs to HMRC and they will come and take it from you.

    If you need cash and are so confident you'll get it in future then take a persona loan and pay it off down the line. Or try desperately to live within your means, especially in the early stages of your contratc career.

    Leave a comment:


  • deeter
    replied
    Jesus, NLUK. I do read the guides and contact my accountant regularly; is it so bad I tried the shortcut of polling the forum's collective experience just this once?

    Leave a comment:


  • northernladuk
    replied
    Originally posted by deeter View Post
    Can operating profit from the current year be taken out legally, or does one need to wait for it to end before withdrawing any of it (as part of the tax year that follows)?

    (I'm pretty sure you can, but I figured I'd just double-check while the subject's up)
    (giggle)

    Leave a comment:


  • northernladuk
    replied
    Yeah sure. Take it all out. Nothing can go wrong.. Can it?

    P.s you shouldn't be taking all your dividends. You should leaving as much in the company as possible to build a warchest up just in case your second gig takes awhile to get. Taking everything out including your tax money and then ending up on the bench for a few months will be extremely uncomfortable.

    Leave a comment:


  • jamesbrown
    replied
    Originally posted by fiddleleaf View Post
    dividends
    Originally posted by fiddleleaf View Post
    dividents
    Right.

    Originally posted by cojak View Post
    cocky
    Rhymes with cocky.

    Leave a comment:


  • deeter
    replied
    Originally posted by MrButton View Post
    If it’s not retained profit then I think it’s an illegal dividend. Basically don’t take out ANY more than you need to cover your debtors (tax etc) at any point in time.
    Can operating profit from the current year be taken out legally, or does one need to wait for it to end before withdrawing any of it (as part of the tax year that follows)?

    (I'm pretty sure you can, but I figured I'd just double-check while the subject's up)
    Last edited by deeter; 17 March 2019, 21:58. Reason: Clarifying I'm not a _complete_ idiot

    Leave a comment:


  • MrButton
    replied
    If it’s not retained profit then I think it’s an illegal dividend. Basically don’t take out ANY more than you need to cover your debtors (tax etc) at any point in time.

    Your accountant should be able to advise almost exactly how much that is.

    Btw. “D” and “T” are not next to each other on a standard qwerty keyboard. ?*♂️

    Leave a comment:


  • cojak
    replied
    Originally posted by fiddleleaf View Post
    Hi there, I started contracingt just about 7 months ago, and have a question about dividends.
    I have taken about 2/3 of lower % dividents out, but have money in my bank account saved up for tax, just thinking is it worth taking that money out as dividents, as tax doesn't need to be paid for a while and can pay that off from future invoices, so I can still use up smaller % this tax year? Sounds very confusing, but this is my first year, so still trying to get my head around.

    Thank you
    Don't get cocky with money that technically isn't yours, something may happen in the future (like getting canned from your contract with a long bench-time) that means you don't have the invoices to pay back your tax..

    Read up on this here Limited Company Dividends Guide

    Leave a comment:


  • fiddleleaf
    started a topic first year contracting / dividents

    first year contracting / dividents

    Hi there, I started contracingt just about 7 months ago, and have a question about dividends.
    I have taken about 2/3 of lower % dividents out, but have money in my bank account saved up for tax, just thinking is it worth taking that money out as dividents, as tax doesn't need to be paid for a while and can pay that off from future invoices, so I can still use up smaller % this tax year? Sounds very confusing, but this is my first year, so still trying to get my head around.

    Thank you

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