I'm putting away 20% of my monthly income for corp Tax

[Alan @ BroomeAffinity]

"You need the taxmans approval to voluntarily wind up a company and they only give that if your accounts are up to date and fully paid up.

Most likely he just let the company drift into liquidation or non-existence. I've seen a fair few of these in my time. The tax and VAT offices can take about 3 years before they do anything in terms of winding up. I know of a contractor who is on his 4th company in maybe 15 years. He has earned about £50k a year from each and has paid very little tax. His first 2 companies have had liquidators appointed but so far they haven't seen the relation or the pattern. God knows how when you consider that the addresses are the same and the only change in the name is XX Contracts Ltd to XX Solutions Ltd.

[Turion]

"He also used to wind his company up every two years and just leave a few quid for the IR and VAT quoting that they should just "help themselves" to whats left"


You need the taxmans approval to voluntarily wind up a company and they only give that if your accounts are up to date and fully paid up.

[Nixon Williams]

in theory , 20% of invoice is fine as you only pay 20% of profits

However given that we have no idea what you are running as a salary or dividend , it might not be enough

For the year to 31/03/08, 20% is the maximum you would have to pay, any salary and other costs would reduce this amount.

The rate increases to 21% on 1st April 2008 (unless the Chancellor changes this in the Budget).

Your accountant should be advising on this anyway.

Alan

[sidknows]

in theory , 20% of invoice is fine as you only pay 20% of profits

However given that we have no idea what you are running as a salary or dividend , it might not be enough

[miffy]

I know someone who treated his company Bank Account as his own money for his first few months in contracting.

He ended up having to fight of all his creditors when the VAT bill came because he'd spent all the VAT money.

That's hilarious! Totally reckless, but funny all the same!

I used to know a guy who just "dipped in" when he wanted something new (usually a substantial purchase like a plasma tv). He'd then leave the accountant to "sort it" as he put it

He also used to wind his company up every two years and just leave a few quid for the IR and VAT quoting that they should just "help themselves" to whats left

I'd never dream of that (I don't think I have the balls), but I can't help but laugh at other peoples recklessness.

[tim123]

I know someone who treated his company Bank Account as his own money for his first few months in contracting.

He ended up having to fight of all his creditors when the VAT bill came because he'd spent all the VAT money.

tim

[vhadiant]

But what about NI and income tax what % should I be sticking away for this?

The money in the company bank account is not your money. There's no point "putting away" x% as you literally can't.

It's only your money after you pay salary to you (which incur PAYE & NI) and/or you give yourself a dividend (which also incur personal tax).

This of course +/- expenses. Looks like you are in need of an accountant buddy. Go get one. It's less paperwork now by treating the money in your company bank account as your money (it isn't), but in actual fact you're only delaying the hassle to the end of the company year.

[ratewhore]

But what about NI and income tax what % should I be sticking away for this?

Better than a lot of people do and you should be congratulated for that. Remember though that NI and PAYE will probably be paid quarterly so should be easier to account for.

[Ardesco]

At the moment I put aside 32% of my gross incoming to account for VAT and CT, this will go up to 33% in a couple of weeks.

Anything left over after I have paid VAT and CT is my bonus

[r0bly0ns]

The answers will depend on what your needs are, what you are invoicing and what you want to do with your business.

You need to speak to an accountant.

[MrRobin]

Do you not have an accountant? Sounds like you need one!

You should put away 20% (21% in a few weeks time) of monthly profit. I.e.

Invoice amount + VAT charged - VAT payable - salary - employers NI - expenses

[roadster198]

What salary are you paying yourself???

And 20% of what, exactly, are you "putting away" for CT?

Currently putting away 20% of my invoice amount for Corp Tax per month

[51st State]

What salary are you paying yourself???

And 20% of what, exactly, are you "putting away" for CT?

[roadster198]

But what about NI and income tax what % should I be sticking away for this?