New ltd company - advice needed!

[MakeitOrBrakeit]

Many thanks for the help, advice and links everyone. As I mentioned in my original post, this is only a short-term contract and I'm not sure what I'll be doing at the end of it. That's why I don't really want to spend too much on an accountant! Obviously, I will need some assistance with various things, especially to file my end of year returns.

I am also thinking that I can worry about that a bit more at the end of the three months as I will still have time to either invest in a good accountant for the long-term or know that the contract is over and I can wrap things up, paying an accountant a one-off fee to cover everything.

I like the like of Xero and FreeAgentCentral, I'll make a decision over the weekend and start using that properly.

Thanks again, I appreciate the help.

Hi Liam,

You are in right path. Most of the work that accountants hype about, you can do yourself. Accounting is no rocket science. its simple.

There is pleanty of online help available from HMRC. all your work you can do online and HMRC will pay you 75 pounds incentive if you do all your work online with them.

Also, just use a decent software. Many are free some decent ones come with free trail for a year or so. So you will not shell out a penny for year. You will also get some VAT advantage if you register for VAT with hmrc.

Most of the accountats will tell you Invocing, and year end accounting is a pain in the ass. you need to pay 500 pounds for that. But thats just a carp. As contractors our accounts are as simple as an excell sheet. All help and advice is available on net.

I guess most of the guys here are accountants in disguise fishing for some one, you would see them online throught the day. So please do wiegh the the advice you get.

[NotAllThere]

I am the only person in the the company (sole director), and I am not sure how to set up the salary for my self in order to pay just Corporatio tax.

As low as you like

Do I need to have any special programme to set up the salary, or just keep records using an Excel?

No.

so could I wourk long hours on the company behind and pay for my self very small salary?

Yes

Now go and talk to an accountant for your own sake.

[Irma]

Setting up the salary for myself

I am the only person in the the company (sole director), and I am not sure how to set up the salary for my self in order to pay just Corporatio tax.

Do I need to have any special programme to set up the salary, or just keep records using an Excel?

Also as I would set up a minimum salary i would need to work just few hours, so could I wourk long hours on the company behind and pay for my self very small salary?

If somebody knows the answers to my quiries please reply.

Thank You very Much

[liam.m]

Many thanks for the help, advice and links everyone. As I mentioned in my original post, this is only a short-term contract and I'm not sure what I'll be doing at the end of it. That's why I don't really want to spend too much on an accountant! Obviously, I will need some assistance with various things, especially to file my end of year returns.

I am also thinking that I can worry about that a bit more at the end of the three months as I will still have time to either invest in a good accountant for the long-term or know that the contract is over and I can wrap things up, paying an accountant a one-off fee to cover everything.

I like the like of Xero and FreeAgentCentral, I'll make a decision over the weekend and start using that properly.

Thanks again, I appreciate the help.

[TykeMerc]

Get an accountant

If you're unsure of the best and proper way to handle things then a proper accountant who understands contractors is very important. True they charge, but they're value for money in the long run.

[PhilAtBFCA]

New Ltd Company

liam.m

You may find this link useful for Directors Salary, it describes the factors you need to take into account when deciding on a salary in your company.

You might also find this link useful, there is a spreadsheet and a video and once you have entered in a couple of details in the spreadsheet you can see a calculation of salary dividends, coroporation tax etc.. so you can model different scenarios.

On the software side, there is lots available arround the internet. I would choose something very basic to start with and then see how it goes.

I do like Xero too, the link has been given earlier, and there are a number of competitors that rank with that, IMHO, like Kashflow, E-conomic, Clear Books, Liberty Accounts.

I have looked at most of these at one time or another. IMHO I like www.freeagentcentral.com as it is designed for Professional Contractors and Freelancers so 1) Your personal tax is calculated as you manage your salary and dividends, vital for tax planning, (I dont know another application that does this) 2) you can do timesheets, billing, mileage claims, expenses all in one system, 3) handles different vat schemes well and swithces easily from cash accounting to standard, flat rate to standard etc. 4) payroll integtrated so easy to manage and no posting of journals

There is a free trial on their website and a list of accountants that are FreeAgent friendly, but you could engage any accountant you chose.

I hope that helps

Phil

PS Disclosure - We recommend all our clients to use FreeAgent so I am not unbiased in my opinion !

[Manic]

Get an accountant and take a look at www.xero.com

[Hex]

As I am the only person in the the company (sole director), I am a bit confused about paying myself a salary and dividends. I understand I can pay myself the minimum amount and then pay the rest in dividends but how do I formally do this?

You need to register your company for PAYE with HMRC. Then you just pay yourself whatever salary you want to, there is a CD HMRC will send you which will work out how much Employer's National Insurance, Emloyee's National Insurance and Income Tax you need to pay monthly. Then every quarter (or monthly if you prefer) you can pay the amounts due on line.

Dividends you just pay (out of net profit) - I do a BACS payment from my company bank account, but you could write a cheque. It is best to produce dividend counterfoils to the shareholder(s) which detail the net dividend and the tax credit. You will also need to create minutes of the company meeting at which the dividend was agreed.

However, there are many other things you will need to consider as a director of your own limited company such as company returns, PAYE returns, VAT registration, Corporation Tax returns. I think you will need an accountant. You can get a contractor accountant for less than £100 / month. If you do most of the work yourself, you may get away with paying an accountant £400 or so to do your Tax Returns only. I think you will probably need a lot of hand holding though as you are obviously new to this.

[bassy]

if you havent read the first timers guide on the right hand side then you should start there - there is some very useful information there (direct link http://www.contractoruk.com/first_timers/index.html)
Next thing as you're already set up your limited company get yourself a good accountant - there are a number that come on here regularly (i use darren at Upton myself) - in the long run a good accountant should save you the money you spend on them per month and they can handle your payroll etc if you need them to. They'll also keep you up to date with filing dates of your other taxes.

[liam.m]

Hello,

Basically, I was made redundant a couple of months ago and have been looking for work since. I was offered an excellent contract job (initially only 3 months, possibility of it being extended) a few weeks ago, which I need to be a limited company for and have now set up. It also means I can do ad-hoc work for my old company (there is and will be work available).

I've registered my limited company (and bank account etc.) and have had a contract from the company I will be working for (through a recruitment consultant) and will be starting later this week.

As I am the only person in the the company (sole director), I am a bit confused about paying myself a salary and dividends. I understand I can pay myself the minimum amount and then pay the rest in dividends but how do I formally do this? Where does NI fit into this? Also, sort of along the same lines: is there a cheap software/Excel accounting tool I can use to cover these things?

I've spent quite a long time researching all of this but I can't seem to get clear and up-to-date answers, so I'd be grateful if someone could clarify these point for me.

Also, at the end of this contract it's possible I won't be doing any more contracting work as I am aiming for a permenant job, so I'm not very keen on paying anyone to tell me everything I need to know!

Thanks in advance for any replies.

LM