Reply to: Profits location

[Olly]

ah right....I see where the other chap was coming from. Thanks sorry mr sock

[Clare@InTouch]

You would need a PAYE scheme in place if you're paying that level of wages - else the fact that you're paying yourself enough to qualify for NI won't be registered with HMRC at all, so it won't qualify!

[Olly]

thanks..thought so.
OP is paying himself 5200 a year (100 a week)
I love it when someone on the internet is wrong
I'll now smugly go and make a coffee.

P.S. Though he does say "below the NI threshold" which makes me think OP is a tad confused.

Before I got on my high horse about folk on here always saying "ask your account" or "get an accountant"......to the OP....I suggest you get an accountant

[Clare@InTouch]

erm...please explain?

You need 30 qualifying years in order to get a full state pension, and in order for a year to qualify you need earnings of at least £5,044.

Qualifying for a basic State Pension : Directgov - Pensions and retirement planning

[Olly]

Besides your also doing yourself out of a state pension and not keeping your NI upto date.

erm...please explain?

[Pondlife]

You're not looking nearly hard enough.

Besides your also doing yourself out of a state pension and not keeping your NI upto date.

Exactly.


(welcome back BTW)

[Sockpuppet]

None at all at the minute. My commute is a walk, my lunch is eating at home. This is why it appeared as though an accountant might have been overkill.

You're not looking nearly hard enough.

Besides your also doing yourself out of a state pension and not keeping your NI upto date.

[escapeUK]

Why are you asking these questions because you don’t appear to be listening to the good advice from previous posters?

But listening to what he is saying, he is deducting 21% off everything! And then paying below NI limit wages and the rest of dividends.

So he's actually paying more tax than he needs to, as the 21% would not be payable on his wage or any expenses (if any existed). So although it sounds simplistic, and not "proper" accounts, I doubt he is going to get into any trouble for running very basic accounts which give HMRC more tax! I know our tax system is twisted, but come on!

Btw, when people say that "the money belongs to the Company", I always think, "Yes, but the Company belongs to me!"

I would agree that you should get an accountant, but not to make HMRC happy, but to pay them less tax and make you happy. Increase your wage to £476.25 a month and stop paying 21% on it, and register for flat rate VAT too, that makes more money for me than my accountant costs!

[PlazaCommerce]

So you don't put ANY expenses through the company?

None at all at the minute. My commute is a walk, my lunch is eating at home. This is why it appeared as though an accountant might have been overkill. However, I've seen a company that will take care of everything for £50 a month which seems like it might be the best idea.

[ChimpMaster]

Perhaps you feel as though your company income isn't high enough to justify an accountant. Or maybe there is another reason. I don't know.

In any case, you are doing this the wrong way around. I have met contractors who keep their own books, but only after having used an accountant for several years prior, i.e. to learn the ropes.

An accountant is also invaluable on keeping up to date on latest developments in tax and law. For example, the shifting of tax brackets expected from April. This will impact how much dividend you can pay without creeping into the 40% tax bracket.

And expenses! There are always expenses - books, mobile phone, internet, reclaiming your insurance cost, selling your laptop to the company etc etc.

[malvolio]

This is the reason I joined the forum, to ascertain whether I need an accountant or not.

It's fine for accountants, or people affiliated with accountants to simply say I need one but taking into account your last post I'm trying to figure out what implications there would be if I carry on the way I am.

As I stated, the salary I'm receiving (as director) is below the NI threshold and the rest I'm taking as dividends.

Every transaction, in or out from the company account is recorded and based on calculations I've made I currently have more than enough left in my company account to pay the corporation tax when it's due.

For one, I'm not an accountant nor am I affiliated to any.

Second I've explained some of the detail you need to be able to produce. For example, you saying something is a dividend is not enough, you have to have a board minute declaring a dividend, to whom its been paid, how much and how much tax credit it has accrued. Don't do that and your divi is actually salary, which rather buggers up your claim that NICs don't apply. And leaving that detail aside you pay PAYE on divis anyway.

And so on...

So how about we stop giving advice to someone who clearly doesn't need it and you carry on defrauding the taxman. 'Cos that's how he'll see it.

[TykeMerc]

And for about 1% of your company's turnover it's a waste of your precious free time to do otherwise IMHO.

True, I do enough project accounting to not want to have to arse about with my company stuff in detail. Arguably if the accountants were to beggar something up badly then I've also got some comeback on their professional firm too.

For £90 per month (inc VAT) it's value for money to me.

[Pondlife]

I'm not affiliated in any way with an accountant other than I employ a firm to handle my accounts.

I've been in business close to 20 years now, while I've come across lots of accounting info and experience I prefer to pay a professional to give me advice, keep the books, prepare returns and generally make sure I don't make any damn silly mistakes. A bonus is that my income is as tax efficient as the rules reasonably allow.

I could undoubtedly manage without an accountant, but I prefer not to.

WHS

And for about 1% of your company's turnover it's a waste of your precious free time to do otherwise IMHO.

[Netraider]

I'm not affiliated in any way with an accountant other than I employ a firm to handle my accounts.

I've been in business close to 20 years now, while I've come across lots of accounting info and experience I prefer to pay a professional to give me advice, keep the books, prepare returns and generally make sure I don't make any damn silly mistakes. A bonus is that my income is as tax efficient as the rules reasonably allow.

I could undoubtedly manage without an accountant, but I prefer not to.

WHS

[TykeMerc]

I'm not affiliated in any way with an accountant other than I employ a firm to handle my accounts.

I've been in business close to 20 years now, while I've come across lots of accounting info and experience I prefer to pay a professional to give me advice, keep the books, prepare returns and generally make sure I don't make any damn silly mistakes. A bonus is that my income is as tax efficient as the rules reasonably allow.

I could undoubtedly manage without an accountant, but I prefer not to.