Reply to: How much to pay oneself through Ltd Company ?

[Robwg]

This is the biggest pile of horsetulip I have read on this board for ages. EBs/Agencies/interviews/business negotiations. FFS, get a grip on reality! I have direct customers and I also go through, wait for it, an agency. Said agency gets me interviews. Yes - I interview for contracts. And then what? If the client wants me, I negotiate with the agent.

I am glad you posted that before I did!! :-)

Reminded me of Michelle off of the Apprentice last year. 'Managing direct of her own firm' and 'Takes home 100 Grand a year'. Needless to say when Sugar asked her why she wanted to quit her own firm where she was boss etc. and come work for his she didn't really have an answer - mainly because 'owns her own firm' isn't really as impressive as 'works as a contractor' is it??

[Nixon Williams]

Provided you are not caught by IR35 then the salary you pay can be anything you wish (you may need to consider pension plan arrangements) I generally advise around the minimum wage and dividends each month.

There is nothing naughty about paying a lower salary and topped up with dividends provided they are paid from profits and you pay the taxes on them.

No higher rate tax is due on dividends until your total gross income exceeds £38,335 (2006/07)

I hope this helps

Alan

[ratewhore]

apologies, I felt moved to say something on behalf of those of us from the planet real life...

[Dundeegeorge]

C'mon, it was Denny

This is the biggest pile of horsetulip I have read on this board for ages. EBs/Agencies/interviews/business negotiations. FFS, get a grip on reality! I have direct customers and I also go through, wait for it, an agency. Said agency gets me interviews. Yes - I interview for contracts. And then what? If the client wants me, I negotiate with the agent.

Get off your fecking high horse...

You were expecting sense, perhaps?

[ratewhore]

The are easily recognisable because they refer to EBs as agencies, believe that those who do 'add value' (which most thankfully recognise as being rare) 'find them a job' or else they refer to their business negotiations as 'interviews' and send 'CVs' off to the agency.'

I would say less than 10 per cent on here are truly outside IR35 with marketing literature, good direct clients they can use between EB contracts, rights of substitution in practice and on paper, outside client control by working as and how and where they like with the fee that is meant to reflect meeting client deadlines rather than being paid for their time (on site). The proof the the pudding are those topics raised about what a contractor should say to their current client when other work comes their way. For real businesses, truly operating outside IR35, this is as relevant or as worrying as asking your clients permission to blow your nose. Most businesses, in case, you didn't know do work for multiple clients simultaneously, in case you didn't realise.

The majority on here are pseudo IT employees with a stitched up IR35 friendly contract looked over by Bauer and Cotterall or Qudos who take a fee for old rope (because they don't actually know what working conditions will be like on site). Therefore, most contractors are working on site, full time under client control for a contracted period, just like any other fixed term employee, moan about putting in extra hours for no pay, are paid a daily or hourly fee in leiu of pension, holidays etc for their time not their work. They should be paying tax on most of their income, minus 5% not just a proportion of it.

This is the biggest pile of horsetulip I have read on this board for ages. EBs/Agencies/interviews/business negotiations. FFS, get a grip on reality! I have direct customers and I also go through, wait for it, an agency. Said agency gets me interviews. Yes - I interview for contracts. And then what? If the client wants me, I negotiate with the agent.

Get off your fecking high horse...

[DaveB]

I know contracgtors who are not being paid anything other than divi's which is really taking the p***. If you are earning the income of your company then you shoud be paid for that.

Thats not taking the piss thats just daft. Doing that wastes your personal tax allowance unless you have another income from elswewhere that uses it up.

Take the advice of a good accountant. Pay minimum wage. Carry Tax Investgation Insurance. Sleep at night.

[autodial]

Another offshore company owns the UK limited company as well. The Offshore company has anonymous directors. My domicile is Isle of Man. If the IR come they can have two fingers. My bank is the Jersey (HSBC) which is nice because the agents like the thought of HSBC, I just give them the sort code and they think it’s on the mainland.

Yeh but if you live and work in the UK you may have a problem as I am pretty sure that the IRC can still go after you personally. What happend with the Contracting Overseas thing? didnt the contractors endup footing the unpaid taxes? Offshore? I dont think so.

[Paddy]

Are you MAD or just taking the p***? dont you know going offshore is like holding up a red flag to IR saying come and get me cos its not the offshore company that gets the bill when IR35 comes a knocking at your door, it will be you who pays. How do you feel now?

Another offshore company owns the UK limited company as well. The Offshore company has anonymous directors. My domicile is Isle of Man. If the IR come they can have two fingers. My bank is the Jersey (HSBC) which is nice because the agents like the thought of HSBC, I just give them the sort code and they think it’s on the mainland.

[Denny]

You sound like a fun guy

I'm not fun or a guy. So you're wrong again.

[Mark Crossan]

I know contracgtors who are not being paid anything other than divi's which is really taking the p***. If you are earning the income of your company then you shoud be paid for that.

[Jay54]

I am really struggling to pay myself anything these days. By the time I’ve paid the offshore consultancy company, and by the time I’ve paid the offshore advisory company there is very little left.

Are you MAD or just taking the p***? dont you know going offshore is like holding up a red flag to IR saying come and get me cos its not the offshore company that gets the bill when IR35 comes a knocking at your door, it will be you who pays. How do you feel now?

[lilelvis2000]

For the first couple of years isn't it alright to pay yourself very little? I mean you have a fledgling "business" don't you?

Perhaps after a few years you may want to pay a reasonable salary - I'm in the £9,000 pa area now.

[Paddy]

I think that paying oneself minimum wage and taking the rest as dividends is taking the p*ss somewhat and may well mark a company out for investigation.

What would be a prudent figure to pay oneself as a director ? Average national wage ? More / less ? What does everybody pay oneself?

I am really struggling to pay myself anything these days. By the time I’ve paid the offshore consultancy company, and by the time I’ve paid the offshore advisory company there is very little left.

[Emperor Dalek]

You sound like a fun guy

Never a truer word spoken in jest!

[boredsenseless]

Ultimately you are paying an accountant to advise you on the best thing to do with your money.

I'd take his advice before Denny's or Dundeegeorge's or mine if I was you.

However it is good to be enlightened yourself in case your accountant is pants!

The answer is simple the law allows a director of a company to pay themselves whatever they like (this isn't even subject to the funds being available, however if you are negligent the receivers could sue you later!). Any profit remaining can be distributed by way of dividends or retained for investment in the company. (Obvioulsy HMRC get their cut before this)

I would always argue leaving the money in the company, drawing dividends as and when the balance of retained profits exceeds a given figure (I set this at the amount I'd need to live for a year if no work came in). Hence if I have more than that in the company it is in my mind truly surplus to the operating overheads of the company and can be distributed.

Contrary to what most people think investigations are either purley random, or triggered by absent paperwork (such as returns, accounts etc) or mistakes in these or you PAYE/VAT.

The reason people believe it is more related to those claiming no salary and high dividends is because there are a lot doing it this way compared with the alternatives and also a lot of contractors don't take the time to be on top of the requirements of running a company and so make mistakes.

That said in the course of your life as a contractor you will more than likely be investigated in some way, thats life if you earn a big wedge nowadays