Reply to: Employee Salary and NI Payment

[NotAllThere]

I will have the luxury of keeping an accountant.

It's not a luxury. Unless you are competent with financials yourself, it's a necessity.

[northernladyuk]

Correct but I guess it's just trying to help the OP rather than confuse them with semantics. Sorting it from day 1 could have meant address the VAT and plan what to do from day 1 and not necessarily apply for it.

Exactly. This is no a case for confusing the issue.

Contracts, in my experience, state a daily rate of x thousand Euros / Pounds + VAT. VAT No. is sometimes requested at this stage as well.

[northernladuk]

Correct but I guess it's just trying to help the OP rather than confuse them with semantics. Sorting it from day 1 could have meant address the VAT and plan what to do from day 1 and not necessarily apply for it.

[TheFaQQer]

Good to know whether or not you need or want to be VAT registered.

What company needs to be registered on day 1? You might want to be registered, but I'm not sure you ever need to be registered.

It may be good to know that you might want to be registered, but it's not something that "needs sorting from day 1".

[northernladyuk]

Why does VAT need sorting from day 1?

Good to know whether or not you need or want to be VAT registered.

[TheFaQQer]

Things like insurance and VAT need sorting from day 1.

Why does VAT need sorting from day 1?

[northernladyuk]

The OP's attitude is particularly worrying in this regard. e.g. Having a wife as a shareholder could make absolutely little sense if she's working and earning anything close to the higher rate. He's probably just heard that it's a good idea from another contractor or something.

The bit that worries me is:

when I break even and become profitable,

If the OP is an IT contractor and in contract, it is hard to see how you can not be profitable. If the OP is not a traditional daily rate IT contractor, then this is probably the wrong forum.

[FrontEnder]

What Frontender says and add that the set up is the key bit. Get the shareholding wrong or start paying yourself the money that should be set aside for tax and the accountants first job is to try get you out of trouble without a large tax bill or fine. Get it right first time.

The OP's attitude is particularly worrying in this regard. e.g. Having a wife as a shareholder could make absolutely little sense if she's working and earning anything close to the higher rate. He's probably just heard that it's a good idea from another contractor or something.

[northernladuk]

What Frontender says and add that the set up is the key bit. Get the shareholding wrong or start paying yourself the money that should be set aside for tax and the accountants first job is to try get you out of trouble without a large tax bill or fine. Get it right first time.

If money really is a problem Gorilla Accounting give the first two months for free so you can get some money in the bank.

For most of us and particularly people like yourself an accountant is a necessity not a luxury.

[FrontEnder]

I don't understand the comment that the business isn't profitable and can't afford an accountant, yet you have enough money coming into the business to pay you and your wife a salary

A contractor accountant typically costs around £100 a month. When I went with mine, they didn't ask for anything up front, so it's not like you have to fork out a large sum up front. It'll be about £100 next month.

Sure there's a risk that your contract finishes leaving you a bill for them, but considering you clearly don't have a clue on the basics, I'd say the bigger and far more costly risk is getting your tax affairs wrong.

[northernladyuk]

Hello All,

I am already trading and in business. I need to do these things myself as my company is yet to become profitable. In a couple of months, when I break even and become profitable, I will have the luxury of keeping an accountant.

But until then I want to do all this myself. So your advise will be much appreciated.

Thanks

They don't worry about paying yourself or your spouse until you have an accountant. If you can afford to pay salary, you can afford to pay an accountant.

If you are making sales, you must get your head around VAT immediately. Focus on teat first.

[SueEllen]

Hello All,

I am already trading and in business. I need to do these things myself as my company is yet to become profitable. In a couple of months, when I break even and become profitable, I will have the luxury of keeping an accountant.

But until then I want to do all this myself. So your advise will be much appreciated.

Thanks

Then you will be in a complete mess.

Things like insurance and VAT need sorting from day 1.

[BrilloPad]

Try QDOS. They are very good at this sort of stuff.

If you don't pay an accountant, you might not pay HMRC too. You are going to end up in jail if you are not careful.

[mattfx]

OP Sounds like you need to be on an accountancy forum rather than a contractor forum to be honest. Most of us here have accountants I think. Some don't, but most do.

[Nishant]

Hello All,

I am already trading and in business. I need to do these things myself as my company is yet to become profitable. In a couple of months, when I break even and become profitable, I will have the luxury of keeping an accountant.

But until then I want to do all this myself. So your advise will be much appreciated.

Thanks