Ltd. company questions

[stek]

So let me get this right....

Turnover

Pay yourself a min salary + expenses
Net profit is taxed at 20% corporation tax
Remainder can be taken as a dividend (will need to work out how much i can take if wanting to stay under the basic rate personal tax allowance).

Is that more or less the grounds on how it works?

Make sure gig isn't Public Sector and make sure gig is outside IR35, pay tax upfront for next year if over lower limit...

[PurpleGorilla]

So let me get this right....

Turnover

Pay yourself a min salary + expenses
Net profit is taxed at 20% corporation tax
Remainder can be taken as a dividend (will need to work out how much i can take if wanting to stay under the basic rate personal tax allowance).

Is that more or less the grounds on how it works?

You will pay dividend tax too.

[RSoles]

Pension.
Remember you will need to retire some day and your Ltd. Co. can pay into your pension.
This comes out before profits and Corp. tax are calculated.

[D15]

So let me get this right....

Turnover

Pay yourself a min salary + expenses
Net profit is taxed at 20% corporation tax
Remainder can be taken as a dividend (will need to work out how much i can take if wanting to stay under the basic rate personal tax allowance).

Is that more or less the grounds on how it works?

[northernladuk]

Before you go off and get giddy it will also fund you for periods on the bench between gigs which can be long.

Plenty of other things to worry about before masses of money in your company.

[teapot418]

Ask a kindly mod to move your thread to accounting.

Yes, the money builds up. You either take it at higher rate tax, put it in a pension, or wait till you stop contracting and close your company, at which point you pay capital gains on it.

It's a good idea to keep 6-12 months to cover bench time, sickness etc, etc...

[SueEllen]

Why have you posted this in General?

I presume you can read and understand things?

Nope clearly you can't.

Anyway do you like gladiators?

[D15]

New to this so apologies if my questions are a bit obvious.

If you pay yourself a minimum salary and a chunk of dividends to keep you in basic 20% tax rate..... what happens to the 'pot' of money left in the Ltd company? after a period of a few years this would have built up, how can i get it out of the business?

I found this article: Optimum Directors Salary and Dividends 2017/18 - JF Financial : Online Accountants

Im a little confused at their examples, why is there no mention of corporation tax deduction on profits? I thought this was required before dividend could be paid out?