limted companies
11 January 2007, 09:09 PM
#1
limted companies
does anyone know what advantages there are to forming a limited company for tax reasons ??? i have been advised by my accountant that i need to form one but i dont really know what they involve!!! and if i have to pay myself a wage how much can i pay myself ????
11 January 2007, 09:18 PM
#2
Scooby Regular
Join Date: Oct 2002
Posts: 84
Likes: 0
Received 0 Likes
on
0 Posts
You can avoid paying 40% tax by claiming a lower wage topped up by a dividend on which you pay 19% corporation tax! - I think. Thats what my accountant told me anyway.
11 January 2007, 09:55 PM
#3
Also bear in mind that you can get somewhere in the region of £34000 tax free in the form of dividends, double that if you partner/wife does the same. So essentially if you earnt £80k you'd only really pay corporation tax. (plus some nominal tax and NIC)
11 January 2007, 10:14 PM
#5
Scooby Regular
Join Date: Sep 2003
Location: Scoobynet
Posts: 5,387
Likes: 0
Received 0 Likes
on
0 Posts
You also get allowances for things you can claim back again tax. Eg if you plan on your home being your 'office' (doesnt mean you have to work there all the time if you are a contractor for example) but you can claim back again heating bills and phone bills etc.
Its annoying having to do a tax return though, although Im sure your account will be quick to point out that he can do that for you! ($$)
Its annoying having to do a tax return though, although Im sure your account will be quick to point out that he can do that for you! ($$)
11 January 2007, 10:40 PM
#7
Scooby Regular
Join Date: Dec 2006
Location: Mars
Posts: 11,470
Likes: 0
Received 0 Likes
on
0 Posts
I'd get a decent accountant to check and okay your dividends - We had a wee hiccup (advise from bad accountant) and had to pay some back - Oops!
Need to do a bit of bookwork but it's well worth doing.
Must do personal tax return VERY soon or I'm doomed!
Need to do a bit of bookwork but it's well worth doing.
Must do personal tax return VERY soon or I'm doomed!
Trending Topics
11 January 2007, 10:41 PM
#8
It is every mans duty to pay taxes but it is every mans right to reduce the amount of tax he pays. Tax avoidance is legal - tax evasion is a different matter - be careful. If you cross the line expect no mercy
11 January 2007, 10:49 PM
#10
Scooby Regular
Join Date: Dec 2006
Location: Mars
Posts: 11,470
Likes: 0
Received 0 Likes
on
0 Posts
Play your cards right and running a limited company will make your personal finances go a LOT further - Claiming expenses, taking out minimal salary, dividends, etc, etc.
Play your card wrong and you get busted - Which is annoying.
Play your card wrong and you get busted - Which is annoying.
11 January 2007, 10:51 PM
#11
11 January 2007, 11:01 PM
#13
11 January 2007, 11:05 PM
#15
SN Fairy Godmother
Join Date: Nov 2003
Location: Far Far Away
Posts: 35,246
Likes: 0
Received 0 Likes
on
0 Posts
You also get allowances for things you can claim back again tax. Eg if you plan on your home being your 'office' (doesnt mean you have to work there all the time if you are a contractor for example) but you can claim back again heating bills and phone bills etc.
Its annoying having to do a tax return though, although Im sure your account will be quick to point out that he can do that for you! ($$)
Its annoying having to do a tax return though, although Im sure your account will be quick to point out that he can do that for you! ($$)
11 January 2007, 11:05 PM
#16
Scooby Regular
Join Date: May 1999
Posts: 7,901
Likes: 0
Received 0 Likes
on
0 Posts
Yep - that's about right - expect to pay your accountant about 2% of TURNOVER but ours is a diamond - keeps it all sorted. Pay yourself a low wage and a dividend (you'll need 2 shareholders I think, one MD and a company secretary at least. that is how we are set up - each owning 50% of the company)
You don't need 2 shareholders. You need two company officers. You must have a director and a company secretary, and they cannot be the same person. Although the company secretary can also be a director, but not the sole director. You can have as many or as few shareholders as you want.
If your turnover exceeds a certain amount (£59,000 I think) you'll have to register for VAT. You'll also need a company bank account, and to register for PAYE. You'll need to do annual returns to companies house and pay your CT within 9 months of your company's financial year end. You'll need to pay VAT quarterly and PAYE monthly, although small companies can apply for quarterly PAYE payments. You'll also need some mandatory insurance: public liability and employer's liability. The latter is a bit of a farce because as a director you'll be prohibited from ever claiming on it.
11 January 2007, 11:15 PM
#17
On dividends up to the higher rate tax bracket you pay no additional personal tax, only the 19% Corporation Tax on the profits that generated them. Strictly you pay 10% but get a 10% tax credit, actually. Over the higher-rate bracket you effectively pay 25% personal tax on the net dividend amount, and of course the 19% CT on the profits that allowed it to be paid.
You don't need 2 shareholders. You need two company officers. You must have a director and a company secretary, and they cannot be the same person. Although the company secretary can also be a director, but not the sole director. You can have as many or as few shareholders as you want.
If your turnover exceeds a certain amount (£59,000 I think) you'll have to register for VAT. You'll also need a company bank account, and to register for PAYE. You'll need to do annual returns to companies house and pay your CT within 9 months of your company's financial year end. You'll need to pay VAT quarterly and PAYE monthly, although small companies can apply for quarterly PAYE payments. You'll also need some mandatory insurance: public liability and employer's liability. The latter is a bit of a farce because as a director you'll be prohibited from ever claiming on it.
You don't need 2 shareholders. You need two company officers. You must have a director and a company secretary, and they cannot be the same person. Although the company secretary can also be a director, but not the sole director. You can have as many or as few shareholders as you want.
If your turnover exceeds a certain amount (£59,000 I think) you'll have to register for VAT. You'll also need a company bank account, and to register for PAYE. You'll need to do annual returns to companies house and pay your CT within 9 months of your company's financial year end. You'll need to pay VAT quarterly and PAYE monthly, although small companies can apply for quarterly PAYE payments. You'll also need some mandatory insurance: public liability and employer's liability. The latter is a bit of a farce because as a director you'll be prohibited from ever claiming on it.
11 January 2007, 11:29 PM
#18
Scooby Regular
Join Date: May 2006
Location: I have ad blocked my rep - so dont waste your time!
Posts: 1,548
Likes: 0
Received 0 Likes
on
0 Posts
"If your turnover exceeds a certain amount (£59,000 I think) "
not allways - i turn over many times that amount but am not VAt registered.
not allways - i turn over many times that amount but am not VAt registered.
Thread
Thread Starter
Forum
Replies
Last Post