KevPage

I'm thinking of setting up my own business to run on a part time basis, I'm currently employed and in the higher rate tax band, the wife is working and pays 20%

Would it be better to set the business up as a partnership and pay money to my wife rather than to me? Is that legal? Any other ideas to avoid paying too much tax?

Any help would be much appreciated?

Cheers
Kev

BlkKnight

Speak to an accountancy firm that specializes in tax avoidance.

I can provide a link if you would like.

Trout

iTrader: (1)

Partnerships are complicated.

What you can do is set the company up and pay yourself a low basic wage and for any profits to be paid as dividends. To pay your wife the lions share then she would have to hold he majority of shares.

You will also need a company director and many employment contracts would not permit you to be a director of a company - so again the onus would be on your wife.

A good accountant will give you best advice, including, do you want to handover the lion's share of your business to your wife as you may split up an you will NOT be protected. Just saying

I have a great accountant who did all of this for me - PM if you are interested.

hodgy0_2

i was under the impression that from a legal standpoint at least - partnership were less complicated

in that Limited Companies are legal entities that partnership are not -- which can make partnerships more flexible

skeeter

I agree with the ltd company and payment via dividends route, most tax efficient way, but for real advice to suit your personal circumstances you really need to pay for some professional help.

S

Trout

iTrader: (1)

Hodgy,

at least to my understanding to protect yourself from liabilities you would need to form an LLP and by the time you go down that route you might as well have a limited company.

In a partnership you are effectively the company. With a limited company you are an employee, director or shareholder, but you are not the company.

But as everyone says, get professional advice depending on your circumstances as everyone has a unique situation.

the_msp

Get professional advice; if your business were to operate at a loss (which is "allowed" for "5 years") then a good accountant will be able to claim tax BACK that you have PAYE'd... if you want to go full time business eventually then I would just go Ltd straight away (from the risk point of view - depends what type of work and turnover you will be forecasting...) reinvest all your profits in what would be needed to run full time. Then when you are ready you have your foot in doors and profits can become wages...

P.s. keep on top of the paperwork even with "low turnover" it soon builds up - or better yet "employ" the wife to do it

hodgy0_2

yes you are proabably right -- anyway as you say best get professional advice