Setting up a legit business
#1
Scooby Regular
Thread Starter
Setting up a legit business
Has anyone got any pointers of advice for the following situation. Basically I work full time, doing quite well, pay shed load of tax.
Mrs works 2 days a week, school hours and doesn't use all her tax allowance, so doesn't pay any. She's been thinking of trying to get a couple of cash in hand cleaning jobs (for example) but after having a conversation with a work mate last week, it seems that we may actually be better off setting up a small business with both of us as directors. I can then put some money in to the business, for example, buy a small car for her to get to cleaning jobs in, and because it will run at a loss, I can offset some of this against my tax. Same can be applied to running the business from home, putting a % of bills we get towards the business as well.
That's about all I know, so does anyone know anything about this sort of thing and if we could actually be better off by doing it?
Cheers
Q
Mrs works 2 days a week, school hours and doesn't use all her tax allowance, so doesn't pay any. She's been thinking of trying to get a couple of cash in hand cleaning jobs (for example) but after having a conversation with a work mate last week, it seems that we may actually be better off setting up a small business with both of us as directors. I can then put some money in to the business, for example, buy a small car for her to get to cleaning jobs in, and because it will run at a loss, I can offset some of this against my tax. Same can be applied to running the business from home, putting a % of bills we get towards the business as well.
That's about all I know, so does anyone know anything about this sort of thing and if we could actually be better off by doing it?
Cheers
Q
#5
Tax and NI can be offset yes. It could get complex though.
Get a good accoutant. What you are trying to do is possible - depending on your personal circs. Get hold of a good accountant and run through everything and see what they suggest.
Get a good accoutant. What you are trying to do is possible - depending on your personal circs. Get hold of a good accountant and run through everything and see what they suggest.
#6
Indeed, if you start to claim back PAYE on losses of your LTD then expect them to raise an eyebrow - which is where you need your good accountant.
#7
See an accountant mate.
Obviously if you are on PAYE and your Missus s not using her allowances, you are getting screwed both ends, so working for yourself would give you the best options.
Most people don't seem to realise that once they start paying 20% basic rate tax, they are paying out a marginal rate of close to 40% once all NI contributions are taken into account - suckers!
Funnily enough, until recently the BBC were pushing employees to go down the Ltd Co route.
HMRC took a dim view by all accounts.
Obviously if you are on PAYE and your Missus s not using her allowances, you are getting screwed both ends, so working for yourself would give you the best options.
Most people don't seem to realise that once they start paying 20% basic rate tax, they are paying out a marginal rate of close to 40% once all NI contributions are taken into account - suckers!
Funnily enough, until recently the BBC were pushing employees to go down the Ltd Co route.
HMRC took a dim view by all accounts.
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#9
Scooby Regular
Getting paid into ltd company is one thing - it has income and makes a profit of some sort but has a lower tax profile
Setting up a company to run at a loss is quite another
And any savings made, may well pe paid in accountancy charges
Setting up a company to run at a loss is quite another
And any savings made, may well pe paid in accountancy charges
Last edited by hodgy0_2; 28 March 2013 at 06:37 PM.
#10
Scooby Regular
Thread Starter
Okay peeps, we'll speak to an accountant and see what's what. It might not run at a loss, just break even or something like that, but as a few of you have pointed out, I don't really want to put myself on the HMRC radar....
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