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PostPosted: Sun Mar 24, 2013 8:12 pm 
retrobike rider
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Location: Super Sussex by the Sea
dan smith wrote:
What is your profession?

Have you considered setting up a limited company rather than being self employed?

Dan


It will be gardening/landscaping, with a variety of different clients, many years experience so I *touches wood* already have work coming in from various friends and acquaintances... Not sure how being a limited company would benefit me to begin with, though open to advice!


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PostPosted: Sun Mar 24, 2013 9:07 pm 
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Location: The Cock Inn, Tillett, Herts
It means that if the business goes bankrupt any creditors can't come after your personally for your watch, car or house.

My nephew is in a similar game, landscaping, fencing and he's training to become qualified as a tree surgeon. I dont think his income after expenses is huge, perhaps a salary of £25-£30k a year. However, his tax bill is a lot lower than mine, so he probably ends up with more readies in his poicket at the end. And it has other advantages - new car, written off agaist the business for tax (it's a defender, will genuinely be used for work also). New tv for "entertaining clients", honest, written off against tax, and so on. With a half-sharp accountant your tax liability can be a fraction of your normal Joe on PAYE.


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PostPosted: Mon Mar 25, 2013 1:58 pm 
Gold Trader / PoTM Winner / RB Rider
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Location: brigg, home of the gypsies
How did you start out/get going?

stumbled into an existing business due to very unfortunate circumstances

How do you sort the tax bit out and how do you decide how much to declare?
Monthly book keeping, yearly accounts. declare all income, its too easy to be caught out. far too easy

How does the vat back thing work?
what vat back thing?

What do you do about sickness/injury?
not had a day off sick since i started. you are not allowed to be ill. If i were ill i would have to pay someone i trusted to open up and do deliveries on my behalf

How does it affect tax credits etc?
I dont get those so no problem

How do you discipline yourself for putting tax aside?
i don't. i just crap myself twice a year


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PostPosted: Mon Mar 25, 2013 2:16 pm 
retrobike rider / Gold Trader
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Joined: Sat Jan 27, 2007 10:35 pm
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Location: The desolate flats of Cambridgeshire
I am running as a VAT registered Ltd.

I left university in 2002, and have worked as a Development Engineer in Medical devices, in that time I have been made redundant 3 times, but not gone without a job for more than 2 weeks at any point. In my line of work, when money gets tight, development is one of the first areas to be cut, hence the 3 redundancies, but there are plenty of small-medium companies with work that needs doing, so as a contractor, it is fairly good going.

Indeed I have not looked back since May 2011. My last PAYE job was one of a kind in the center of London, and that paid well, about as much as I could possibly expect to get at this point in my career without going into the dull world of management. Now as a limited I take home between 2-3 times that per year. Work is currently plentiful, indeed I recently had to choose between 3 contracts to take on, all equally good.

It is true that despite the best intentions, you will work longer, the money urges you to. Likewise you will holiday less. It is important to keep in mind that time off is valuable too!

My ltd was setup for me and all the admin such as invoices, returns etc is handled by my accountants, http://www.danbro.co.uk. They are probably not the cheapest, and I must confess I didn't really shop around, but they do make things easy. I hope one day to be able to grow my business, take on a graduate, pay a fair wage and get them the experience they need to go on in medical devices (a particularly hard sector to get a foot into), then perhaps I won't have to be in a position of turning down 2 out of 3 contracts!

Good luck with whatever you decide, but going it alone has certainly worked for me.


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PostPosted: Mon Mar 25, 2013 2:25 pm 
retrobike rider / Gold Trader
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Joined: Sat Jan 27, 2007 10:35 pm
Posts: 8423
Location: The desolate flats of Cambridgeshire
How did you start out/get going?

Made redundant again, grabbed a short term contract, decided I liked it and then went ltd.

How do you sort the tax bit out and how do you decide how much to declare?
All done on a weekly basis by my accountants, they also do my personal return and all business returns, all I have to do is log on to my company bank and send the money.

How does the vat back thing work?
To be honest its a bit of a mystery to me, I do charge VAT and I do claim it back, but again it is the accountant who handles it all.

What do you do about sickness/injury?
If I am too sick to work, I don't work, but you have to remember you wont get paid and will still have expenses to cover. I am not in the sort of industry where a replacement can be drafted in. So it is important to not be sick, or at least make sure you have funds to cover any sick days.

How does it affect tax credits etc?
I dont get those so no problem

How do you discipline yourself for putting tax aside?
I keep all my money in my company account, pay myself a wage weekly and a dividend to top up the coffers as/when required. All based on advice slips from the accountants.

My own books give me an idea of how much i'll need to keep aside for the various tax bills and the weekly advice from the accountant tells me exactly what to pay and when.

In all honesty the thing would be a whole heap more trouble and less beneficial if it wasn't for the services of my accountant!


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PostPosted: Mon Mar 25, 2013 2:58 pm 
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Quote:
How did you start out/get going?


Was made redundant, almost immediately had offers of freelance work, decided to give it a shot. Did a couple of years as a sole trader, just coming up to the end of first year as a limited company.

Quote:
How do you sort the tax bit out and how do you decide how much to declare?


If you're a sole trader you keep simple accounts and declare your profit (essentially revenue - expenses). It's just an extra page on the normal tax return. If you've not done tax returns before it's slightly daunting but actually pretty straightforward. If you're an employee of your own limited company it's slightly more complicated -- you have to have an actual payroll and pay yourself a salary. Your company will pay corporation tax on its profits, you pay income tax on your salary.

Quote:
How does the vat back thing work?


You charge your clients VAT. You reclaim the VAT element of things you buy for the business. It's quite a lot of paperwork, you have to keep very detailed records and do regular VAT returns. My company is on the flat-rate VAT scheme which is a lot simpler to administer -- each business type has a rate at which they owe VAT, I think mine's 13 or 14%. I charge 20% VAT on all invoices and pay the 13 or 14% to HMRC. The idea is that the rate varies according to how much buying/selling of stuff your type of business typically does, so it ought to work out broadly similarly to the actual numbers if you did traditional VAT and accounted for everything individually.

Quote:
What do you do about sickness/injury?


Don't get sick or injured.

Quote:
How does it affect tax credits etc?


It doesn't, really. The tax credits thing doesn't care where your income is coming from, it just cares how much it is.

Quote:
How do you discipline yourself for putting tax aside?


Every time an invoice is paid I (or rather, my wife, who is also employed by the company partly to look after these things because I'm hopeless) puts a fixed percentage of it (I forget what, but it's quite generous) in a separate account with a view to there being enough money in it to pay the tax bill. Seems to work so far :)

An accountant is a good idea. We've done nearly everything ourselves thus far, we got an accountant to help set up the company/payroll/etc and we'll probably get him to do all the regular returns and payroll and so on next year -- he wants £70/month at which is good value considering the time it takes us. It's not a ludicrous time overhead, but it's significant. There's also the real-time PAYE thing coming in which will add an extra reporting burden.


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PostPosted: Mon Mar 25, 2013 3:01 pm 
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Joined: Sun Aug 07, 2011 10:55 am
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Location: Dorset
I have been thinking of setting my own little business up, especially being long term unemployed, i just need to have a little more confidence and be brave.

I am liking the advise on this thread, all very helpfull 8)


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PostPosted: Mon Mar 25, 2013 3:31 pm 
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Location: Stratford upon Avon
The best thing to do is pay yourself the maximum tax allowance (£7,475?) then the rest as dividends. Assuming you own 100% of the company then this should not be a problem.

Doing this will mean you will only pay corporation tax and your NI contribution will be paid for you. (Note, you will need to pay income tax if/when your income reaches a certain amount.)

You will need an account regardless, they will explain all of this too you, I’m sure they will also help you register your company and decided if its beneficial for you to be VAT registered. Book an appointment 


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PostPosted: Mon Mar 25, 2013 3:45 pm 
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The threshold for NI (£7592pa) is now lower than that for income tax (£8195 for 2012/13, £9940 for 2013/14), so if you pay yourself the maximum tax allowance you're still liable for NI at 12%. Which is a bit disappointing -- I was quite excited by the tax allowance going up, but in practice it doesn't make any difference because the NI threshold remains (about) the same.


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PostPosted: Mon Mar 25, 2013 4:08 pm 
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Location: Stratford upon Avon
MikeD wrote:
The threshold for NI (£7592pa) is now lower than that for income tax (£8195 for 2012/13, £9940 for 2013/14), so if you pay yourself the maximum tax allowance you're still liable for NI at 12%. Which is a bit disappointing -- I was quite excited by the tax allowance going up, but in practice it doesn't make any difference because the NI threshold remains (about) the same.



To be honest my accountant deals with this so I’m not 100% up on the figures, however for me and my business taking dividends rather than a salary was more beneficial.

Professional advice is the way forward with regards to TAX once you decided to take control of your own employment :)


Thanks

Dan


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