Who here runs their own limited company? Business administration questions.

[Participant]

I'm becoming interested in the ins and outs of running a small private company and would be interested to hear from small business owners that have turned ltd. from running as a sole trader, or went straight into being a limited company.

What's your area of business? IT contractor? Builder? Accountant?

Do you have another main job and work self-employed part-time? If so, when you notified HMRC that you were self-employed, how if at all did this affect PAYE + NI through your main day job?

Do you produce your own

- income statement
- balance sheet
- notes
- directors' report?

Do you submit simplified accounts, i.e. abbreviated balance sheet and no P&L, or do you voluntarily submit more detailed accounts because you need to produce them for your stakeholders anyway? Or are you forced to submit detailed accounts for another reason?

Do you do your own self-assessment, corporation tax return, VAT, intrastat, EC sales, etc.?

If you were previously a sole trader, what problems have you encountered since becoming limited? Anything to make you regret doing it?

Are you exempt from audit but have your books audited voluntarily?

Do you pay yourself a dividend as well as salary? How do you structure your dividend / salary remuneration? Did you take any advice as to the best way to do it?

Do you employ an accountant or book-keeper for anything? How much do they charge and for what services? How did you find them? Are they any good? When choosing your accountant, was it important to your that they were recognised as supervisors by companies house i.e. a qualified auditor, even if you didn't need auditing?

Are you an IT (or other) contractor that set themselves up as a limited company, hoping to save tax, or for another reason and if so, what?

Have you been or do you think you could be, caught out by IR35 or Section 660 legislation?

Have you ever been fined for late returns?

Have you ever been inspected by HMRC or any other organisation?

This is currently purely for my own curiosity, not a survey or any kind of official research or anything.

Loads of questions there and I'd love to hear from some of you small business owners.

 

[Mr Jack]

I run a limited company. My advice: get an accountant.

 

[inogen]

Mr Jack has it right. Get an accountant. A good one.

A good accountant will save you more than the fees they charge.

It's not only about tax though - My accountant is one of the first people I call before I make any important business decision. Often they've been there or have seen it before or both.

 

[Citizen420]

I did until I became staff, I just paid an accountant who basically deals with it all.

Now that I'm staff my tax is in the double figures... thieving gippos!

 

[Participant]

Mr Jack has it right. Get an accountant. A good one.

A good accountant will save you more than the fees they charge.

It's not only about tax though - My accountant is one of the first people I call before I make any important business decision. Often they've been there or have seen it before or both.

Mr. Jack does not have it right, as I am an accountant myself. I'm just looking into how small business owners tend to deal with their affairs...so...the questions ?

 

[csmager]

I can't answer from strictly personal perspective, but can from an accountant/tax perspective + having a family business that I'm currently not very involved with.

Do you have another main job and work self-employed part-time? If so, when you notified HMRC that you were self-employed, how if at all did this affect PAYE + NI through your main day job?

It wouldn't affect anything on your day job if self-employed. If you did already pay the full 11% NI on your day job, though (i.e earn over £43,875), then you can defer Class 4 NIC on your self-employed earnings so you don't end up paying too much.

Do you submit simplified accounts, i.e. abbreviated balance sheet and no P&L, or do you voluntarily submit more detailed accounts because you need to produce them for your stakeholders anyway? Or are you forced to submit detailed accounts for another reason?

If you met the requirements to submit a simple modified balance sheet, then you would. No one would ever voluntarily disclose more than necessary. We certainly don't.

Do you do your own self-assessment, corporation tax return, VAT, intrastat, EC sales, etc.?

VAT done by us monthly (zero rated supplier, so repayment only), CTSA done by our accountant.

If you were previously a sole trader, what problems have you encountered since becoming limited? Anything to make you regret doing it?

There are positives and negatives to both, but i'd say the limited liability was a huge advantage.

Are you exempt from audit but have your books audited voluntarily?

I wouldn't think anyone would do this - we certainly didn't, but now have to be. It's another business expense (audits can be expensive!), and no one would voluntarily spend money they didn't have to unless they got a benefit from it. I can't see one for owner-managed businesses.

Do you pay yourself a dividend as well as salary? How do you structure your dividend / salary remuneration? Did you take any advice as to the best way to do it?

The usual most tax efficient way is to take up to the earning's threshold as Salary (to get your NI contributions marked as up to date, even though you aren't paying any), and pay the rest as a dividend. That said, this isn't what we do!

Are you an IT (or other) contractor that set themselves up as a limited company, hoping to save tax, or for another reason and if so, what?

Have you been or do you think you could be, caught out by IR35 or Section 660 legislation?

If you genuinely do contract to many companies and meet the self employed definitions, it can be very advantageous - especially as your husband/wife can own 50% and us their tax allowances for dividend payments etc. (The proposed legislation as a result of the Arctic Systems case has been put on hold indefinitely)

Have you ever been fined for late returns?

Not aware of.

Have you ever been inspected by HMRC or any other organisation?

Only your usual VAT inspections.

 

[Greebo]

As a company accountant for a limited company plus currently self employed as plus used to have my own limited company for 4 years and was also an employee at the same time I can answer your questions as follows:

I'm becoming interested in the ins and outs of running a small private company and would be interested to hear from small business owners that have turned ltd. from running as a sole trader, or went straight into being a limited company.

What's your area of business? IT contractor? Builder? Accountant? Currently a self employed accountant plus employee accountant for a limted company

Do you have another main job and work self-employed part-time? If so, when you notified HMRC that you were self-employed, how if at all did this affect PAYE + NI through your main day job? You have a choice. You can leave your tax code unchanged on your main job or have it to zero and use your allowance on your self employed position.

Do you produce your own

- income statement yep
- balance sheet yep
- notes yep
- directors' report? Yes when I was limited, not as self employed.

Do you submit simplified accounts, i.e. abbreviated balance sheet and no P&L, or do you voluntarily submit more detailed accounts because you need to produce them for your stakeholders anyway? Or are you forced to submit detailed accounts for another reason? Always submit as little as possible

Do you do your own self-assessment, corporation tax return, VAT, intrastat, EC sales, etc.? Yes, but I am an accountant

If you were previously a sole trader, what problems have you encountered since becoming limited? Anything to make you regret doing it? Pros and cons both ways. Limited has it's advantages if you ever plan to sell up or go bankrupt (hence the name, limited )

Are you exempt from audit but have your books audited voluntarily? Exempt and don;t have the audited. However, many a small business if funding is needed from the bank, the bank will insist on an external audit.

Do you pay yourself a dividend as well as salary? How do you structure your dividend / salary remuneration? Did you take any advice as to the best way to do it? If employed elsewhere as well as self employed/limited company, no need to pay a salary. If it your only source of income, the IR will expect you to take a reasonable salary, you just can't take it all as dividends.

Do you employ an accountant or book-keeper for anything? How much do they charge and for what services? How did you find them? Are they any good? When choosing your accountant, was it important to your that they were recognised as supervisors by companies house i.e. a qualified auditor, even if you didn't need auditing? A good accountant is somebody who is proactive and gives your advice before you ask the questions. They are worth every penny you pay them.

Are you an IT (or other) contractor that set themselves up as a limited company, hoping to save tax, or for another reason and if so, what? Pass on this one. It's complicated when they changed the rules a few years ago to specifically stop IT/consultants evading tax.

Have you been or do you think you could be, caught out by IR35 or Section 660 legislation? NA

Have you ever been fined for late returns? Nope. However, this year the IR have got tough. They used to give a reasonable time past deadlines without any fines. Now, if your one day late, it's automatic. They have increased the areas they can fine you in. The country hasn't got any money left if you didn't know

Have you ever been inspected by HMRC or any other organisation? HMRC inspections on a regular basis. It depends on your turnover and sector as to how often you are inspected (I used to work for H M Customs in VAT)

This is currently purely for my own curiosity, not a survey or any kind of official research or anything.

Loads of questions there and I'd love to hear from some of you small business owners.

ANd the last advice is find yourself a good accountant. It will save you money.