What do I need to do to get my own business going?

Theres some real crap in this thread, by the usual suspects, but, none the less, some information that I have been looking for myself recently. :)

Cheers & Boo's respectively. :p;):D
 
Mickey said:
and pay tax on a proportion of your dividends from the LTD company. And no offence intended, but some of the figures I've seen Morba quoting in other threads on the subject seem a bit unrealistic to say the least.
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You pay tax on the profits and then dividends is what's left, same as a sole trader I would have thought, you shouldn't be paying tax in dividends unless your on a high profit margin with minimal expenses.
 
Having recently had a breif chat with an accountant I discussed the benefits of Ltd and Sole Trader and he told me that the finanical benefits and increased admin costs only become beneficial around the £50,000 gross profit region.
 
Tesla said:
Having recently had a breif chat with an accountant I discussed the benefits of Ltd and Sole Trader and he told me that the finanical benefits and increased admin costs only become beneficial around the £50,000 gross profit region.
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Must have been a brief chat?

I dont get how simply not paying NI (close to zero anyway) on LTD can leave you with a similar amount.

Is that company with £70k turnover or £1M?
 
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Mickey said:
Actually, I'll expand on this before you even ask.

Taking for example this post:


Now without knowing your actual contract rate it's hard to show accurately, but lets assume £100k a year for an average IT contractor.

Sole trader:
Profit: 100,000
Class 2 NI: 120
Class 4 NI: 3,421
20% Tax: 7,200
40% Tax: 23,426
Total deductions: 34,167

LTD company:
Salary: 5,435
Profit: 94,565
Corp Tax (21% rate): 19,859
Income Tax (40% rate): 9,677
Total deductions: 29,536

A saving of £4,631. I'm also sure I've seen posts of yours where you say you're actually paying yourself more than the £5,435 personal allowance.


So yes, that's why I don't think your figures add up, and you also have the added accountants expenses when running a LTD company.
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I base my figures on the calcs that are on many websites. I cannot be a sole trader, as a contractor I have to have my own company or work through an umbrella company, this is where the savings of LTD come into better light.

Also, you are forgetting that there are things that eat into the profit, hotels / travel / pension and all manner of other things, which effectively lower the corp tax bill at the end of the year.
 
Morba said:
I base my figures on the calcs that are on many websites. I cannot be a sole trader, as a contractor I have to have my own company or work through an umbrella company, this is where the savings of LTD come into better light.

Also, you are forgetting that there are things that eat into the profit, hotels / travel / pension and all manner of other things, which effectively lower the corp tax bill at the end of the year.
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I'm not forgetting these things, but remember, they'd also lower your NI & income tax if you were a sole trader. I'm not disputing that you need to have a LTD company, I'm disputing your claims of it saving you £15k a year minimum ;)
 
Have just done a calculator on SJD for both umbrella and contract, without giving the figure I was using (thought its easy to calculate), there was over 1500 a month difference in the money I would be seeing.
 
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Morba said:
Have just done a calculator on SJD for both umbrella and contract, without giving the figure I was using (thought its easy to calculate), there was over 1500 a month difference in the money I would be seeing.
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Care to explain that using actual figures (a breakdown of the tax paid) as I did? Does the figure they give take into account your personal tax to be paid on the dividend? Take that out and it sounds about right.
 
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