Clean It Up
UK Window Cleaning Forum => Window Cleaning Forum => Topic started by: JSMC on July 04, 2017, 07:51:18 pm
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Currently a sole trader but loads keep saying i should register as a ltd company. Anyone on here care to discuss or offer advice.
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Speak to your accountant
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Not worth it anymore.
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Depending on you earnings,if your paying 40 % tax,by Beijng led you will be paid a small basic wage and the rest in dividends keeping you under the 40% tax bracket.
That's what I'm led to believe.
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Depending on you earnings,if your paying 40 % tax,by Beijng led you will be paid a small basic wage and the rest in dividends keeping you under the 40% tax bracket.
That's what I'm led to believe.
No, dividend allowance has been cut to 5k which will be cut to 2k in 2018/19.
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Less worthwhile now.
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Currently a sole trader but loads keep saying i should register as a ltd company. Anyone on here care to discuss or offer advice.
Don't take tax advice from window cleaners. Just don't.
Some clever cookies on here, some ejits too.
Speak to an accountant
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My accountant recommended we go ltd.
Best thing we have done so far.
But yes speak to your accountant.
The div alowance has been cut to 2.5k from 5k but thats ok just add your spouse as a director.
They are already cutting corporation tax to under 17precent by 2020. Some have made noises of 10 percent but that's unlikely to happen.
Biggest plus for me is the separation. It's great just having a set salary every month now, so much easier to budget the month. The wife and I get all the bills paid in one go and that's that. We have a bit of spending money in our budget and we are happier.
The rest of the money stays in the business if we need some extra cash we can draw a loan from the business for what we need, you buiness becomes almost like your own credit card.
As long as you don't exceed the directors loan limit of 10k and you don't draw more than the business has available in net profits your ok as you can pay back the lIan at the end of the year by taking a dividend to pay it.
We recently had to have the gearbox on the family car rebuilt at over 1k I was able to take a directors loan from my business as apposed to using credit cards or payday loans.
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Ask.
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An.
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Accountant.
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Is it just residential you do?
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I have a mixture of work and i know as a sole trader i can be liable.
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I am ltd and guess what? wish I wasnt if am honest....pain in the ass loads more paper work high accounts bill, i am closing my ltd company this year......and to reply to you can be liable?? liable for what?? were window cleaning we dont have high over heads, keep things simple and easy to run your business and your stand the test of time and earning a good living 8)
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plus if labour get in corporation tax going up to 26%
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plus if labour get in corporation tax going up to 26%
If it does go up to 26 percent, it simply means it's going to be harder to keep money in the company and keep it capitalised. Just reinvest the money in the company for growth that the whole idea with corporation tax the higher it is the more it encourages business owners to spend money on the business to expand it.
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plus if labour get in corporation tax going up to 26%
If it does go up to 26 percent, it simply means it's going to be harder to keep money in the company and keep it capitalised. Just reinvest the money in the company for growth that the whole idea with corporation tax the higher it is the more it encourages business owners to spend money on the business to expand it.
What's the good of that? You are in business for profit not to keep Gardiners afloat!
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plus if labour get in corporation tax going up to 26%
If it does go up to 26 percent, it simply means it's going to be harder to keep money in the company and keep it capitalised. Just reinvest the money in the company for growth that the whole idea with corporation tax the higher it is the more it encourages business owners to spend money on the business to expand it.
What's the good of that? You are in business for profit not to keep Gardiners afloat!
Well the idea works like this..it all depends on spending the money smartly
Company end of year profits say are £10k after wages, and business expenses. So that's a £2600 corporation tax bill.
Instead of spending it on 'stuff' for the company, invest it into.
An advertising budget
An extra vehicle
Your website
An extra member of staff
That's how corperation tax works and why it exists.
Spend 5k on advertising.
2.5k on an extra van & equipment
2.5k on staffing costs
0 tax to pay as all the profits were reinvested in the business.
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plus if labour get in corporation tax going up to 26%
If it does go up to 26 percent, it simply means it's going to be harder to keep money in the company and keep it capitalised. Just reinvest the money in the company for growth that the whole idea with corporation tax the higher it is the more it encourages business owners to spend money on the business to expand it.
What's the good of that? You are in business for profit not to keep Gardiners afloat!
Well the idea works like this..it all depends on spending the money smartly
Company end of year profits say are £10k after wages, and business expenses. So that's a £2600 corporation tax bill.
Instead of spending it on 'stuff' for the company, invest it into.
An advertising budget
An extra vehicle
Your website
An extra member of staff
That's how corperation tax works and why it exists.
Spend 5k on advertising.
2.5k on an extra van & equipment
2.5k on staffing costs
0 tax to pay as all the profits were reinvested in the business.
But the whole point of going limited is to pay yourself dividends instead of a salary and if you make no profit, you can't.
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plus if labour get in corporation tax going up to 26%
If it does go up to 26 percent, it simply means it's going to be harder to keep money in the company and keep it capitalised. Just reinvest the money in the company for growth that the whole idea with corporation tax the higher it is the more it encourages business owners to spend money on the business to expand it.
What's the good of that? You are in business for profit not to keep Gardiners afloat!
Well the idea works like this..it all depends on spending the money smartly
Company end of year profits say are £10k after wages, and business expenses. So that's a £2600 corporation tax bill.
Instead of spending it on 'stuff' for the company, invest it into.
An advertising budget
An extra vehicle
Your website
An extra member of staff
That's how corperation tax works and why it exists.
Spend 5k on advertising.
2.5k on an extra van & equipment
2.5k on staffing costs
0 tax to pay as all the profits were reinvested in the business.
But the whole point of going limited is to pay yourself dividends instead of a salary and if you make no profit, you can't.
You can, but you are thinking about it the wrong way. The whole point of going LTD is to separate the business from your personal affairs.
Here's how it works. Ill give you my example.
My salary is £11500 a year and my wife is also £11500
So we extract £23000 out of the business with no income tax to pay (just a tiny amount of NI but that's all) we are on PAYE and get a payslip every month from the accountant.
Our living costs have been simplified, so we can concentrate on growing the business. So 23k a year is enough for us to live on for now.
Now you cant actually extract dividends from the company until you have made a profit in the 1st place. This is why a salary to cover your basic living costs is best practice as this comes off the companies profits immediately, dividends do not.
I only work 4 days a week, and even that my third day in the week is a shorter day due to it being for quarterly window cleans. We are on track for £52k turnover this year, so the company profits just minus the wages are going to be around the £29k mark, then take off fuel and all the other gubbins and we are in around at £20k profit so far.
Now i wont be able to take dividends until the company is fully capitalised at £16,200 (the 20k profit minus the corperation tax of £3800)
You can then withdraw your dividend (up to £5000 tax free, or more) from that £16,200 balance. Leaving a capital balance in the companies account for the next financial year of £11,200. You can choose to use that money to invest in the business for the next year, or spend it all on the business in the same year, but make sure you get your maths correct.
Now what do you do if an unexpected bill comes your way (it has with us) the you can take a directors loan from the company and pay it off with your dividend at the end of the year, as long as you dont exeed the £5k allowance there wont be tax to pay, and as long as you dont go over the £10k directors loan limit in any one year period you should be ok. But your accountant will recommend whats best.
This is not ADVICE this is simply an example of our current state of affairs as recommended from my accountant.
PLEASE USE AN ACCOUNTANT FOR ANY ADVICE
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The 5k dividend allowance is being reduced to 2k next tax year.
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The 5k dividend allowance is being reduced to 2k next tax year.
Its being halved to £2.5k so ill add my wife as a director. Plus personal allowances are going up from £11500 to £12000 so we will just increase our salary to £12k each.
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No, according to government website it is being reduced to 2k.
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No, according to government website it is being reduced to 2k.
Whichever, it makes the benefit of going limited very limited now.
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I stand corrected.
2,000 it is.