[wightsurf]

Been looking into this today, just out of interest.

From what I can tell it looks interesting . You can pay your self a minimum wage which is taken out of company profits and any profit after all expense are added up is then tax as dividend > Corporation Tax of 10% under the profit of £32010.

You then can pay yourself dividend and pay no tax as you have all ready pay Corporation Tax on this . So you now pay 10% instead of the 20% you are paying.

If I got this right it looks pretty good, sure someone will be along to tell me 

[bobplum]

Been looking into this today, just out of interest.

From what I can tell it looks interesting . You can pay your self a minimum wage which is taken out of company profits and any profit after all expense are added up is then tax as dividend > Corporation Tax of 10% under the profit of £32010.

You then can pay yourself dividend and pay no tax as you have all ready pay Corporation Tax on this . So you now pay 10% instead of the 20% you are paying.

If I got this right it looks pretty good, sure someone will be along to tell me 

you have to do different accountants for a ltd company and only an accountant can do them, i think? so a  bigger bill

[dave0123]

nope that's not right. you pay 20% corporation tax like you do now, you just save national insurance that is all.

[dave0123]

you have to do different accountants for a ltd company and only an accountant can do them, i think?

and nope thats not right either anyone can do accounts for a ltd company, but they are diffrent than a sole trader

[wightsurf]

Dave you are right I was looking at dividend tax rate , I think

[wightsurf]

http://www.hmrc.gov.uk/taxon/uk.htm

This was what I was looking at, now i'm a bit confused here 

Why is there dividends tax at 10% when I thought you paid no tax on dividends as tax has already been  paid  ?

[dave0123]

there is a tax credit up to 32k if you keep reading below your link it will explain it

[bobplum]

 

you have to do different accountants for a ltd company and only an accountant can do them, i think?

and nope thats not right either anyone can do accounts for a ltd company, but they are diffrent than a sole trader

 

[Simon Spencer]

Go to this link to work out if it's worth it!

http://www.companiesmadesimple.com/sole-trader-v-limited-company.html

[H2GoKent]

I'm limited (very says the wife)
Both my wife and I can take up to the personal allowance (£9000ish) tax free and the rest is in dividends. Up to a certain level they treat the divi as if tax has been taken ie: you take £900 and the records will show you have taken £1000, and yes you pay corporation tax on top from your profits. But you will end up paying less income tax
So its handy for us as I have three kids so my wife works for my firm from home, doing admin and taking phonecalls.
I would recommend an accountant as they know what you can claim for etc, they are more expensive but cheaper in the long run.

[PoleKing]

I'm limited (very says the wife)
Both my wife and I can take up to the personal allowance (£9000ish) tax free and the rest is in dividends. Up to a certain level they treat the divi as if tax has been taken ie: you take £900 and the records will show you have taken £1000, and yes you pay corporation tax on top from your profits. But you will end up paying less income tax
So its handy for us as I have three kids so my wife works for my firm from home, doing admin and taking phonecalls.
I would recommend an accountant as they know what you can claim for etc, they are more expensive but cheaper in the long run.

As a % of turnover, how much do you pay yourself (one way or another), how much stays in the business and how much does her maj get (again, one way or another)?
If you don't mind sharing?

I'm sole trader ATM but about to jump to either a partnership (with the wife) or limited. Can't decide...

[H2GoKent]

Depends is the honest answer.
To keep things simple I pay us the same amount each month, which should leave some in the business for van/equipment replacement and maybe enough for a bonus now and then!
I'm running a small surplus at the mo' which I have investment plans for. 
The thing to remember is that you are legally the employee of a company and it's the company's money so you must account for what you do with it.
Profits are taxed once earned, and then when you pay yourself that money it's liable for the usual taxes that wages are, but of course with the help of your accountant you decide how you pay yourself (dividends etc) to make it tax efficient. I don't pay much income tax at all.

Also useful if you have kids and want to claim child benefit, or even child tax credits as your take home pay is basically the same as your earnings, but you can leave money in the business if you have a stonking year to pay yourself another time without it affecting them.
The advantage is you play it how you want and to suit you, the disadvantage is the higher accountancy costs and higher reporting requirements.
Oh and one last thing, stay honest with it (as I'm sure you would) the allowances are fine so you don't need to cheat and have to worry about getting caught.