[Allan Simmons]

Yeah Big Phil , the first time he came to my house ,he turned up in a beat up rusty Montego estate, told me I would make 50k a year net cleaning carpets.

Yeah, I remember in the very early days when things got so tight up there as they grew the business a baliff arrived mid training session.  They sailed close to the wind to get it going but look who's laughing now.  Just goes to show if you have a get out of jail card are you really commited to making it work.  With no way back you HAVE to make things work.

Al.

[PaulKing]

Simons right you need to know your outgoings, and a breakdown of costs without those your not managing, your re-acting

But a plan is better doing it makes you proactive, I know what we must do on average a day to break even, its a fair amount, but nice to know where you stand on a daily basis, weekly, monthly, yearly ect.

Also business plans are handy for budgeting, if you made 20K profit and it 30 days till the end of the year and you need a new van best time to buy it would be end of the year spend the 20K profit and pay no tax for that year.

I know the barclay package and it not bad very nice to know where things are going and how much, using it I notice that we were getting over billed for telecoms and saved us £2k a year, which is going towards the new eco friendly 224bhp turbo nutter engine in my next van.

plan ahead but don't spend all your time doing it would be my advice

[Robert Watson]

How do you make God laugh?








Tell him you plans.

Yes, I have plans, I carry them around in my head and scribbled on numerous pieces of scrap paper, but I know that`s crap. Another skill to learn. Good fun this carpet cleaning, init.

[Warren Aldridge]

"if you made 20K profit and it 30 days till the end of the year and you need a new van best time to buy it would be end of the year spend the 20K profit and pay no tax for that year."

I dont get this.

Obviously we all have personal bills to pay where the profits usually end up. So what do you do when you buy that van? Borrow from the bank?

Derek West was saying he pays no tax or very little, maybe it was a joke ( I dunno ) but if you pay no tax, you arent making any profit, so how do people survive personally on 0 profit?

[Tony Rowley]

Warren

I am no expert and everyone's individual circumstances will differ but you can have a company and draw a wage up to the current tax threshold and pay no tax, put your wife on the books assuming she has no other income and do the same, this is what the politicians used to do( or may still so) to earn extra money.

The profit being referred to is what you would pay corporation tax on at whatever the rate is, I think currently 20% so it would make sense to invest the money back into the company on an asset like a van or other equipment to lower your tax burden.

The above is assuming a limited company and not a sole trader, again I am no expert so I could be wrong.

Tony

[Tony Rowley]

And to Paul moss your threat of physical violence to me did not go unnoticed,

you keyboard cowboy.

Tony

[Allan Simmons]

I believe a van would have to be depreciated on the books as an asset, it wouldn't all be written off in year one, so take your accountants advice before blowing 'profit' on a large asset like a van.  You might find if you blow the cash on the van you'll still finish up with a tax bill and have no cash to pay it and a cash flow problem.

[wynne jones]

Two words: Chartered Accountant (and a Taxi for Tony)

[John Kelly]

Allan you surprise me thought you were on the ball Capital allowances are 100% at the moment.
If I buy a van this month which is the last of my financial year and pay 10k that means my tax bill will be 2k less.
This applies whether you are a sole trader or limited.
As mentioned if you are limited you pay yourself a salary usualy around 90 quid a week which keeps you below the tax and NI threshold. Your profit is then taken in dividends at the end of the year (or at any other time if you wish). Those dividends are taxed as personal income but the profits of the company are also liable to corporation tax.

[Ian Gourlay]

John

I have always wondered about how much you can pay yourself  in a Limited Company

Does Minimum wage legislation not apply to directors

if you work say 30hrs roughly  £`180 a week so how can you pay yourself £90

Also is Capital depreciation this year only it seems to vary from year to year

Perhaps with budget coming everybody better go and buy new equipment

[Ian Rochester]

I always do a business plan at the end of each year, just a simple thing to look at what has changed within the business and where we want to target our efforts in the next 12 months and how we are going to get there.  Doesn't always work but I set objectives and tick them off as and when they are achieved.

I'd like to think that we have a sustainable business now and something that would be attractive if we ever decided to sell it and retire.

If anyone has £400K spare they can take it now! 

[Ian Gourlay]

See  Duncan Bannatyne .

If thats its genuine worth well done .

[Paul Clapham]

Business plans are ok for a general view of  the "direction " you want to take your company / business , but I feel and know , from personal experience from another business I was running a few years ago, THE most important thing to do each month are " monthly management accounts "  ie a profit and loss account every month, this will give up upto date info as to how your company is preforming, its no good finding out in month 11 of your financial year that you are not making any money.

Another very important bit of info, NEVER  ever have your Business bank account and your's  (and your wife's and children's ) personal bank or mortgage accounts with the same banking group !!!!

 This was one of the very best and most valuable  info I have ever been given in business.

[Allan Simmons]

Allan you surprise me thought you were on the ball Capital allowances are 100% at the moment.
If I buy a van this month which is the last of my financial year and pay 10k that means my tax bill will be 2k less.
This applies whether you are a sole trader or limited.
As mentioned if you are limited you pay yourself a salary usualy around 90 quid a week which keeps you below the tax and NI threshold. Your profit is then taken in dividends at the end of the year (or at any other time if you wish). Those dividends are taxed as personal income but the profits of the company are also liable to corporation tax.

Yeah, understand the limited stuff but DIDN'T realise Capital allowance on Vehicles was 100%, will ask my accountant again now, thanks John.  Anyone know a good accountant?

[derek west]

"if you made 20K profit and it 30 days till the end of the year and you need a new van best time to buy it would be end of the year spend the 20K profit and pay no tax for that year."

I dont get this.

Obviously we all have personal bills to pay where the profits usually end up. So what do you do when you buy that van? Borrow from the bank?

Derek West was saying he pays no tax or very little, maybe it was a joke ( I dunno ) but if you pay no tax, you arent making any profit, so how do people survive personally on 0 profit?

only for the first 3 years warren, i'm affraid ive used all my perks now, got a whopper this year (and thats with the wife on the books) unless anyones got some advice, hmmmmm can i pay my 5 and 2 year old a wage for helping me wash the van on sunday.

[Andrew Briscoe]

My accountant told me capital allownce at 100 % finishes at the end of this tax year, and goes back to 25% per annum like it used to be, although i stand to be corrected.

So if you have made a large profit this year and looking at a large tax bill, it may be worth buying a newer van or machine in next week or so.

Andrew

[Craigp]

Allan you can still do it the old way it's YOUR choice. The old ways not changed it's an additional option.

You can use the old system of capital allowance and take the 20% WDA each year.

OR if you wish you can use the new AIA (Anual Investment Allowance) in which you can put 100% through in the year of purchase.

[PaulKing]

only for the first 3 years warren, i'm affraid ive used all my perks now, got a whopper this year (and thats with the wife on the books) unless anyones got some advice, hmmmmm can i pay my 5 and 2 year old a wage for helping me wash the van on sunday.
[/quote]


Pension Contributions?

and yes you can pay the kids when they are 13 and over, better that than pocket money from your pocket.

Personally I think Limited companies are good as you pay yourself PAYE so no nasty tax surprises at the end of the year and if you put the right figures into a accounts package the press of a button will tell you where you stand on a daily basis.

Then during the years you have the choice of getting money out of the business completely legally by either

Taking it as wages

Paying back the directors loan account you formed at the start of the company as your existing company had value

Dividends

pension contributions ( a very good way, just pensions are performing so badly its a little off putting)

or reinvesting it to grow the company, just remember the tax man is not daft you will eventually have to take out the profit even if you keep reinvesting it for ever on your death or retirement it will be taxable so they will get you in the end. Its really just about whats the best way for you at the time.

[PaulKing]

John

I have always wondered about how much you can pay yourself  in a Limited Company

Does Minimum wage legislation not apply to directors

In short NO

A director is a office holder and say you had £10 in the bank and the company owes you for 2 hours work at £5.65 you couldn't pay yourself £11.30 without making the company insolvent thereby making your in abandonment of you directorial duties ( very simple figure but you get the idea) So your excused from Min wage regulations for that reason and a few others

Handy eh!

on the bad side if you authorise someone else to do 2 hours work ( or order a big million pound machine) and the company becomes insolvent because of it then limited or not its you that personally is liable. as you have neglected your directorial duties. Lot of people forget that one. But its real and should be remembered you usually hear about it as "money reclaimed from the directors of the company that went bust" on the news

[Ian Gourlay]

When I was driving around all day listening to Radio 5  I heard talk of Pension that you can run yourself.

But i do not know if it was a figurement of my imagination.


Thanks Paul , that is very handy , so I could legitimately pay myself nothing