[Marc Stock]

Best thing to do is focus on one thing at a time.

For me; its getting the business to 80k; and thats it. 15 months i feel is achievable.

Sounds to me 1st thing you need to do is get through this wintry patch. Dont think about it too much do what you can do, no more; no less.

I would definitely recommend you incorporate though, do it now.

. Your starting to hit levels where your personal tax liability will kill your progress especially when you hit upper tax bracket. 

Your going to need to build captial too for wage buffers and employee liabilities, and building up capital in a business that is a sole trader is a recipe for problems.

Me, i earn a very modest wage and so does my wife.  We get paid monthly and pay tax through paye on the payroll. It covers our basic living costs and thats about it.

 The remaining profit stays in the business and is only subject to 19% corp tax if i dont invest it back in the business. If i need extra money i can withdraw it via directors loan account and write down upto 5k tax free on declaration of div cert against the directors loan account, and anything above that 5k is still only subject to 7.5% tax whilst my total income stays in min bracket. Plus the ltd company owes my sole trader business the value if the goodwill also if i need to redeem that( other tax implications but...its also an option)


So i can grow my business, build up captial and not get walloped for it.

So yes id say that for you to incorporate is a higher priority than getting to 80k.

[Shrek]

Best thing to do is focus on one thing at a time.

For me; its getting the business to 80k; and thats it. 15 months i feel is achievable.

Sounds to me 1st thing you need to do is get through this wintry patch. Dont think about it too much do what you can do, no more; no less.

I would definitely recommend you incorporate though, do it now.

. Your starting to hit levels where your personal tax liability will kill your progress especially when you hit upper tax bracket. 

Your going to need to build captial too for wage buffers and employee liabilities, and building up capital in a business that is a sole trader is a recipe for problems.

Me, i earn a very modest wage and so does my wife.  We get paid monthly and pay tax through paye on the payroll. It covers our basic living costs and thats about it.

 The remaining profit stays in the business and is only subject to 19% corp tax if i dont invest it back in the business. If i need extra money i can withdraw it via directors loan account and write down upto 5k tax free on declaration of div cert against the directors loan account, and anything above that 5k is still only subject to 7.5% tax whilst my total income stays in min bracket. Plus the ltd company owes my sole trader business the value if the goodwill also if i need to redeem that( other tax implications but...its also an option)


So i can grow my business, build up captial and not get walloped for it.

So yes id say that for you to incorporate is a higher priority than getting to 80k.

And that’s how the rich get richer 

Pay yourself and the Mrs £11500 a year tax free ,
 5k  ‘loan’ each a year tax free and anything above that is taxed at 7.5% instead of paying 20% tax 

[JandS]

That's ok if your Mrs works with you....if your a sole trader that's what you are...sole.

[Shrek]

That's ok if your Mrs works with you....if your a sole trader that's what you are...sole.

You could always go Ltd , earn £11500 on your own tax free - then take 5k dividends tax free .
A sole trader earning 35k will pay around £7500 (tax/N.I.) whereas a Ltd company would pay £5400 - might be a good idea for mr dazmond!

[Steve Newres]

Best thing to do is focus on one thing at a time.

For me; its getting the business to 80k; and thats it. 15 months i feel is achievable.

Sounds to me 1st thing you need to do is get through this wintry patch. Dont think about it too much do what you can do, no more; no less.

I would definitely recommend you incorporate though, do it now.

. Your starting to hit levels where your personal tax liability will kill your progress especially when you hit upper tax bracket. 

Your going to need to build captial too for wage buffers and employee liabilities, and building up capital in a business that is a sole trader is a recipe for problems.

Me, i earn a very modest wage and so does my wife.  We get paid monthly and pay tax through paye on the payroll. It covers our basic living costs and thats about it.

 The remaining profit stays in the business and is only subject to 19% corp tax if i dont invest it back in the business. If i need extra money i can withdraw it via directors loan account and write down upto 5k tax free on declaration of div cert against the directors loan account, and anything above that 5k is still only subject to 7.5% tax whilst my total income stays in min bracket. Plus the ltd company owes my sole trader business the value if the goodwill also if i need to redeem that( other tax implications but...its also an option)


So i can grow my business, build up captial and not get walloped for it.

So yes id say that for you to incorporate is a higher priority than getting to 80k.

Thanks for this Marc. I wasn’t aware of the loan system and my carp, ripoff accountant never mentioned it. Just reading up, NI is due on it however.

[G Griffin]

Yeh but having an emergency fund is not really the point.

I have a few grand i can get my hands on that i COULD pay the bills with if i really needed to, but i dont want to be spending my savings or credit cards/loans etc on paying bills, that money should be for holidays, investments etc etc.

I would hate to have saved up 10 grand and then break a leg or be snowed in for 3 months and have to blow it all

But what the recent weather has made me realise more than anything is  that this isnt the most stable business in the world.

I did go out and clean some windows today btw, went out 12-4 and sat out a few showers and did something

Of course it's the point.
It doesn't matter what you want, Adam; you have to deal with what happens.
Nobody wants to break a leg or be off for a prolonged period due to the weather. You can't do anything about it so make the best of it.
Us 2010 veterans are still around. I remember actually enjoying the time off in the end. I looked through the curtains at night and looked forward to another lie in and day off.

That's not what I meant.

It goes without saying you need some savings in reserve.

I was moaning about not being able to work and make any money and the response was why does it matter if you have some savings you are fine.

Well yes I will be fine, I'm not going to starve as I can blow my savings if I need to but thats not the point of the thread. I didn't want to have to blow my savings I want to get out and work.

A bit like saying my vans broken down and it's gonna cost 5k for a new engine but hey it doesn't matter because I have 5k saved up. Of course it matters and it not the point, my bloody vans just blown up and I've blown all my savings on fixing it and im upset.

I'm sorry that you're upset but you can't have your cake and eat it.
Get a cat and kick that.

[Stoots]

Best thing to do is focus on one thing at a time.

For me; its getting the business to 80k; and thats it. 15 months i feel is achievable.

Sounds to me 1st thing you need to do is get through this wintry patch. Dont think about it too much do what you can do, no more; no less.

I would definitely recommend you incorporate though, do it now.

. Your starting to hit levels where your personal tax liability will kill your progress especially when you hit upper tax bracket. 

Your going to need to build captial too for wage buffers and employee liabilities, and building up capital in a business that is a sole trader is a recipe for problems.

Me, i earn a very modest wage and so does my wife.  We get paid monthly and pay tax through paye on the payroll. It covers our basic living costs and thats about it.

 The remaining profit stays in the business and is only subject to 19% corp tax if i dont invest it back in the business. If i need extra money i can withdraw it via directors loan account and write down upto 5k tax free on declaration of div cert against the directors loan account, and anything above that 5k is still only subject to 7.5% tax whilst my total income stays in min bracket. Plus the ltd company owes my sole trader business the value if the goodwill also if i need to redeem that( other tax implications but...its also an option)


So i can grow my business, build up captial and not get walloped for it.

So yes id say that for you to incorporate is a higher priority than getting to 80k.

Thanks.


Yes i have been considering going LTD for a long time, it has numerous benefits for myself other than tax, mainly due to having children and a girlfriend that only works part time.

When i spoke to an accountant a few months ago i was told for a sole trader  turning over 40k the benefits tax wise are very slim when you factor in the extra costs involved in running a ltd vs doing my own books as a sole trader.

But i realise theres much more to it than that.

The only problem is i think i will need a re-brand or name change as there is a Thompson cleaning LTD registered with companies house, they are also window cleaners and only 7 miles from me.

i dont think i would get away with thompson pro cleaning ltd with it being so close and the same industry but would have to check.

[Stoots]

Yeh but having an emergency fund is not really the point.

I have a few grand i can get my hands on that i COULD pay the bills with if i really needed to, but i dont want to be spending my savings or credit cards/loans etc on paying bills, that money should be for holidays, investments etc etc.

I would hate to have saved up 10 grand and then break a leg or be snowed in for 3 months and have to blow it all

But what the recent weather has made me realise more than anything is  that this isnt the most stable business in the world.

I did go out and clean some windows today btw, went out 12-4 and sat out a few showers and did something

Of course it's the point.
It doesn't matter what you want, Adam; you have to deal with what happens.
Nobody wants to break a leg or be off for a prolonged period due to the weather. You can't do anything about it so make the best of it.
Us 2010 veterans are still around. I remember actually enjoying the time off in the end. I looked through the curtains at night and looked forward to another lie in and day off.

That's not what I meant.

It goes without saying you need some savings in reserve.

I was moaning about not being able to work and make any money and the response was why does it matter if you have some savings you are fine.

Well yes I will be fine, I'm not going to starve as I can blow my savings if I need to but thats not the point of the thread. I didn't want to have to blow my savings I want to get out and work.

A bit like saying my vans broken down and it's gonna cost 5k for a new engine but hey it doesn't matter because I have 5k saved up. Of course it matters and it not the point, my bloody vans just blown up and I've blown all my savings on fixing it and im upset.

I'm sorry that you're upset but you can't have your cake and eat it.
Get a cat and kick that.

course you can, i had a treacle sponge cake yesterday, i bought that.

[Stoots]

That's ok if your Mrs works with you....if your a sole trader that's what you are...sole.

You could always go Ltd , earn £11500 on your own tax free - then take 5k dividends tax free .
A sole trader earning 35k will pay around £7500 (tax/N.I.) whereas a Ltd company would pay £5400 - might be a good idea for mr dazmond!

Its going down to 2k dividend tax free in april though which makes that side of things a lot less appealing to a sole trader.

[G Griffin]

Treacle sponge cake and it's the worst month you've ever experienced?
You don't know you're born. 
You'd have been alright being a window cleaner during the Great Treacle Sponge Cake Shortage of 2010.
Hard times, they were.

[Slacky]

I lived in a shoe-box in 2010 and we didn't see a single Treacle sponge cake all summer. We went 8 months without a single Treacle Sponge Cake being sited in the whole of the village.

[Stoots]

They are down to 39p in my local farm foods, have been for a while.

[Shrek]

That's ok if your Mrs works with you....if your a sole trader that's what you are...sole.

You could always go Ltd , earn £11500 on your own tax free - then take 5k dividends tax free .
A sole trader earning 35k will pay around £7500 (tax/N.I.) whereas a Ltd company would pay £5400 - might be a good idea for mr dazmond!

Its going down to 2k dividend tax free in april though which makes that side of things a lot less appealing to a sole trader.

Corporation tax is going down to 17% by 2020 though

[Og]

Battemberg.


I reckon you need some big jobs to bump you over the 80k mark. Rather than loads of 18 quid semis.

[Stoots]

Battemberg.


I reckon you need some big jobs to bump you over the 80k mark. Rather than loads of 18 quid semis.

me ?

wish i could get 18 quid a semi i would be doing 60k as a sole trader if i could.

[Marc Stock]

Best thing to do is focus on one thing at a time.

For me; its getting the business to 80k; and thats it. 15 months i feel is achievable.

Sounds to me 1st thing you need to do is get through this wintry patch. Dont think about it too much do what you can do, no more; no less.

I would definitely recommend you incorporate though, do it now.

. Your starting to hit levels where your personal tax liability will kill your progress especially when you hit upper tax bracket. 

Your going to need to build captial too for wage buffers and employee liabilities, and building up capital in a business that is a sole trader is a recipe for problems.

Me, i earn a very modest wage and so does my wife.  We get paid monthly and pay tax through paye on the payroll. It covers our basic living costs and thats about it.

 The remaining profit stays in the business and is only subject to 19% corp tax if i dont invest it back in the business. If i need extra money i can withdraw it via directors loan account and write down upto 5k tax free on declaration of div cert against the directors loan account, and anything above that 5k is still only subject to 7.5% tax whilst my total income stays in min bracket. Plus the ltd company owes my sole trader business the value if the goodwill also if i need to redeem that( other tax implications but...its also an option)


So i can grow my business, build up captial and not get walloped for it.

So yes id say that for you to incorporate is a higher priority than getting to 80k.

Thanks for this Marc. I wasn’t aware of the loan system and my carp, ripoff accountant never mentioned it. Just reading up, NI is due on it however.

No worries.
Please remember though this does not constitute financial advice. ASK YOUR ACCOUNTANT.

[alank]

It was that cold in our village in 2010 the only treacle sponge cake we had was frozen solid till august

[Marc Stock]

And that’s how the rich get richer 

Pay yourself and the Mrs £11500 a year tax free ,
 5k  ‘loan’ each a year tax free and anything above that is taxed at 7.5% instead of paying 20% tax 

Its not quite a simple as that.

When you take a directors loan, you are effectively just moving funds from your business account to your personal account. You can pay it off any time. So say you get a parking ticket of £100, you could take £100 from your business account, pop it into your personal account marked as "directors loan". the next day after payday, pop the 100 back into the business account and you have paid back the directors loan. 

However there can be extra implications for large sums of money; for example if you are moving more than 10k a year through the directors loan account; this is likely to cause a red flag. There is nothing wrong doing it; but such large sums of money could cause money laundering regulators to wake up and take notice, so youd better be sure you have done everything to the letter of the law. Anything untoward? They might force you to pay your company interest, or take is as wages and pay extra tax.

Also you don't want to borrow more than the post tax profits, that can be difficult for a lot of companies because you might for example borrow £3k in one quarter with the intention of paying it back by declaring dividends from the post tax profits, but the rest of the year your business drys up and the available profits cannot pay the directors loan back and your stuck with an overdrawn directors loan account which is really really bad. In extreme cases, you can be made bankrupt by your own company and possibly face criminal charges for embezzlement...the list goes on.

This is why you need a good accountant. I use a firm of accountants who are tax experts as well it costs around £1700 a year, and its well worth every single penny.



 

[G Griffin]

I lived in a shoe-box in 2010 and we didn't see a single Treacle sponge cake all summer. We went 8 months without a single Treacle Sponge Cake being sited in the whole of the village.

Luxury.

[G Griffin]

It was that cold in our village in 2010 the only treacle sponge cake we had was frozen solid till august

You were lucky.......
 
I'm looking to increase my turnover as well.
Apple turnover that is.