[Stoots]

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.

Good info

Although I hope it's not going to cost me that much for an accountant.

I got quoted 500 for a sole trader including payroll for 1 member of staff.

I'll have to get some quotes for ltd

[Tom-01]

Its weird how it works depending where in the country you are.

December just gone was our best ever, and we worked the least we ever have done. I alone had over two weeks off (actually off doing nothing as didn't have a holiday last year), and January will also be our best ever. South East hasn't been that bad, two days lost to freezing weather thats it (gutter jobs). Ploughed on through the rain and winds, but it hasn't really been that bad at all.

Hope you get back on track, just need to get out there mate. If you want to employ you need to show your employees that they need to work through rubbish weather and when they don't feel like it - if you can't be bothered why should they?

[zesty]

Adam, with regards to payments on account. (They are horrible) you only start paying it when your tax bill is over £1000. If it’s under that, then you’ll just pay the exact tax due and no more.

For me, I have to pay a big fat lump sum in jan, which I paid beginning of December to get it out the way. Then another (though smaller) lump sum in July.

The payments on account are ‘future payments’ towards your next years tax bill. So if you were to have a very bad year that next tax year, you could potentially get some of that ‘payment on account’ money back.

So your probably don’t have to worry about it at the mo, as your profit probably isn’t enough, yet..

Just bare it in mind, because the first year you fall into the payments on account bracket (larger tax bill than 1k) it really does cause some stress (if your not aware like I wasn’t) The first year it happened to me I wasn’t expecting to pay it, so I had to use savings to cover the cost. Needless to say I learnt from that for the next year!

[Stoots]

Adam, with regards to payments on account. (They are horrible) you only start paying it when your tax bill is over £1000. If it’s under that, then you’ll just pay the exact tax due and no more.

For me, I have to pay a big fat lump sum in jan, which I paid beginning of December to get it out the way. Then another (though smaller) lump sum in July.

The payments on account are ‘future payments’ towards your next years tax bill. So if you were to have a very bad year that next tax year, you could potentially get some of that ‘payment on account’ money back.

So your probably don’t have to worry about it at the mo, as your profit probably isn’t enough, yet..

Just bare it in mind, because the first year you fall into the payments on account bracket (larger tax bill than 1k) it really does cause some stress (if your not aware like I wasn’t) The first year it happened to me I wasn’t expecting to pay it, so I had to use savings to cover the cost. Needless to say I learnt from that for the next year!

Thanks, yes I had a read up on it.

the tax bill I've just paid this Jan was from April 16 -apr 17 which was my first year full time and I had loads of expenses.

This year's bill will almost certainly be more so good job I found out about this.

[zesty]

Adam, with regards to payments on account. (They are horrible) you only start paying it when your tax bill is over £1000. If it’s under that, then you’ll just pay the exact tax due and no more.

For me, I have to pay a big fat lump sum in jan, which I paid beginning of December to get it out the way. Then another (though smaller) lump sum in July.

The payments on account are ‘future payments’ towards your next years tax bill. So if you were to have a very bad year that next tax year, you could potentially get some of that ‘payment on account’ money back.

So your probably don’t have to worry about it at the mo, as your profit probably isn’t enough, yet..

Just bare it in mind, because the first year you fall into the payments on account bracket (larger tax bill than 1k) it really does cause some stress (if your not aware like I wasn’t) The first year it happened to me I wasn’t expecting to pay it, so I had to use savings to cover the cost. Needless to say I learnt from that for the next year!

Thanks, yes I had a read up on it.

the tax bill I've just paid this Jan was from April 16 -apr 17 which was my first year full time and I had loads of expenses.

This year's bill will almost certainly be more so good job I found out about this.

Yeah it will be worse next year, to be honest my guess it that most window cleaners (sole traders) are paying under 1k tax, I did for the first 4 years, I takes time to build a big profitable round. It’s just that on CIU everyone earns 400 notes a day 

The fact is, the average window cleaner pay across the U.K. is around 21k, it just so happens that everyone on CIU is on 50k 


According to hmrc ‘experienced window cleaners’ earn between 20-23k a year

[Slacky]

Most window cleaners who use it as their sole income will be paying plenty more than 1K tax a year. Even if you've only been going a year and have bought work, to pay 1K a year in tax you'll only need a modest income of £70 odd a day, especially if you're trad.

I was knocking out £90 a day when I started 20 years ago.

[JandS]

Caught me out too first time paying on account.
I pay so much a month by direct debit so when I submit the return there's virtually nothing to pay out as my account is in credit.

[Stoots]

Spoke to an accountant this morning and it looks like I'm going to go ltd very soon.
It suits my personal situation/plans better

I will add my tax has only been under 1k to date as I've invested so much back in.

[Marc Stock]

You won't regret it Adam.

[Steve Newres]

Spoke to an accountant this morning and it looks like I'm going to go ltd very soon.
It suits my personal situation/plans better

I will add my tax has only been under 1k to date as I've invested so much back in.

Unless you are earning about 50k a year there is no point in going limited.

[Stoots]

You won't regret it Adam.

when i spoke to them a lot of it went over my head, all seems very complicated.

Just getting quotes at the minute for an accountant, had anything from £500 to £1200 so far

[Stoots]

Spoke to an accountant this morning and it looks like I'm going to go ltd very soon.
It suits my personal situation/plans better

I will add my tax has only been under 1k to date as I've invested so much back in.

Unless you are earning about 50k a year there is no point in going limited.

yes there is,  but it depends on personal circumstances and why you want to go ltd. From a soley tax point of view theres very little it it when you consider the added costs of an accountant, but theres more to it than that.

[Steve Newres]

Spoke to an accountant this morning and it looks like I'm going to go ltd very soon.
It suits my personal situation/plans better

I will add my tax has only been under 1k to date as I've invested so much back in.

Unless you are earning about 50k a year there is no point in going limited.

yes there is,  but it depends on personal circumstances and why you want to go ltd. From a soley tax point of view theres very little it it when you consider the added costs of an accountant, but theres more to it than that.

Yes, you can call yourself a company director instead of a window cleaner.

[Stoots]

Spoke to an accountant this morning and it looks like I'm going to go ltd very soon.
It suits my personal situation/plans better

I will add my tax has only been under 1k to date as I've invested so much back in.

Unless you are earning about 50k a year there is no point in going limited.

yes there is,  but it depends on personal circumstances and why you want to go ltd. From a soley tax point of view theres very little it it when you consider the added costs of an accountant, but theres more to it than that.

Yes, you can call yourself a company director instead of a window cleaner.

sounds like you need to look into it more, theres loads of reasons to go ltd depending on personal circumstances.

[Marc Stock]

You won't regret it Adam.

when i spoke to them a lot of it went over my head, all seems very complicated.

Just getting quotes at the minute for an accountant, had anything from £500 to £1200 so far

If at all possible, go with an accountancy firm, and one that its chartered they will know exacly whats best for your business and will guide you in the right direction.

[Tom-01]

You won't regret it Adam.

when i spoke to them a lot of it went over my head, all seems very complicated.

Just getting quotes at the minute for an accountant, had anything from £500 to £1200 so far

If at all possible, go with an accountancy firm, and one that its chartered they will know exacly whats best for your business and will guide you in the right direction.

Agreed.

I wouldn't have got my mortgage without one, definitely worth having. Talking of mortgage, that payment on account last year was a nasty surprise, especially when we had to pay deposit and stamp duty, solicitors etc.

[Splash & dash]

Spoke to an accountant this morning and it looks like I'm going to go ltd very soon.
It suits my personal situation/plans better

I will add my tax has only been under 1k to date as I've invested so much back in.

Unless you are earning about 50k a year there is no point in going limited.

yes there is,  but it depends on personal circumstances and why you want to go ltd. From a soley tax point of view theres very little it it when you consider the added costs of an accountant, but theres more to it than that.

Yes, you can call yourself a company director instead of a window cleaner.

sounds like you need to look into it more, theres loads of reasons to go ltd depending on personal circumstances.

Don’t want to be rude but think you are talking to the wrong accountant very few people will be better off going ltd unless you are earning a lot it’s swings and rounderbouts yes but you will get a dividend instead of wages , I looked at it and it’s not worth it for us according to our accountant, wish my tax bill was only a grand it’s many times that unfortunately ,I think you need some good advice from a professional not someone trying to sell you a service it’s more work for an accountant so he is bound to recomend it

[Simon Trapani]

Spoke to an accountant this morning and it looks like I'm going to go ltd very soon.
It suits my personal situation/plans better

I will add my tax has only been under 1k to date as I've invested so much back in.

Unless you are earning about 50k a year there is no point in going limited.

yes there is,  but it depends on personal circumstances and why you want to go ltd. From a soley tax point of view theres very little it it when you consider the added costs of an accountant, but theres more to it than that.

Yes, you can call yourself a company director instead of a window cleaner.

sounds like you need to look into it more, theres loads of reasons to go ltd depending on personal circumstances.

Care to expand?

[Stoots]

Spoke to an accountant this morning and it looks like I'm going to go ltd very soon.
It suits my personal situation/plans better

I will add my tax has only been under 1k to date as I've invested so much back in.

Unless you are earning about 50k a year there is no point in going limited.

yes there is,  but it depends on personal circumstances and why you want to go ltd. From a soley tax point of view theres very little it it when you consider the added costs of an accountant, but theres more to it than that.

Yes, you can call yourself a company director instead of a window cleaner.

sounds like you need to look into it more, theres loads of reasons to go ltd depending on personal circumstances.

Care to expand?

Well not really because some of the reasons are personal, family situations, children, courts and ex wife type stuff.

One reason though I can share is that I'm thinking of adding my partner either as an employee or as a shareholder later this year and will  take advantage of tax free allowance and dividends etc.

Like I said there's more to it than simply saving a few hundred quid on your tax bill.

That's why I said it suits my situation.

I'm not a daft, I've done my research on the various scenarios with sole trader Vs ltd and considered all the options from expanding Vs staying the same etc etc.
Not going to make a decision overnight I'm still researching all the ins and outs but it's looking likely it will be the way forward for me.

[Stoots]

Spoke to an accountant this morning and it looks like I'm going to go ltd very soon.
It suits my personal situation/plans better

I will add my tax has only been under 1k to date as I've invested so much back in.

Unless you are earning about 50k a year there is no point in going limited.

yes there is,  but it depends on personal circumstances and why you want to go ltd. From a soley tax point of view theres very little it it when you consider the added costs of an accountant, but theres more to it than that.

Yes, you can call yourself a company director instead of a window cleaner.

sounds like you need to look into it more, theres loads of reasons to go ltd depending on personal circumstances.

Don’t want to be rude but think you are talking to the wrong accountant very few people will be better off going ltd unless you are earning a lot it’s swings and rounderbouts yes but you will get a dividend instead of wages , I looked at it and it’s not worth it for us according to our accountant, wish my tax bill was only a grand it’s many times that unfortunately ,I think you need some good advice from a professional not someone trying to sell you a service it’s more work for an accountant so he is bound to recomend it

The wrong 5 accounts?

I don't plan on taking much dividends, most of the profit will be re invested.

Like I've said I've looked at it myself also