[alboy]

just starting up a window cleaning buisiness for commercial and domestic, any advice on what to trade as ie, ltd company, sole trader etc

[williamx]

I would start as a sole trader at first, after you have built up the business to the level where you have to start paying tax, I would then change over to Ltd because with the right accountant you can earn upto £35,000 without paying income tax.

[ftp]

Go on .....

[williamx]

My accountant explained it like this.

You pay yourself your yearly tax free allowance as you wage, which is £6000 and some change.

Now because you are a limited company you can withdraw £25,000 per year in tax free dividends.

So each year you have a income of £31,000 and you haven't had to pay any tax on it.

Roll on 5 April when Pure HYDRO Cleaners goes Limited

[ronnie paton]

pure im not sur its true, you will find you can pay your self 390 a month without paying tax nat ins or employee nat ins, remeber you become an employee.

im not totally sure on the amount you can take in divedons but i wasnt aware it is £25k i could be wrong.

[sparklebright]

My accountant explained it like this.

You pay yourself your yearly tax free allowance as you wage, which is £6000 and some change.

Now because you are a limited company you can withdraw £25,000 per year in tax free dividends.

So each year you have a income of £31,000 and you haven't had to pay any tax on it.

Roll on 5 April when Pure HYDRO Cleaners goes Limited

All the above is true, but....

You do have to pay Corportion Tax, this is levied on your profits at the rate of 10%. So if your turnover is £40k you pay your self £6k, you spend £3k shall we say on van repairs or something then you will pay 10% of £31K ie £3100.
Your company pays this, but of course you have had to earn it, and Accountants charge a little more for doing the books of Ltd Co.
Still, works well for me

[ok cleaning]

hi pure hydro someting wrong somewere i have been a ltd for 4 years but i allways paid tax i paid nearly £5 k for the turnover of you talking about so it is not that easy to avoid paying tax anymore ltd companies paid less tax than the  sole treaders till a few years earlier but now the gov changed the tax system again and so there is not much difference between the two other than being a ltd has got better imprasion to the customer and better subject tu status .

[seandyer2003]

pure im not sur its true, you will find you can pay your self 390 a month without paying tax nat ins or employee nat ins, remeber you become an employee.

im not totally sure on the amount you can take in divedons but i wasnt aware it is £25k i could be wrong.

You can take alot ronnie, i thought it was only 5 % or something but someone (tax advisor) told me it was much more, but the tax on corporations is going up to the same as income tax soon 22%

[Alex Gardiner]

Corporation tax is 21% right now and will be going up to 22% this April.

So on the quoted figures you would be paying 22% of £25,000 which is £5,500.

[luther1]

Small businesses have to pay tax on all profits taken as dividends at 19%.

[Clive McDonald]

Alex do you have a window cleaning website?

Just curious, i bet you don't.

[Rogue Trader]

I would start as a sole trader at first, after you have built up the business to the level where you have to start paying tax, I would then change over to Ltd because with the right accountant you can earn upto £35,000 without paying income tax.

£35k , i thought you had a round worth £50 - £70k remember 4 x day week £250 per day domestic and £350 per day commercial :

[williamx]

I would start as a sole trader at first, after you have built up the business to the level where you have to start paying tax, I would then change over to Ltd because with the right accountant you can earn upto £35,000 without paying income tax.

£35k , i thought you had a round worth £50 - £70k remember 4 x day week £250 per day domestic and £350 per day commercial :

I will be paying myself £35k a year in wages, the rest will be invested in tax friendly investments in the company name.

and by this time next year, that £50 to £70k turnover will have increased to £150k

[Alex Gardiner]

Alex do you have a window cleaning website?

Just curious, i bet you don't.

Bet you I do