Accountant Fees
Discussion
As I'm going to be self employed once I start at Bloodhound SSC I'm going to have to start my own company, take a wage then dividends from the profit, this is the way the guys that already work there have suggested. What would a typical accountant charge for doing the honours for me??
Also, I'm guessing I need to register a company name, not sure how to do that wither as I've never been self employed before.
Also, I'm guessing I need to register a company name, not sure how to do that wither as I've never been self employed before.
You will not be "self-employed". If you are running a limited company, the term "self-employed" is incorrect. Self-employment relates to people who run their own businesses as sole-traders. They are not operating under any sort of limited liability arrangement. They pay Income Tax and Class 4 National Insurance on the business profits, not what they extract from the business as "Drawings". They also pay monthly Class 2 NI.
You propose to set up a limited company. This means you create a new legal entity - which is not you - called a limited liability company. You register the company at Companies House. Note - you do not register a "name" as such, you register the limited company itself.
You become both a director (i.e. the manager) of the company and a shareholder (i.e. the owner) of the company.
As a director, you extract a salary from the company. This salary is subject to PAYE and Class 1 NI (employee's and employer's).
As a shareholder, you can extract dividends from the comapny. Dividends are subject to Income Tax only. NO NI is charged on dividends.
The limited company itself will be subject to Corporation Tax on its taxable business profits.
Company affairs are quite a bit more complicated than those for a similar sized sole trader.
A sole trader prepares an annual set of accounts and will submit those accounts plus tax computations plus a self assessment tax return to HMRC.
A limited company will -
prepare a full set of limited company accounts to complay with Companies Act formats and accounting standards
prepare a short form abbreviated set of accounts for filing at Companies House.
prepare a Corporation Tax return and related computations for submission to HMRC. A set of the full format accounts also is sent to HMRC
Almost definitely the company will need to register for PAYE so that it can make monthly or quarterly PAYE/NIC payments to HMRC in respect of the director's salary. Even if the director choses to draw a very low level of salary on which no PAYE or NI may be payable, registering for PAYE uis still advisable as there arev other non-salary matters which are covered by PAYE regulations which may need to be returned - such as director's expense claims or taxable Benefits in Kind.
In addition to all this, it is highly likely that the director will need to submit a personal self assessment tax return, especially if they wish to pay themselves mainly through dividends.
Finally, when you set up as a limited comnpanty, you do need to be aware of the implications of IR35.
IR35 does not apply to sole-traders/self-employed individuals.
So, to answer your basic question, how much should an accountant cost, that very much depends on how much of the above applies to your company and how much of the various requirements are dealt with by the accountant.
A total package covering everything would cost around £800 to £1,000 - depending on where the accountant is to some extent and how big the accounting firm is.
You propose to set up a limited company. This means you create a new legal entity - which is not you - called a limited liability company. You register the company at Companies House. Note - you do not register a "name" as such, you register the limited company itself.
You become both a director (i.e. the manager) of the company and a shareholder (i.e. the owner) of the company.
As a director, you extract a salary from the company. This salary is subject to PAYE and Class 1 NI (employee's and employer's).
As a shareholder, you can extract dividends from the comapny. Dividends are subject to Income Tax only. NO NI is charged on dividends.
The limited company itself will be subject to Corporation Tax on its taxable business profits.
Company affairs are quite a bit more complicated than those for a similar sized sole trader.
A sole trader prepares an annual set of accounts and will submit those accounts plus tax computations plus a self assessment tax return to HMRC.
A limited company will -
prepare a full set of limited company accounts to complay with Companies Act formats and accounting standards
prepare a short form abbreviated set of accounts for filing at Companies House.
prepare a Corporation Tax return and related computations for submission to HMRC. A set of the full format accounts also is sent to HMRC
Almost definitely the company will need to register for PAYE so that it can make monthly or quarterly PAYE/NIC payments to HMRC in respect of the director's salary. Even if the director choses to draw a very low level of salary on which no PAYE or NI may be payable, registering for PAYE uis still advisable as there arev other non-salary matters which are covered by PAYE regulations which may need to be returned - such as director's expense claims or taxable Benefits in Kind.
In addition to all this, it is highly likely that the director will need to submit a personal self assessment tax return, especially if they wish to pay themselves mainly through dividends.
Finally, when you set up as a limited comnpanty, you do need to be aware of the implications of IR35.
IR35 does not apply to sole-traders/self-employed individuals.
So, to answer your basic question, how much should an accountant cost, that very much depends on how much of the above applies to your company and how much of the various requirements are dealt with by the accountant.
A total package covering everything would cost around £800 to £1,000 - depending on where the accountant is to some extent and how big the accounting firm is.
R500POP said:
Thanks for that, so say, for instance, I was getting paid £5000 a month by my employer, what would be the most benificial way of getting paid?
"Employer"?Who are you talking about?
As a director of your own limited company, the employer is actually your limited company.
Bloodhound SSC is not your employer, they are a customer.
What you propose seting up is dangerously exposed to an IR35 attack by HMRC. You need to take some good professional advice on this BEFORE you start seting up a limited company.
I will PM you.
Eric Mc said:
"Employer"?
Who are you talking about?
As a director of your own limited company, the employer is actually your limited company.
Bloodhound SSC is not your employer, they are a customer.
What you propose seting up is dangerously exposed to an IR35 attack by HMRC. You need to take some good professional advice on this BEFORE you start seting up a limited company.
I will PM you.
Thanks Eric, as you can tell, this is all totally new to me. I'm really just looking to make sure everything is above board.Who are you talking about?
As a director of your own limited company, the employer is actually your limited company.
Bloodhound SSC is not your employer, they are a customer.
What you propose seting up is dangerously exposed to an IR35 attack by HMRC. You need to take some good professional advice on this BEFORE you start seting up a limited company.
I will PM you.
Eric Mc said:
You cannot afford to get started on the wrong foot. In fact, posting a query about seting up a trading limited company in the "Jobs and Employment" forum always indicates to me a fundamental lack of understanding of whaytis involved inn these situations.
That's me I'm afraid, no idea at the moment what to do for the best.Eric Mc said:
You cannot afford to get started on the wrong foot. In fact, posting a query about
seting up a trading limited company in the "Jobs and Employment" forum always indicates to me a fundamental lack of understanding of whaytis involved inn these situations.
OK, but how is this helping the guy...?seting up a trading limited company in the "Jobs and Employment" forum always indicates to me a fundamental lack of understanding of whaytis involved inn these situations.
Presumably as the director of a limited company you are employed.
As a director.
Hence "Jobs & Employment" section...
OP: Yes, limited company, basic monthly wage with dividends from profits making up the majority of your income.
As for accountants fees I normally pay around £1000 a year which includes end-of-year accounts, personal tax return, payroll administration and registered office. The only thing I do is VAT returns because they're relatively easy, which may or may not be relevant to you for a while anyway.
NobleGuy said:
OK, but how is this helping the guy...?
Presumably as the director of a limited company you are employed.
As a director.
Hence "Jobs & Employment" section...
OP: Yes, limited company, basic monthly wage with dividends from profits making up the majority of your income.
As for accountants fees I normally pay around £1000 a year which includes end-of-year accounts, personal tax return, payroll administration and registered office. The only thing I do is VAT returns because they're relatively easy, which may or may not be relevant to you for a while anyway.
Thanks, does your accountant do all your book keeping for you?Presumably as the director of a limited company you are employed.
As a director.
Hence "Jobs & Employment" section...
OP: Yes, limited company, basic monthly wage with dividends from profits making up the majority of your income.
As for accountants fees I normally pay around £1000 a year which includes end-of-year accounts, personal tax return, payroll administration and registered office. The only thing I do is VAT returns because they're relatively easy, which may or may not be relevant to you for a while anyway.
R500POP said:
NobleGuy said:
OK, but how is this helping the guy...?
Presumably as the director of a limited company you are employed.
As a director.
Hence "Jobs & Employment" section...
OP: Yes, limited company, basic monthly wage with dividends from profits making up the majority of your income.
As for accountants fees I normally pay around £1000 a year which includes end-of-year accounts, personal tax return, payroll administration and registered office. The only thing I do is VAT returns because they're relatively easy, which may or may not be relevant to you for a while anyway.
Thanks, does your accountant do all your book keeping for you?Presumably as the director of a limited company you are employed.
As a director.
Hence "Jobs & Employment" section...
OP: Yes, limited company, basic monthly wage with dividends from profits making up the majority of your income.
As for accountants fees I normally pay around £1000 a year which includes end-of-year accounts, personal tax return, payroll administration and registered office. The only thing I do is VAT returns because they're relatively easy, which may or may not be relevant to you for a while anyway.
For example I have Word doc with a list of expenses that match up to the bank & card statements, print it off and attach the relevant statement(s) and associated receipts to it.
Remember to keep money in your account to cover Corp Tax liabilities (I work on roughly 20%) to save headaches later.
As for employment terms in your situation:
"Employer": This is your Ltd. company.
"Employees": Anyone employed by your Ltd. company.
Companies that you physically go and work with are just clients of your company.
Confused?
THis may have absolutely no bearing on you at the moment, but bear your mortgage in mind when you are running thorugh your accounts.
However the revenue view it, a director of a limited co, with more than 20% shareholding, will be treated as self-employed. Therefore any lender will want to see your accounts when it comes to a mortgage application.
Some will take 1 years accounts, others 2, some 3. They will average your income over whatever period they choose. (They'll look at salary and dividends if applying as a director.)
If your accountant has done his job and minimised your tax bill, you may find it impossible to borrow the amount you already owe.
Self cert is dead, so proving your income is, with a very few exceptions required. If you think a house move or remortgage is in the offing, please bear it in mind.
However the revenue view it, a director of a limited co, with more than 20% shareholding, will be treated as self-employed. Therefore any lender will want to see your accounts when it comes to a mortgage application.
Some will take 1 years accounts, others 2, some 3. They will average your income over whatever period they choose. (They'll look at salary and dividends if applying as a director.)
If your accountant has done his job and minimised your tax bill, you may find it impossible to borrow the amount you already owe.
Self cert is dead, so proving your income is, with a very few exceptions required. If you think a house move or remortgage is in the offing, please bear it in mind.
R500POP said:
NobleGuy said:
Confused?
Very.My biggest concern is IR35.
One other thing, the accountant may well save you a bit of money you wouldn't otherwise have so very often the cost is worth it, plus you get all the horrible paperwork done into the bargain.
scotal said:
THis may have absolutely no bearing on you at the moment, but bear your mortgage in mind when you are running thorugh your accounts.
However the revenue view it, a director of a limited co, with more than 20% shareholding, will be treated as self-employed. Therefore any lender will want to see your accounts when it comes to a mortgage application.
Some will take 1 years accounts, others 2, some 3. They will average your income over whatever period they choose. (They'll look at salary and dividends if applying as a director.)
If your accountant has done his job and minimised your tax bill, you may find it impossible to borrow the amount you already owe.
Self cert is dead, so proving your income is, with a very few exceptions required. If you think a house move or remortgage is in the offing, please bear it in mind.
Yep, that's a really good point actually. Be prepared to forget a (re-)mortgage for a while.However the revenue view it, a director of a limited co, with more than 20% shareholding, will be treated as self-employed. Therefore any lender will want to see your accounts when it comes to a mortgage application.
Some will take 1 years accounts, others 2, some 3. They will average your income over whatever period they choose. (They'll look at salary and dividends if applying as a director.)
If your accountant has done his job and minimised your tax bill, you may find it impossible to borrow the amount you already owe.
Self cert is dead, so proving your income is, with a very few exceptions required. If you think a house move or remortgage is in the offing, please bear it in mind.
A few years ago you would have been fine. I got my last one with a photocopied passport and an email stating "Yes, I earn £X per year."
As above you are looking at roughly £1k per year for accountancy costs.
You can ask them to:
Register your business as companies house (as a limited company)
Give you a payslip each month for PAYE (total paye would be around £7.5k pa to cover your NI)
(you can take a dividend out of company profits (look google for paye v dividend calculator to give you a broad understanding - just don't refer to a dividend as a wage or salary)
Prepare and submit yearly accounts, informing you how much corporation tax to pay
Calculate your VAT payments (flat rate VAT scheme sounds best for you, for I assume you won't buy many things with VAT on them) - on £5k income a month a little overheads this could save you a couple/few thousand per year.
Arrange NI/Paye payment slips to be sent to you/set up
Sort your self assessment
Personally, I'd consider asking Eric Mc to do it for you at this kind of rate (he knows his onions!)
You can ask them to:
Register your business as companies house (as a limited company)
Give you a payslip each month for PAYE (total paye would be around £7.5k pa to cover your NI)
(you can take a dividend out of company profits (look google for paye v dividend calculator to give you a broad understanding - just don't refer to a dividend as a wage or salary)
Prepare and submit yearly accounts, informing you how much corporation tax to pay
Calculate your VAT payments (flat rate VAT scheme sounds best for you, for I assume you won't buy many things with VAT on them) - on £5k income a month a little overheads this could save you a couple/few thousand per year.
Arrange NI/Paye payment slips to be sent to you/set up
Sort your self assessment
Personally, I'd consider asking Eric Mc to do it for you at this kind of rate (he knows his onions!)
R500POP said:
Very.
My biggest concern is IR35.
My accountant offers what they term as a 'comprehensive IR35 review' as part of the service. They have a dedicated team of people that go through your contract and also a questionnaire to help ascertain whether you're captured or not.My biggest concern is IR35.
Some people will do this independently so you don't have to do it through an accountant but I do for convenience i.e. I chose an accountant that does this, my year end accounts, VAT etc.
Either way it is very important as it defines how your income is managed so best get this sorted.
Anybody heard of these guys - http://www.darwinpay.co.uk/toolbox/limited-umbrell...
They are claiming they can pay me 84.5% of the £5000 per month AND I'll be IR35 exempt as their employee. Sounds too good to be true.
They are claiming they can pay me 84.5% of the £5000 per month AND I'll be IR35 exempt as their employee. Sounds too good to be true.
doogz said:
84.5% sounds a bit optimistic.
If i may offer some advice, you may come across one of these umbrella company/Ltd company accountancy agencies called "Brookson"
Stay away, i've never dealt with such complete and utter incompetance.
I've done the umbrella thing, and i've done the accountancy agency thing, and the best advice i can give, is to find a decent local accountant. Someone, that when you need some advice, or have a quick question, you can pick up the phone and speak to. These companies, the people that answer the phones aren't accountants, they're phone monkeys. They don't know anything, and all they'll do is piss you about, or take a message and tell you they'll get someone that actually has a clue, to phone you back. But no-one ever will.
ThanksIf i may offer some advice, you may come across one of these umbrella company/Ltd company accountancy agencies called "Brookson"
Stay away, i've never dealt with such complete and utter incompetance.
I've done the umbrella thing, and i've done the accountancy agency thing, and the best advice i can give, is to find a decent local accountant. Someone, that when you need some advice, or have a quick question, you can pick up the phone and speak to. These companies, the people that answer the phones aren't accountants, they're phone monkeys. They don't know anything, and all they'll do is piss you about, or take a message and tell you they'll get someone that actually has a clue, to phone you back. But no-one ever will.
scotal said:
THis may have absolutely no bearing on you at the moment, but bear your mortgage in mind when you are running thorugh your accounts.
However the revenue view it, a director of a limited co, with more than 20% shareholding, will be treated as self-employed. Therefore any lender will want to see your accounts when it comes to a mortgage application.
Some will take 1 years accounts, others 2, some 3. They will average your income over whatever period they choose. (They'll look at salary and dividends if applying as a director.)
If your accountant has done his job and minimised your tax bill, you may find it impossible to borrow the amount you already owe.
Self cert is dead, so proving your income is, with a very few exceptions required. If you think a house move or remortgage is in the offing, please bear it in mind.
If your business account is 'cash rich' then you'll be fine with a good financial advisor.However the revenue view it, a director of a limited co, with more than 20% shareholding, will be treated as self-employed. Therefore any lender will want to see your accounts when it comes to a mortgage application.
Some will take 1 years accounts, others 2, some 3. They will average your income over whatever period they choose. (They'll look at salary and dividends if applying as a director.)
If your accountant has done his job and minimised your tax bill, you may find it impossible to borrow the amount you already owe.
Self cert is dead, so proving your income is, with a very few exceptions required. If you think a house move or remortgage is in the offing, please bear it in mind.
I moved/remortgaged in July with less then 2 years accounts and it was possible.
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