Ltd company profits
Discussion
Hi,
I own a small Ltd company that basically has little overheads and is highly profitable against the small overheads there are.
What, if any, methods exist for preventing corporation tax, the company is quite new and I wish to retain the profit for future expansion.
It's under one-man ownership (me) - also, would I be able to withdraw the business and put into my own employee pension before corporation tax is calculated?
Thanks in advance.
I own a small Ltd company that basically has little overheads and is highly profitable against the small overheads there are.
What, if any, methods exist for preventing corporation tax, the company is quite new and I wish to retain the profit for future expansion.
It's under one-man ownership (me) - also, would I be able to withdraw the business and put into my own employee pension before corporation tax is calculated?
Thanks in advance.
I have a few accountants I will be talking with, but in such matters I have always found that if I have some basic understanding, they tend not to try and fleece me and treat me more equally.
The business is actually a few years old, but has gone from sole trader to Ltd and many, if not most of the initial start-up overheads are no longer present. As it's a digital business and highly automated there is little or no admin/costs, probably the accounting will be the biggest, which is why I want to see what people say here.
The business is actually a few years old, but has gone from sole trader to Ltd and many, if not most of the initial start-up overheads are no longer present. As it's a digital business and highly automated there is little or no admin/costs, probably the accounting will be the biggest, which is why I want to see what people say here.
trickywoo said:
Company pension contributions are the simplest option. £40k a year and comes out as an expense so reduces the profit on which corp tax is due.
Good, this is what I wanted to hear! £40K per year per director, asking in case I want to add others later???... (wife) (Possible business partners also)
AnotherUsername said:
Money spent with a good accountant at DAY 1 would have been the best choice, failing that, tomorrow AM. There are so many things you've probably already missed out on; pre-incorporation costs, R&D tax credits etc etc etc
I accept that. Unfortunately, the idiot forces of Brexit had some influence over things, so Ltd co was formed pretty quickly and contracts etc updated. Things have smoothed out pretty well, the company makes money and I just want to be ahead of the curve, for every good accountant out there, there are 10 s
t ones, same goes for legal people. Ideally what I'm looking for are the right questions to ask / avenues to explore from people with profitable businesses who don't draw much or any salary!
Canute said:
I have a few accountants I will be talking with, but in such matters I have always found that if I have some basic understanding, they tend not to try and fleece me and treat me more equally.
The business is actually a few years old, but has gone from sole trader to Ltd and many, if not most of the initial start-up overheads are no longer present. As it's a digital business and highly automated there is little or no admin/costs, probably the accounting will be the biggest, which is why I want to see what people say here.
None of this matters. The business is actually a few years old, but has gone from sole trader to Ltd and many, if not most of the initial start-up overheads are no longer present. As it's a digital business and highly automated there is little or no admin/costs, probably the accounting will be the biggest, which is why I want to see what people say here.
Steviebee's reply above does.
Europa1 said:
None of this matters.
Steviebee's reply above does.
If I did not indicate that, that is the plan.Steviebee's reply above does.
BUUUT, not going to engage until I have informed myself, this site is one aspect and I like the quality of advice given including yours. So then....
Questions to ask the prospective accountant,,,,
Squiddly Diddly said:
Have I got this correct?
You have made a profit.
You want to retain the money in the Ltd.
You don't want to pay any corporation tax.
Ideally retain the money in the Ltd as far as possible, but if I have to remove it, then something like pensions as mentioned above is the next step.You have made a profit.
You want to retain the money in the Ltd.
You don't want to pay any corporation tax.
Not sure if there is an easy way to defer profit, but that's the longer-term business strategy!
Canute said:
I accept that. Unfortunately, the idiot forces of Brexit had some influence over things, so Ltd co was formed pretty quickly and contracts etc updated.
Things have smoothed out pretty well, the company makes money and I just want to be ahead of the curve, for every good accountant out there, there are 10 st ones, same goes for legal people.
Ideally what I'm looking for are the right questions to ask / avenues to explore from people with profitable businesses who don't draw much or any salary!
What type of capital costs (i.e. fixed assets) has the company had?Things have smoothed out pretty well, the company makes money and I just want to be ahead of the curve, for every good accountant out there, there are 10 s
t ones, same goes for legal people. Ideally what I'm looking for are the right questions to ask / avenues to explore from people with profitable businesses who don't draw much or any salary!
Has it made full use of the Capital Allowances available?
Does the company engage in Research and Development (as defined by HMRC)? If it does, there are very generous allowances available?
Is there more than one director?
If not, is there scope for adding more - especially if some individuals may not be making full use of personal tax allowances.
If the company evolved from a sole trader, how was the transition handled?
What happened to any fixed assets owned by the sole tradership that are now being used by the company?
How much in the way of costs does the director fund from his own pocket?
If there are such costs, how are these costs refunded to the director?
Does the director run the company from home?
If he does, how does he claim for "Use of Home" costs in the business?
I'd like the OP to respond to the list of points I raised. if he came to me as a client, before he even opened his mouth I would ask a similar set of questions.
The problem with people who decide to "do their own thing" is that they don't know what they don't know.
And before you write off "expensive" accountants, you should at least be aware of how much an accountant might save you(not just in tax) before you write the accountant off as "expensive". A fee of £1,000 is cheap if the accountant can save you £5,000 (or more).
The problem with people who decide to "do their own thing" is that they don't know what they don't know.
And before you write off "expensive" accountants, you should at least be aware of how much an accountant might save you(not just in tax) before you write the accountant off as "expensive". A fee of £1,000 is cheap if the accountant can save you £5,000 (or more).
OP since you're not getting the sort of answer you'd like here's some more useful links:
https://www.contractoruk.com/
https://www.contractoruk.com/directory/contractor_...
https://www.contractoruk.com/forums/
https://www.contractoruk.com/
https://www.contractoruk.com/directory/contractor_...
https://www.contractoruk.com/forums/
Would recommend looking into the contractor UK forums.
It usually goes like this though.
Draw a tax efficient salary approx £8.5k without incurring NI, take dividends (32.5k) charged at 7.5% anything additional is 32.5%
Keep money in the company or if profits are in excess of 50-100k after this setup a holding company, pay it dividends (tax free) and use this as your investment vehicle.
It usually goes like this though.
Draw a tax efficient salary approx £8.5k without incurring NI, take dividends (32.5k) charged at 7.5% anything additional is 32.5%
Keep money in the company or if profits are in excess of 50-100k after this setup a holding company, pay it dividends (tax free) and use this as your investment vehicle.
Gassing Station | Business | Top of Page | What's New | My Stuff