FAO Accountants

[timskipper]

Scenario: New Ltd company (retail sector). Not VAT registered. Two directors, no other employees. No PAYE salary drawn, all profits re-invested to fund growth.

How much would you say is a fair charge for setting up the company and ongoing annual accounting?

Cheers
Tim

[Eric Mc]

I presume it is not VAT registered because its turnover is below the registration threshold.

Even though you say the directors do not draw salaries, it is still good policy to register the company for PAYE as there may be a statutory obligation to make an Employer's Annual Return because these cover other matters over and above salaries. I ensure all my clients register for PAYE, even if salaries are below the PAYE/NI thresholds.

I would suggest an annual fee of between £600 to £1,000.

[timskipper]

Thank you Eric.

Would it complicate matters if one of the Directors was an existing Director of another company, which did provide a PAYE salary for them?

In respect of VAT; with not much to claw back it eats into profit too much having to give a slice of the sales income to the VAT man, while it's not necessary due to turnover levels.

[Eric Mc]

timskipper said:

Thank you Eric.

Would it complicate matters if one of the Directors was an existing Director of another company, which did provide a PAYE salary for them?

In respect of VAT; with not much to claw back it eats into profit too much having to give a slice of the sales income to the VAT man, while it's not necessary due to turnover levels.

It would make some differencs. If one of the director has a "proper" employment elsewhere, that would mean his/her parersonal allowances were fully used up by the "main" employment. That means that it would not be possible to pay that director a salary up to the PAYE/NI limits without deducting PAYE tax in his company as he would have no allowances to utilise against the director's remuneration from the company.

However, the same is not true for the NI situation as NI is calculated on a job by job basus and as long as the Director's Remuneration stayed below teh NI threshold (called the Lower Earnings Limit) the director would not suffer any NI deductions on the salary from the company.

Employers are also obliged to return details of expenses and benefits paid to or reimbursed to directors even if they don't draw salaries. That is why registering for PAYE should really be done automatically by new companies - just to ensure they fulfill their legal obligations under the PAYE regulations.