I've gone Ltd!
JodieR
Registered Posts: 1,002 Beyond epic contributor 🧙♂️
Exciting day here today... I now have a very pretty logo and new website (www.reedswood.co.uk), although mostly everything else will stay the same! If you're into that sort of thing please 'like' me on facebook as i'm intrigued to know what changes when I get to 30 likes.
http://www.facebook.com/pages/Reedswood-Bookkeeping-Accountancy-Ltd/111314115684901
thanks
http://www.facebook.com/pages/Reedswood-Bookkeeping-Accountancy-Ltd/111314115684901
thanks
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Comments
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Exciting day here today... I now have a very pretty logo and new website (www.reedswood.co.uk), although mostly everything else will stay the same! If you're into that sort of thing please 'like' me on facebook as i'm intrigued to know what changes when I get to 30 likes.
http://www.facebook.com/pages/Reedswood-Bookkeeping-Accountancy-Ltd/111314115684901
thanks
Great website- it's good to see MiPs flourishing (especially for someone like me who is just starting out).
Well done.0 -
Great website Jodie~ An investment in knowledge always pays the best interest ~Benjamin Franklin0
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Congratulations x0
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Well done - thats fantastic!0
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Aww thanks guys!0
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I really like it Jodie! Congrats! Welcome to the generous world of £632.50 a month salary0
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Jodie, I'm amazed you haven't incorporated sooner :huh:
Regards
Dean0 -
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I'm with Monsoon - you only need to be over the Lower Earnings limit of £5564 to make a qualifying year so you want a salary between £5564 and £7592 annually (£464 and £632 monthly) for optimum NIC wangling.0
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I can't remember my reasoning for £632.50 but I did work it out at the time. I just checked and it's just below the Primary threshold, meaning no employee's NICs - no need to give HMRC free money.
It's marginally more tax efficient to pay over the secondary threshold and pay the employers NI.0 -
We do £624 per month, so no NI to pay employers or employees0
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I've prepared a rough excel spreadsheet and assuming a flat 20% corp tax rate:
Gold medal goes to the salary of £632.50/month which gives a tax saving of £1,506.74
Silver medal goes to the salary of £635.00/month which gives a tax saving of £1,506.07
And in last place is the salary £624.00/month which gives a tax saving of £1,497.60
However the £624/month is the lowest maintenance salary, i.e. no need to contact the client about a (£14.08 or £21.58) NIC liability and is the one I go for.
By the way the above calculations are for ATT revision purposes/procrastination.0 -
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I've prepared a rough excel spreadsheet and assuming a flat 20% corp tax rate:
Gold medal goes to the salary of £632.50/month which gives a tax saving of £1,506.74
Silver medal goes to the salary of £635.00/month which gives a tax saving of £1,506.07
And in last place is the salary £624.00/month which gives a tax saving of £1,497.60
However the £624/month is the lowest maintenance salary, i.e. no need to contact the client about a (£14.08 or £21.58) NIC liability and is the one I go for.
Huzzah! My maths is right
I agree, it's lower maintenance to keep below the threshold; depends on the client as to which I use, but mostly it's £632.50
Reader, did you factor in Employee's NI in there?0 -
Huzzah! My maths is right
I agree, it's lower maintenance to keep below the threshold; depends on the client as to which I use, but mostly it's £632.50
Reader, did you factor in Employee's NI in there?
Yeah, that's what makes the £632.50/month salary better at tax avoidance, because £14.08 of E'er NIC becomes payable at £632.50/month. Therefore overall expense (compared to £624.00/month) increases by £116.08 (i.e. £8.50 x 12 + £14.08) and therefore extra ct relief at 20% on the £116.08 is £23.22.
However take into account that £14.08 becomes payable, therefore overall tax relief in comparison to £624/month salary is: £23.22 - £14.08 = £9.14 (i.e. £1,506.74 - £1,497.60).
Interesting, I calculate that a salary of £632.67/month helps a tax payer to avoid paying £1,506.92 of tax (i.e. a new gold medalist; therefore £624/month doesn't even medal).0 -
I won't bother to check the maths but to keep things going...
What you're saying is; waste £30 (£635.00-£632.50*12) of the clients' tax fee allowance and the company has missed out on a further £6 CT deduction (£30*0.2).
The reason we tip toe over is an ethical one. Although the NIC being paid is extremely small in comparison to a 'normal' employee, the directors can honestly walk into A&E thinking they are at least contributing...
Regards
Dean0 -
Congratulations!
What was the basis of your decision & how do you think it is better than being non-ltd? Am toying with the idea myself.0 -
Congratulations!
What was the basis of your decision & how do you think it is better than being non-ltd? Am toying with the idea myself.
Thanks
When I started working for myself it happened very suddenly and I had to think of a business name in a day. I went with 'accounts by jodie' because it started with an 'a' so would be at the top in the yellow pages. tbh i never really liked it as a name, and less so when I realised it shortened to A BJ! But I didn't want to change it too soon as I didn't want it to look like something had gone wrong and i needed to change my name.
Now that I've got an apprentice working for me it felt wrong having my name so dominently in the business name, I want him to feel more part of the business, so that it's about us instead of me, so that was one reasons to change, also when I saw what my payments on account would be in Jan if I stayed a sole trader it confirmed that this was the right decision!0 -
We usually look at incorporating once a client is making £25k profit upwards. There are tax savings to be had below that figure but these can sometimes be less than the increase in our fees.0
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