I've gone Ltd!

JodieR

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

reader

JodieR wrote: »

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.

Jo Clark

Great website Jodie

LynWest

Congratulations x

JJH1969

Well done - thats fantastic!

JodieR

Aww thanks guys!

Monsoon

I really like it Jodie! Congrats! Welcome to the generous world of £632.50 a month salary

Dean

Jodie, I'm amazed you haven't incorporated sooner :huh:

Regards

Dean

Dean

JodieR wrote: »

i'm intrigued to know what changes when I get to 30 likes.

I'm intrigued by this also. Let me know what does happen

Regards

Dean

Dean

Monsoon wrote: »

I really like it Jodie! Congrats! Welcome to the generous world of £632.50 a month salary

Sure this'll be a debate sparker but isn't this under the NIC PT? I think you want to be tip-toeing just over the threshold don't you? We run this at £635 per month.

Regards

Dean

groundy

Dean wrote: »

We run this at £635 per month.

As do we, agree with Dean, just to get the debate started.

Apologies to OP for going off topic and congrats.

JodieR

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.

JodieR

Dean wrote: »

Jodie, I'm amazed you haven't incorporated sooner :huh:

Regards

Dean

You're probably right, I should have done it before but I wanted everything to be a bit more organised before I did it, and while there's still tweaks to be made I think now was a good time to do it!

Monsoon

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.

pirate

We do £624 per month, so no NI to pay employers or employees

reader

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.

JodieR

reader wrote: »

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.

I concur. Unless they're paying over Tax & NI for other employees anyway, this is much less hassle for me & clients.

Monsoon

reader wrote: »

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?

reader

Monsoon wrote: »

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).

Dean

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

Dean

Lindylou

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.

JodieR

Lindylou wrote: »

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!

groundy

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.