Setting myself up in business- advice

[Hart of the Matter]

Ok. Time has come to take a risk in my life. Stepping out of secure employment after 32 years to go it alone. I have built up a suitable and workable pension pot so I have 6 years to fill.
I am pretty clear that limited liability is way to go. I expect to pull in about 65000 with about 10000 costs. I understand that I can pay myself 8000 to not pay NI etc that leaves a dividend of about 47000. This is where I get unclear. Do I pay both cooperation and dividend tax on the remainder ( new tax regime in 2016 I believe) or are they the same thing? Any other advice about what can be included in costs etc appreciated. Many thanks

 

[dickie davies]

What area do you live and have you an accountant yet?

I was self employed up to three years ago and can recommend a really good guy in Prestbury

 

[Prestwich_Blue]

You pay corporation tax on any profits. So if you take £65k and have allowable expenses of £10k, you'll pay corporation tax on £55k. You'll take a salary of about £10k, which is in itself an expense so that would reduce your profit and hence corporation tax.

Dividends are a bit more complicated. It used to be that you could take them up to the higher rate limit with no further tax payable but it's changing in 2016. Get an accountant.

 

[PistonBlue]

First thing to do is to get an accountant. I use a guy in Cheadle, big City fan great bloke. Pm for his details if you want.

 

[whp.blue]

Don't do it!
If you make any money the left wingers on here will want you strung up by your bollocks!

Seriously though
If you are going to turn over only £65k your first call should be to HMRC they are really helpful to small new businesses and at that level of turnover I doubt you will even need an accountant.

I know a lot of small business and self employed people who do their own books and with online tax returns to hmrc you will save the accountancy fees, at least five people I know registered to remove their agents from their tax returns and it took less than a hour to fill in their annual tax returns

 

[Tom H Conwy exile]

Is that Howard, Piston?

 

[Why Always Ste]

Best advice I can give in this sector is - learn how to spell *Business

 

[PistonBlue]

Is that Howard, Piston?

No Tom, this is a David.

 

[Didsbury Dave]

Ok. Time has come to take a risk in my life. Stepping out of secure employment after 32 years to go it alone. I have built up a suitable and workable pension pot so I have 6 years to fill.
I am pretty clear that limited liability is way to go. I expect to pull in about 65000 with about 10000 costs. I understand that I can pay myself 8000 to not pay NI etc that leaves a dividend of about 47000. This is where I get unclear. Do I pay both cooperation and dividend tax on the remainder ( new tax regime in 2016 I believe) or are they the same thing? Any other advice about what can be included in costs etc appreciated. Many thanks

As it stands you will pay 20% corporation tax on your profits, can take about £10K as income (tax free) and can then take your first £40K (approx) without any tax implications. Above that £40K figure you will pay about 25% income tax up to £80K I think, when it goes up to 40%. These are approximate figures as it changes slightly most budgets.

But as PB says, the laws change this year and you have to pay more tax because they are closing this off for small business owners.

What you need is an Accountant who understands what they call "tax planning", because there are often ways to reduce tax. Are you married? This is important because you can double your tax-free income this way. Expenses is the other simple way to take money from your company tax free, but he can't legally tell you that. PM if you want to know more about this.

 

[the originalkippaxman]

First thing to do is to get an accountant. I use a guy in Cheadle, big City fan great bloke. Pm for his details if you want.

This is the most important thing that I have found in running a business get a decent accountant they can save you so much money.