flak monkey
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| posted on 3/7/09 at 06:59 PM |
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Any accountants in?
Having started to think about setting up my own business alongside my day job I am wondering how I go about all the tax stuff?
All new to me, so if anyone can enlighten me I would be most appreciative.
I obviously already earn over the threshold so additional earning are presumably taxed at the same rate? (20% i think).
Found lots of info about setting up as a sole trader but most seems aimed as if that was your only job, not as if it was your second.
My brain is addled 
Sera
http://www.motosera.com
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adam1985
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| posted on 3/7/09 at 07:08 PM |
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never done it but i always thought you get stung on tax on a second job
eta no help at all but just my 2 pence sorry
[Edited on 3/7/09 by adam1985]
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eccsmk
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| posted on 3/7/09 at 07:15 PM |
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as far as i know tax is 20% until you earn over £34,800 even if you have 2 jobs.
im sure national insurance goes up tho, i cant find the linky at the min so ill keep searching
i cant find it sorry.
maybe you will have to contact hmrc
[Edited on 3/7/09 by eccsmk]
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Cousin Cleotis
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| posted on 3/7/09 at 07:21 PM |
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What would the business be?
It might be easier to set up a limited company and do your own payroll with one of the free online payroll programs. Just as i did 3 months ago, very
easy.
Paul
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s2gse
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| posted on 3/7/09 at 07:24 PM |
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set up as a LTD company go as a director then the company pays corparation tax at about 20% on the profit made for the year and you can take a tax
free divident of around £ 30,000 tax free.
if you are married and set the wife up as as director as well and another divent of around £ 30,000 tax free
so if the company has a profit of £100,000 pay 20,000 corparation tax
leaving £80,000
you and the wife take £60,000 tax free leaving £ 20,000 in the company bank account and claim that on expenses for running the company
thats how the MPs pay half the tax anyone else pays
But you need to make a profit first
life's to short and so was the drive
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JoelP
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| posted on 3/7/09 at 07:29 PM |
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its dead easy david, just let HMRC know you are setting up self employed and tell them you are an employee too. Then fill in a tax return and they
work out how much you owe.
I have always done my own returns and just use an accountant to do the PAYE stuff for the employees.
Beware! Bourettes is binfectious.
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SteveWalker
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| posted on 3/7/09 at 07:33 PM |
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If you're running your own business, you can pay yourself a very low directors fee each month to minimise income tax and NI, then take out all
reasonable expenses and the remainder is the profit on which you must pay corporation tax.
You (as sole shareholder) can take the profit as dividends and pay no further taxes on it. If you have a wife or girlfriend who does no other work and
will be part of the business, you can pay them just enough to make maximum use of their tax free allowance and reduce your profits and therefore
corporation tax.
If your turnover is low enough, you will not have to charge VAT, but if it is higher (or voluntarily), you can charge VAT at 15% and either pay VAT at
15% to the Inland Revenue and claim back VAT that you have paid to other companies at 15% or, more simply, charge VAT at 15% and pay it at a lower
flat rate to the IR, but you'll not then be able to claim back VAT that you have paid out - it depends on how much stuff you have to buy as to
which is the better for you.
Keep up with accounts and notifications to IR and Companies house or you'll be hit with fines.
Bear in mind that if you are self-employed, even ceasing trading may not allow you to claim on mortage or credit card payment protection insurances
for many months or even at all if you need to. It seems to take about 9 months to complete the process of ceasing trading and striking off your
company and you will have to pay to do this.
A few other things. Depending on you circumstances you may not being paying enough Class 1 NICS to qualify for contributions based Jobseekers
allowance if things go wrong.
If you use your car to travel anywhere on business (even to the shops), you'll need to have business use on your insurance - but you can then
claim business mileage as an expense (typically 40p per mile up to 10000, 25p per mile after), so reducing your company's profits and therefore
c.tax.
Accountancy fees can soon add up.
If you end up purely self-employed, it'll be harder to get mortgages and other credit.
Finally, if the sort of work that you're contemplating means that you are working for another company and are effectively the same as an
employee of theirs, you'll get caught under the IR35 rules and have to pay tax the same as a normal employee.
It's all pretty complicated, but can be worth it. In my case it didn't work out, mainly due to family health problems 
[Edited on 3/7/09 by SteveWalker]
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gazza285
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| posted on 3/7/09 at 07:35 PM |
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CASH IN HAND!
DO NOT PUT ON KNOB OR BOLLOCKS!
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907
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| posted on 3/7/09 at 07:35 PM |
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Hi David,
I think most accountants will give the first consultation free.
Someone recommended one, I phoned and made an appointment, and spent an hour with him.
Cheers
Paul G
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David Jenkins
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| posted on 3/7/09 at 08:54 PM |
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Just remember that the legal requirements for ltd company financial reporting are MUCH more complicated that for a sole trader. This extra work has
to be paid for - either in your time (a lot), or from an accountant.
When I was an IT contractor I had to be a Ltd Company and VAT registered... my accountant illustrated the difference by showing the height of each
pile of paperwork - sole trader, 1 folder, 1" thick. My paperwork, several folders, 6" thick.
If you can swing it, go for sole trader - it's much simpler and much cheaper in overheads.
I've got a book somewhere that discusses the various requirements - if you're interested I'll dig it out and send it to you (or hand
it over at Diss one day) - let me know by U2U. It's for IT, but the principles are the same.
[Edited on 3/7/09 by David Jenkins]
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GrumpyOne
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| posted on 3/7/09 at 11:58 PM |
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You only get one set of allowances which you are using up in your day job, anything you earn after that as a sole trader will be taxed at the top
rate.
A Ltd company might be your best solution depending on how much you expect to turnover and at what profit margin. There are ways to get money out of a
Ltd company without paying tax.
I would need to know a bit more about your circumstances before offering too much advice.
Cheers
Colin
My wife is very understanding, she understands that if I am in the garage I am not in the house annoying her.
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