I'm in abit of a pickle regarding ltd company and could do with some advice please.

clairibel

Hi,

I'll start from the beginning. I joined Arise work at home job in march last year and set up a ltd company as this was what they preffered, anyway i was terminated in August and i made roughly about £350 a month.

So i get my corporation tax form and first off i filled it in wrong...i'm doing it myself because bottom line Arise did not provide me with enough income to pay an accountant and it was not the job i was led to believe at the time...very low earnings. I put my total earnings of £1625 in the profits box and they wanted to charge me £342 ish corp tax. I made no profits, barely broke even and it wasn't really a company as such just me contracting to Arise to work for Shopdirect as a customer service agent.

So i sent an amended return after speaking to them, but now they have sent it back saying i need:I haven't found them that helpful.

1. A directors report.
2. Full balance sheet
3. Profit and loss account.

I'm really not clued up on this stuff and do not know what to do...i wish i had never started my company as been nothing but stress for me...i was ill informed and i was led to believe by arise it to be straightforward.

I just don't know where to start tbh and it is a big stress for me.
Can anyone please help me with constructive advice on what to do. Its so easy to set up these things £17 i think but was not aware what came with it

Thanks for any help.

paulwf

Sorry to hear of your bad experience. Could you please clarify something...you had an income of £1,625 but you say you didn't make a profit. Where did all the money go?

I'm not trying to be picky, this is a genuine question that will have a bearing on the advice given. Did you have lots of items to buy or did you pay yourself a wage? If you paid yourself a wage did you do a proper payroll or just took the money out?

clairibel

Hiya,

That £1,625 was my total for 6 months work, so i had to live off it as a wage, i didn't understand all the dividend/payroll stuff and now i'm paying for it

So when taken as a salary over 6 months it works out about £270 a month wage.

Thanks for your help. i don't take offence, i know i've been daft.

clairibel

I've been online and read the directors report but just don't know what to put in it. I also have access to all my invoices to Arise showing my monthly income, which i thought was enough but apparently not.

I wouldn't know what assets and liabilities i have, would this just be none same with profit and loss.??

kazwookie

Clairibel

Assets to a company are items that you bought with a value like, machinery, car, computer, stock, etc

Overheads are items such as:- stationary, pens, gas, electricity, stamps, cleaning items etc

Liabilites are items such as:- PAYE, Vat, money you owe to others for any purchases you made.

it might be an idea for you to ring 2 or 3 local accountant companies to you and ask them how much it would be (a rough idea) for to prepare all your accounts etc for you.

heretolearn_2

To be honest with you, I think you'll be better off biting the bullet and paying an accountant to sort this out for you.

You declared £1625 as your profit - not the turnover (income) and therefore you have to pay tax on it. Ltd Coys don't get a personal allowance in the way that individuals do - the company is a separate entity to you legally.

If you don't understand all this, an accountant will sort it out and probably save you paying too much tax.

paulwf

I was worried you'd say that

A limited company is it's own legal entity, so although you own it the finances are totally separate to yours. Unlike being self employed you can't just take money out, you are classed as an employee and have to do payroll as any normal company does.

The alternative to taking money out as wages is to draw it as dividends, perhaps every 6 months or yearly.

I'm not an expert on the tax situation...I'm sure one of the accountants here will be able to help...but normally you draw wages until just under your personal allowance then draw the rest in dividends to minimise tax.

I really think you need an accountant to dig yourself out of this (to be honest you've unfortunately created a messy situation) and get the company closed. It's a case of having to bite your lip and pay it, you can't try and justify it against what you earnt you just have to pay it and write it off. If you can't afford it full stop then call Business Link as they can offer some advice for free. A book keeper might be able to help and costs less than an accountant although at the end of the day I think an accountant is really going to be best.

One to chalk up to experience really...please be wary of other self employed work from home schemes, most of them are more trouble than they are worth.

clairibel

Cheers for all your help, i will ring business link first and see what they say and go from there. Never again

I dissolved it in August. Let this be a lesson to others starting with Arise.

timnicebutdim_2

Just a thought but you could possibly post this on one of the accountancy forums and ask for some help - you never know some people may offer to look at it for free, up to the point where it needs to be signed off by an accountant and thereby reducing any further costs.

Mahmood_Reza

Hi Clairibel,
Sorry to hear about your bad experience - in my experience it is not unusual for start up businesses to receive advice that is not necessarily in their best interests (in this case the limited company structure protects Arise, but shifts a lot of unnecessary a/c and tax burdens onto you).
Anyhow, based on what I have gleaned you will have no tax liability since (a) what you paid to yourself can be classed as either a wage (below your personal allowance) or a loan (under £5,000 = potentially tax free). Based on the limited information I cannot see any profits arising. You always have the right to amend any returns etc sent in. Subject to your future intentions you may wish to consider dissolving the company - there will be ongoing costs and obligations to maintain it, and relatively heaby fines/penalties if it goes wrong.
Hoep this helps, apologies if not answered or incorrect protocol - I am new to this forum

paulwf

Mahmood_Reza wrote: »

Anyhow, based on what I have gleaned you will have no tax liability since (a) what you paid to yourself can be classed as either a wage (below your personal allowance) or a loan (under £5,000 = potentially tax free). Based on the limited information I cannot see any profits arising.

I think the problem is the OP from what I can gather has just drawn the money out for wages as you would if you were self employed. She has then declared the company turnover as the profit. My concern would be that it is too late in the day to now make the declared profit disappear in payrolled wages and expenses. That's why an accountant needs to look at it.

If you take money out as a directors loan presumably that needs to be paid back before the company is wound up? Wouldn't using a loan just delay the issue?