sole trader tax, car, perks, help!!!

CLAPTON

just for the avoidance of doubt

why does it matter to you whether you leave the 6k in your business account or withdraw it; it doesn't affect tax in any way

nathand_2

jam14 wrote: »

ok guys lets start over
I have someone doing my ac!!!!s not an accountant but someone experienced in sorting the paperwork and I have already submitted 2 returns with no issues. My annual turnover is say 35,000 - with 10,000 of that being spent on equipment, hotels, car upkeep & mainly diesel. This is paid by credit card and settled at the end of each month. I charge a flat £25 per hour rate be it driving onsite or in the office to keep things simple for clients and this balances itself out over the week.
I would like clarification on the best way to claim business mileage I was under th eimpression this was only up to a certain level, I do approx 35000 miles per year.

Bearing in mind I am saving for a new car in 12 months when it gets to April what is best to do with the £6000 I will have saved up in my business account? leave it there or withdraw as earnings?

I am sucessfully managing everything merely looking for a few hints on things I may be unaware of, sorry for any initial confusion but I am noy totally clueless as I may have appeared!! thanks

Start from the top of the page and read downwards. Get an accountant. It's not just the documents that you need one for. Its for answers to all the questions you have. Dont leave it to people on the net, get someone who knows what they are talking about.

jam14

sorry NATHAND your not quite getting this, with self assessment there s no need for an accountant for the last two years things have been done efficiently and well I am simply asking if there are any further ways to save money, the addition of an accountant on such simple accounts is not necessary. Most writing on here seems to be from either accountants or people who run far more complex accounts than mine will ever be.

I am looking for simple wasy to save money be it on credit card, fuel, car or tax, not brain surgery and certainly no need to pay an accountant in this technical age!!!

CLAPTON

you don't need to answer but what was your reason for you to ask whether to keep the 6k in the business a/c or withdraw as earnings?

ceeforcat

We currently live off my wifes wage but I pay myself approx £2500 every now and again whilst putting away the expected 20% tax to a savings account, I have heard people speak about dividends rather than wages but I am unsure if this is an option for a sole trader r how it works? I have also heard talk of self employed paying themselves a small amount per month/year to keep under tax levels but again am unsure how this is done and how they extract the actual cash?

I am sorry - but when I read this paragraph I wonder how on earth you can be sure that your returns are correct. Have you been declaring the income that you draw from your business as a wages expense? You state that you put away 20% of the £2500 that you withdraw for tax when this has nothing to do withanything whatsoever. What was your turnover, expenses and drawings for last year's accounts and on what amount did you pay tax?

You also appear to be assuming that, because you have heard nothing from HMRC, your returns must have been correct. There is no checking exercise when you submit the return - the process at submission simply generates a bill. It will only be if or when an officer chooses to look at it that you will discover how accurate you have been.

CLAPTON

based on the limited info you have provided
your a/c for year 2010-11 would look like this

1. turnover £35,000
2. expenses £10,000
3. profit £25,000
4. tax is 20% of (25,000 -6475) = 20% of 18,525 i.e. payment of £3,705
5. NI £2.50 per week for class 2
and 8% of (25,000 - 5715) = 8% of 19,285 i.e. payment of £1,543


is that broadly what you have submitted?