Tax small business

bluenitsuj

Confused. Can anyone help explain tax for small business. e.g

Year turnover 150,000
less
Rent 20,000
Staff 3,000
Insurance 320
Alarm 50
Accountant 1500
Stock 60000

Total net profit 65130

Is this right. Is corporation tax then taken from the above net profit @ 20% = £13,026
If i take out a wage of 650 a month ( which will keep me under the threshhold ) is the wage taken out of the net profit - before the tax is worked out, or after.
I presume I can then take a dividend out of the final figure = 52104.

heathcote123

bluenitsuj wrote: »

Confused. Can anyone help explain tax for small business. e.g

Year turnover 150,000
less
Rent 20,000
Staff 3,000
Insurance 320
Alarm 50
Accountant 1500
Stock 60000

Total net profit 65130

Is this right. Is corporation tax then taken from the above net profit @ 20% = £13,026
If i take out a wage of 650 a month ( which will keep me under the threshhold ) is the wage taken out of the net profit - before the tax is worked out, or after.
I presume I can then take a dividend out of the final figure = 52104.

Disclaimer- I am not an accountant.

The wages come out of the profits, so you'd deduct the 7800 from the gross profit, giving a net profit of 57330, with a corp tax bill on that of ~11.5k

You can they pay yourself about 35k in divs without attracting any further personal tax - if you want to pay out the other 10k left this year you'll need to pay a further personal div tax on it (20% or so I think once div credit taken into account), so you might want to leave this for next year depending on how you think trade will be.

If you're paying 1500 for an accountant though, phone them up & ask them for exact figures. No point paying good money to get unreliable info on here! Incidentally, that seems quite a steep accountancy fee for the turnover involved.

Acc72

bluenitsuj wrote: »

Confused. Can anyone help explain tax for small business. e.g

Year turnover 150,000
less
Rent 20,000
Staff 3,000
Insurance 320
Alarm 50
Accountant 1500
Stock 60000

Total net profit 65130

Is this right. Is corporation tax then taken from the above net profit @ 20% = £13,026
If i take out a wage of 650 a month ( which will keep me under the threshhold ) is the wage taken out of the net profit - before the tax is worked out, or after.
I presume I can then take a dividend out of the final figure = 52104.

I guess that the above is the business you are looking to buy ?

Did the seller give you the figures ?

There seems to be a few costs missing :

eg. as this is retail, what about a van/fuel/insurance/ repairs etc.

Are rates included within the rent figure? (if not, budget for a cost of 40% of the rent cost).

Electricity costs?
Telephone / mobile costs ?
The insurance figure looks very very low.
Employee costs of £3k are very low.

The only advice I would give is to go and see a local accountant for advice before you part with any redundancy money.

Pennywise

When you say "stock", what do you mean? Do you mean stock in hand, or do you mean purchases during the year, or do you mean the cost of the stock sold during the year?

bluenitsuj

Acc72 wrote: »

I guess that the above is the business you are looking to buy ?

Did the seller give you the figures ?

There seems to be a few costs missing :

eg. as this is retail, what about a van/fuel/insurance/ repairs etc.

Are rates included within the rent figure? (if not, budget for a cost of 40% of the rent cost).

Electricity costs?
Telephone / mobile costs ?
The insurance figure looks very very low.
Employee costs of £3k are very low.

The only advice I would give is to go and see a local accountant for advice before you part with any redundancy money.

I have the figures from the seller.
No van is required.
Business rate exempt
Rent includes gas,electric,water and buildings insurance.
Telephone is average £50 per month
The insurance cost is what he currently pays but I will obviously look into this.
He Runs the business himself, working days and just employs help one day a week for 7 hours.

I have an appointment with my accountant tomorrow morning so I should know then if this a goodun or a walk away un.

bluenitsuj

Pennywise wrote: »

When you say "stock", what do you mean? Do you mean stock in hand, or do you mean purchases during the year, or do you mean the cost of the stock sold during the year?

Stock means purchases during the year.

Savvy_Sue

bluenitsuj wrote: »

He Runs the business himself, working days and just employs help one day a week for 7 hours.

Don't think you can dispense with their services, when you take over the business this person will probably be TUPEd across. Please get legal advice about the implications of this.

paulwf

May I ask what the sector is? For such a high GP you'd usually expect a much higher wage bill.

There seems to be loads of expenses missing. All those might be minor but soon add up, for example window cleaning can be a few hundred over a year and bank charges combined with credit card processing charges can be getting on for a grand.

I guess I'm skeptical because if it was me I'd put in a manager for £20K and sit back and enjoy the £45K profit instead of selling it. I'd also want 3 times the net profit when selling i.e. I'd be selling for just under £200K. How much are they asking?

Acc72

bluenitsuj wrote: »

I have an appointment with my accountant tomorrow morning so I should know then if this a goodun or a walk away un.

What did your accountant say ?