Director on the side...

PaulDonn

Hi everyone,

I have just started a ltd. company and in the process of getting my business plan implemented. Just so you know, i have no experience in limited companies or anything to do with HMRC/VAT and all the paperwork that comes with it.
My day 2 day job earns me an average of £65k per annum, How will this impact on my limited company?
I know thats a very open question but your comments are greatly appreciated.

Thanks

dshart

Your day to day job should have no impact on your limited company. Your limited company is a separate entity in regards to tax and vat.

I take it your day to day job is nothing to do with the business you are setting up?

podperson

Your day to day job shouldn't impact on your company. If you are taking a wage as an employee from the limited company then it will obviously affect the tax code you're on for that but that should be all.
Obviously hard to comment fully with no details but if you're just running it as a 'part time' business at this point are you sure you need to be a limited company? If you don't really have experience in them creates a lot of additional paperwork, accounts to do etc.

trailingspouse

As you are already earning £65,000 I'm guessing you're paying tax at the higher level. This will mean that when you take your dividend from the ltd company, you will have to pay tax at the higher level on the full amount (because your day job has already used up your tax allowances etc). There are ways round this - for example, you could pay into a pension from the profits in the ltd company. I'm assuming you already have an accountant - if you haven't, then you need to get one asap. They are the best people to help you run your business in as tax efficient a manner as possible.
And a word of caution - if you're not used to dealing with VAT and so on, get it all sorted in your head. I've found the VAT people very helpful - they know it's complicated, and it's easier for them if you get it right. Never ever miss a deadline - you really really don't want to p*** them off.

benhc123

It will make no difference except that you would pay the higher level tax on dividends from the company.
P.S. Well done for starting your own company

Regshoe

A limited company may or may not have been the best option for you, impossible to be sure without the details. Ideally it is best to speak to an accountant before registering for anything, in any case I suggest you go so one ASAP (or even two or three so you can choose whichever seems most competent/best value).

I'm biased as I am an accountant, but you have a minefield of different admin and legislation to consider, particularly now you have registered a limited company. If you are earning £65k in your main employment I assume you are hoping to make a similar rate of return (or higher) from setting up a business. At this level of income it really isn't worth your time to do much of the accounting work yourself.

PaulDonn

Thanks for the response all.

The company i have setup is going to be an internet only company, so it will only consist of a website. The plan is that companies are going to pay to advertise on the site. Thats all i can say incase someone copies and beats me to it. Haha, i bet everyone thinks that when they come up with an idea.
It is not directly related to my day job but it is in the same sector, oil and gas.
I dont have an accountant..yet.

From what i have said, is a ltd. company the best solution.

Also, could i make my partner (not married) the director or involved where she could take the tax free allowance out, she is a stay at home mum of 2
I will now look at accounting services in Tyne and Wear and get upto speed on VAT.
Thanks again all

Wywth

PaulDonn wrote: »

...From what i have said, is a ltd. company the best solution...

I understand you already have set up a ltd co.

PaulDonn wrote: »

...Also, could i make my partner (not married) the director or involved where she could take the tax free allowance out, she is a stay at home mum of 2 ...

As a current director (and possibly subject to shareholder's agreement if this is different) you can appoint who you want as a director
There's currently no tax free allowance for limited companies.

PaulDonn

Yes I have set it up and registered already but comments above about whether that was the best option.

anamenottaken

PaulDonn wrote: »

Thanks for the response all.

The company i have setup is going to be an internet only company, so it will only consist of a website. The plan is that companies are going to pay to advertise on the site. Thats all i can say incase someone copies and beats me to it. Haha, i bet everyone thinks that when they come up with an idea.
It is not directly related to my day job but it is in the same sector, oil and gas.
I dont have an accountant..yet.

From what i have said, is a ltd. company the best solution.

Also, could i make my partner (not married) the director or involved where she could take the tax free allowance out, she is a stay at home mum of 2
I will now look at accounting services in Tyne and Wear and get upto speed on VAT.
Thanks again all

She can be paid a salary to make use of her personal allowance if she is willing to take the responsibility of being a director or provides a service to the company.

trailingspouse

I would beg to disagree with the above post. She can of course take a salary - providing she actually does work for the company, and actually gets paid - but she doesn't need to be a director to do this. If she's a director, she'll be paid a dividend, which might be more tax efficient.
My husband and I run our own business, and are both directors. We have 50:50 shares in the business. This means that when we pay ourselves a dividend, we get exactly the same amount of money each. This is despite the fact that he is the one doing the actual work (I do the books, talk to the accountant, pay the VAT, nag at him to provide receipts and keep his mileage up to date - all the boring stuff basically). Remember, as a 50:50 shareholder and director she will legally have exactly as much say in the business as you do - are you prepared to relinquish that much power? What if you split up? Having her as a director would indeed be more tax efficient - as you're already paying the higher rate tax, at least you'd only be paying 20% on the dividends that went to her.
As I've said before - this is complicated and serious stuff, get an accountant, and they can tailor their advice to your particular circumstances. Just because it works for us doesn't mean it's the right thing for you.