Business Query

StartingOut12

Hi all,

I've been told this is the place to come if your looking for a little guidance on saving £££ and business related things.

Over the last 3 month's I've been building my own business selling a product. I work a 9-5 and earn around £20k a year but then I run my online business when I get home.

After all business fees e.t.c. I made £60,000 last month & now it's coming to pay time! I'll be receiving this large lump sum from a merchant account into a bank account.

I'm 23 years old & completely clueless regarding business! The only accounts I have are Nationwide personal Flex accounts. What would be the best way to receive this money, should I take it into my personal account or setup a ltd and transfer it there?

From my understanding, if I were to transfer it to myself I'd be paying around 40% tax on most of it, where as if I transferred it to a LTD I'd only pay 20% but then when it came to paying myself I'd end up paying 40% as I'm already above the tax bracket? I really don't know where to go with this or what to do.

I'm sorry if this isn't the place to be asking the above questions, I'd be ever so grateful though if someone could chip in & either guide me in the right direction or tell me if I'm about to make a crazy mistake transferring it into my personal account!

Thanks

Gromitt

It all depends on where you are based, where you get your goods from and where you ship your goods to.

If your a UK company selling goods to the UK, then don't forget that if your turnover exceeds 77K (or you expect it to soon), you need to register for VAT regardless.

I believe the current 40% tax bracket starts at 35K+baseline, so mine is something like 43K or so, so I wouldn't use the 60K from your business as a wage or income as you'll be stung for tax. Put it in a seperate account in the name of the business. You'll be taxed at 20% or so for the products sold in the UK, but you'll be charging this to your buyers anyway, so no loss.

and get an accountant! Some of them are worth their weight in gold. Others are just crap and just want as much of your money as possible.