New LTD company

betterthanyours

Hello

Just after a bit of advice. I've won my first contract and ready to start contracting. My company was setup in October 2016 and stayed dormant. First of all, do I need to let HMRC know I have begun trading, if so, how?

Secondly, I'm trying to figure out how to pay myself - monthly / weekly? And how do I generate my own pay slip? I will be operating as a Director of the company, not an employee.

I do intend to hire an accountant, however all these firms are asking for ~£90 per month. That seemed rather excessive to me or is that the going rate?

Thanks in advance for your input.

MediaGuy

Hi,

Well done on the contract win! Yes, absolutely you need to let HMRC know you are trading ASAP. There is no longer a grace period.

As for paying yourself, it depends (and I am a small hobby type business so your milage may vary) but ideally doing it via dividend is usually a better idea below a certain level (I take a twice yearly dividend.) Depends on your circumstances.

I really would advise getting an accountant but £50 is silly cheap. I pay £120 .a month and that is considered the going rate in my neck of the woods.

Aquamania

betterthanyours wrote: »

Hello

Just after a bit of advice. I've won my first contract and ready to start contracting. My company was setup in October 2016 and stayed dormant. First of all, do I need to let HMRC know I have begun trading, if so, how?

Secondly, I'm trying to figure out how to pay myself - monthly / weekly? And how do I generate my own pay slip? I will be operating as a Director of the company, not an employee.

I do intend to hire an accountant, however all these firms are asking for ~£90 per month. That seemed rather excessive to me or is that the going rate?

Thanks in advance for your input.

Yes, if you plan your company to start trading you need to inform HMRC.
This link explains how
https://www.gov.uk/restart-a-non-trading-or-dormant-company

If you are going to pay yourself a salary, then you need to also register that with HMRC and start a PAYE scheme. This explains how:
https://www.gov.uk/register-employer

If you are the sole shareholder, you can of course pay yourself a divi, but it's usually worth paying yourself a salary (as well) so that you accrue the necessary NI credits.

You should consult an accountant to decide how best to pay yourself.
Accountants cost vary, particularly what you ask them to do.
You should be able to get an initial discussion free of charge, and then they will discuss their services and prices.
If you just want the accountant for tax advice, maybe complete your tax returns etc, for a simple business this can be as little as £250-£750 per year. Pay about another £300 if you want the accountant to also do your own personal tax assessment.
(these are the lowest prices and depend on you supplying the accountant the details he wants in the format he wants, and assume you keep things simple)
Of course, if you want the full works, with the accountant doing your monthly payroll, and you just chucking a box full of receipts/invoices at him to sort everything out, then you will end up paying a lot more.

If you run your own payroll, you'll need an approved payroll software. HMRC do one, but they also advise who else offers them. Even some of the commercial offerings are free for small employers, maybe with restricted functionality, but which fullfills all HMRC requirements. I think most people prefer one of the commercial offerings rather than the HMRC offering.
If you are lucky, the software will produce you payslips - if not create your own, maybe using a spreadsheet, taking the necessary figures from the software package you use.

If you are a service company, then you may fall within IR35. Your accountant will advise you further.

phill99

TBH you wold be well !dvised to see an accountant. Get them to do all of that stuff. That's what they are good at and trained in. It will allow you to the stuff that is important to you: marketing, managing staff, dealing with your clients. That will help grow your business and income. Sweating the small stuff wont!!

Allan53

Typical advise is to reimburse yourself with mix of salary and dividend. Depending on company income, and your "expenditure needs" best to pay ~£8k in salary and £5k in dividend to pay no income Tax and NI (check figures with accountant). A payslip is not necessary and administratively easier to draw down salary monthly. Must have sufficient profit to draw down on dividend payments, which could be taken monthly, yearly or any period between. Let your accountant deal with HMRC as now stricter reporting requirements, but no reason why you can not keep your own "ledger" and simply use accountant for company set up, PAYE and year end returns. Consider if additional "directors" can be listed, as potential tax savings. If service contract potential IR35 considerations, so seek professional advice!

Makkusu

betterthanyours wrote: »

Hello

Just after a bit of advice. I've won my first contract and ready to start contracting. My company was setup in October 2016 and stayed dormant. First of all, do I need to let HMRC know I have begun trading, if so, how?

Secondly, I'm trying to figure out how to pay myself - monthly / weekly? And how do I generate my own pay slip? I will be operating as a Director of the company, not an employee.

I do intend to hire an accountant, however all these firms are asking for ~£90 per month. That seemed rather excessive to me or is that the going rate?

Thanks in advance for your input.

Hi I'm a contractor accountant! Assuming you're a true 'contractor' I thought that might be of interest.

Unfortunately, HMRC have made contractor life hard in the past couple of years, and continue to do so. Be very cautious of advice given over the internet, I can spot some incorrect advice in this thread already which can land you penalties, many years down the line (if you're unlucky). Example, you haven to run a proper payroll due to RTI, you can't just draw down a salary.

IF you are a contractor, there is also this thing called IR35, very serious and boring stuff.

The best piece of advice here is to get an accountant.

£100 a month might sound a lot at first but I save most of my clients at least 5 digits in tax... a year.

trailingspouse

If you're going to do the bookkeeping side of things yourself, you need to build it in to your working week. Receipts don't file themselves!!

OH and I run a similar Ltd company - he does the work (as a contractor), and I do the books. And by that, I mean I keep a track of all of the business's income and expenditure, I reconcile the bank statements, I file all the receipts, I invoice the clients, I do the VAT returns, I do payroll and mileage, I do the paperwork when we pay a dividend, I do the EC Sales list, I chase unpaid invoices, and I keep the website up-to-date. It's a lot to do alongside your actual work, so unless you have a willing (and able) spouse (and talk to your accountant about the implications of having your spouse as a director) it makes sense to buy in at least some of these services.

We pay £1800 a year for our accountant - it's money well spent, and they've saved us a fair bit over the years.

And to answer your question, we pay ourselves monthly (and reimburse mileage and out-of-pocket expenses), and we pay a dividend appx every 3 months.

RWBLDN

I've also recently started my own business. I think Alan53 nailed when he said you should be careful what you read on forums, especially with something so serious and tax and personal finance. I use an online accountant called crunch.co.uk who change about 65 a month (which is tax deductible) and are on the phone to advise any time you need them. I also send all my invoices through their online software too. Check them out.