50k Income Limited Company

PeterJames123

Hi All,

I am starting my own limited IT company how maximise my earnings if I have an income of 50k per year. 

My only monthly expenses are;
£20 petrol per month average for petrol as I work from home and just use the car for work meetings.

£24 Sim only phone bill 

£26 use of home allowance

£0 Bank is free
£50 accountant 

I don't intend to purchase any new equipment as my Laptop is sufficient, but understand what I can claim for should I need to. 

I understand I can take out a maximum of £300 per year for trivial expenses which is split into £50 vouchers.
I will be charged up to 7.5% on any dividends I take out the company
I will have to pay 19% corporation tax on the amount left in my business account. 

Thank you. 

Grumpy_chap

You need to employ an Accountant as, for example, you cannot simply claim petrol but can claim mileage.  An accountant will give you reliable advice very simply.

bris

You can claim petrol or mileage but you can't claim both.
The dividends need to be done on a self assessment if they are over 10k
Accountant £50? Can I get his number, 

dancing_star

PeterJames123 said:

I will have to pay 19% corporation tax on the amount left in my business account. 

If your £50 accountant told you that you maybe should look for a more expensive accountant.

Pennywise

PeterJames123 said:

I will be charged up to 7.5% on any dividends I take out the company
I will have to pay 19% corporation tax on the amount left in my business account. 

You have to pay 19% on the amount you draw out as dividend too, not just the amount left.  Dividends aren't a deduction for corporation tax.  You also have to pay CT on money you've not received, such as money owed to the customer - company accounts/tax aren't done on the cash in/cash out basis.  If your accountant hasn't explained this, then you need to get a better one.

Grumpy_chap

Pennywise said:

You also have to pay CT on money you've not received, such as money owed to the customer - company accounts/tax aren't done on the cash in/cash out basis.  

It is possible to use the "cash accounting basis" but I am uninformed as to how that works.

oldbikebloke

Grumpy_chap said:

Pennywise said:

You also have to pay CT on money you've not received, such as money owed to the customer - company accounts/tax aren't done on the cash in/cash out basis.  

It is possible to use the "cash accounting basis" but I am uninformed as to how that works.

as Pennywise says, you need a competent accountant
limited companies cannot use cash accounting EVER

Sandtree

oldbikebloke said:

Grumpy_chap said:

Pennywise said:

You also have to pay CT on money you've not received, such as money owed to the customer - company accounts/tax aren't done on the cash in/cash out basis.  

It is possible to use the "cash accounting basis" but I am uninformed as to how that works.

as Pennywise says, you need a competent accountant
limited companies cannot use cash accounting EVER

Given the £50k revenue the OP mentioned its may not relevant however my understanding was that Ltds can use cash accounting for VAT purposes but not for corporation tax

oldbikebloke

Sandtree said:

Given the £50k revenue the OP mentioned its may not relevant however my understanding was that Ltds can use cash accounting for VAT purposes but not for corporation tax

correct, but OP's question was in relation to corp tax (not Vat) and, by extension, income tax on personal "earnings"

As OP is clearly out of his depth, I kept it simple to the context of his question. He needs an accountant  ... not attempt to DIY

Sandtree

The headline question was maximising earnings and if hes in "IT" it could be most/all his clients are VAT registered businesses and therefore voluntary registration for VAT could help in that space and then the "EVER" of your post does become a little more relevant.

Fully agree the OP lacks the knowledge to go it alone and I'd question if their £50 a month accountancy fee is going to be sufficient for the level of initial handholding they'll need

pleasedelete

indemnity/professional insurance
payroll costs
business banking (will be free to begin with but then will cost)
book keeping system? I use quickbooks which is £25 a month (you can do your own payroll in QB)