Tax help for a small business

MrsPee

Hello, 
I wondered if there is any way I can speak to a tax specialist for small businesses? i don't need an accountant as such, but need advice on paying tax. I am a partner in a small business which is a Ltd company. We pay ourselves through PAYE, but it is under £12,000 which is our tax code threshold. The company has now received a letter from HMRC saying we need to pay PAYE tax, but I can't understand why as each of us (directors) are being paid less than £12,000 and our tax codes are 1250. Can anyone help please?

Grumpy_chap

You need to submit RTI at each PAYE payment, so reporting the salary drawn and tax due (even if that is nil).

It would probably be prudent to pay an Accountant to advise and process the monthly payroll.

MrsPee

Thank you, we've been trying to avoid an accountant if possible as at the moment we just can't justify the expense unfortunately.

Grumpy_chap

Do not see the expense of an Accountant as a cost, but as an investment.

You and your partner are running a small Ltd Co., and therefore responsible for everything.  That does not mean you have to do everything yourself and it will be exceedingly difficult if you do try to do everything yourself.  Use external support when it is appropriate.

The cost of an Accountant will probably be less than you think and will offer benefits over and above the simple financial return:

• Gain benefit of all regular and legally permitted allowances to reduce the tax liabilities of the Ltd Co and your personal tax.
• Peace-of-mind knowing the accounts are correct and you are not building up a tax liability.  In turn, reduces your stress level and allows you to be more effective at doing what the business does.
• Release time to allow you to focus on developing the business.  An accounting task that may take you four hours without the knowledge and experience in processing accounts may only cost one hour of the Accountant's time.

You say you are paying yourselves through PAYE, but do not appear to be running payroll and declaring RTI submissions.  You need to know about income tax and NI just for this.  You will also need to prepare your annual accounts and corporation tax returns.  Then your personal tax returns.  I assume you are not registered for VAT, but do you know the benefits and cons of doing so, or did you simply check the registration threshold is not applicable and decide it was easier not to register for VAT?

There are fairly regular threads asking about the costs of an Accountant.  Two recent threads that cover small business and personal accounting services are as below:
Personal:
https://forums.moneysavingexpert.com/discussion/6214232/cost-of-accountant-for-self-assessment-submission
Small Business:
https://forums.moneysavingexpert.com/discussion/6212968/200-monthly-cost-for-a-good-account-for-a-small-business-ok#latest
In the second of the above threads, I stated that my Accountancy fees for the business were around £1k + VAT.  For the sake of accuracy, the total annual cost for 2019 business was £1,105 + VAT

oldbikebloke

MrsPee said:

Thank you, we've been trying to avoid an accountant if possible as at the moment we just can't justify the expense unfortunately.

yet you are lost and in need of help... QED pay an accountant
is the company the SOLE SOURCE of ALL earned income for each of you (Ltd companies do not have "partners", they have shareholders, directors and employees)? 

with 12k earnings have you paid your NI? Is the company able to claim employment allowance to offset its NI ER? "PAYE" is not just income tax.