Freelancer limited company accounting
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onetimeatponycamp
Posts: 121 Forumite
I went freelance a couple of months ago, I set up a limited company but as I haven't been making much money yet I haven't employed an accountant. I've done lots of research so I'm hoping I've done everything correctly. So far, I've just paid myself in dividends - I made the assumption that since I was over the threshold for NI in my role that finished before then that this would make the most sense, it's only been a couple of payments so far.
I want to get some accounting support, but the monthly packages offered for limited companies seem like overkill. I'm happy to do my own bookkeeping, my company accounts are pretty straightforward - I invoice and get paid by say 2 or 3 clients a month, I have some expenses and I need to pay myself dividends. So from an accountant I think for now I just need some advice, probably not even payroll. I'm happy to pay for the filing of accounts as a one-off sum when it comes to that point.
Really I just need some advice on whether I'm doing the right thing dividend/salary wise and if/when I should register for VAT. What's the best way to approach an accountant for this - do I just pay for one-off advice?
I want to get some accounting support, but the monthly packages offered for limited companies seem like overkill. I'm happy to do my own bookkeeping, my company accounts are pretty straightforward - I invoice and get paid by say 2 or 3 clients a month, I have some expenses and I need to pay myself dividends. So from an accountant I think for now I just need some advice, probably not even payroll. I'm happy to pay for the filing of accounts as a one-off sum when it comes to that point.
Really I just need some advice on whether I'm doing the right thing dividend/salary wise and if/when I should register for VAT. What's the best way to approach an accountant for this - do I just pay for one-off advice?
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You must register for VAT when your turnover is going to hit the current threshold (£85k) in a 12 month period, there are limited circumstances when it is beneficial to voluntarily register for VAT before having to (eg if you sell 0% rated products/services, if all your customers are themselves VAT registered etc). For the majority, VAT registration is put off as long as possible.
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For a one off chat you can pay them by the hour. The rate can vary from £100 to £££ (all + VAT) depending on their practice.
For monthly fee example, I'd expect small companies to pay about £100 ( + VAT) per month which includes VAT returns, payroll for a couple of staff and the year end tax and accounts returns.
When you say you've paid yourself in dividends (which would have to be interim), that assumes you've made a profit. How sure are you of this?0 -
onetimeatponycamp said:I went freelance a couple of months ago, I set up a limited company but as I haven't been making much money yet I haven't employed an accountant. I've done lots of research so I'm hoping I've done everything correctly. So far, I've just paid myself in dividends - I made the assumption that since I was over the threshold for NI in my role that finished before then that this would make the most sense, it's only been a couple of payments so far.
I want to get some accounting support, but the monthly packages offered for limited companies seem like overkill. I'm happy to do my own bookkeeping, my company accounts are pretty straightforward - I invoice and get paid by say 2 or 3 clients a month, I have some expenses and I need to pay myself dividends. So from an accountant I think for now I just need some advice, probably not even payroll. I'm happy to pay for the filing of accounts as a one-off sum when it comes to that point.
Really I just need some advice on whether I'm doing the right thing dividend/salary wise and if/when I should register for VAT. What's the best way to approach an accountant for this - do I just pay for one-off advice?
That sounds like larger organisations.
You may find that using a small, local, or even one-man band Accountant is more cost-effective. It is best to identify a suitable resource based upon personal recommendation. I am paying between £1k and £1.2k per year and that covers all the monthly payroll, quarterly VAT returns, annual accounts, SA returns (x2) and answering any adhoc queries I have during the year.0 -
DullGreyGuy said:You must register for VAT when your turnover is going to hit the current threshold (£85k) in a 12 month period, there are limited circumstances when it is beneficial to voluntarily register for VAT before having to (eg if you sell 0% rated products/services, if all your customers are themselves VAT registered etc). For the majority, VAT registration is put off as long as possible.0
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Grumpy_chap said:onetimeatponycamp said:I went freelance a couple of months ago, I set up a limited company but as I haven't been making much money yet I haven't employed an accountant. I've done lots of research so I'm hoping I've done everything correctly. So far, I've just paid myself in dividends - I made the assumption that since I was over the threshold for NI in my role that finished before then that this would make the most sense, it's only been a couple of payments so far.
I want to get some accounting support, but the monthly packages offered for limited companies seem like overkill. I'm happy to do my own bookkeeping, my company accounts are pretty straightforward - I invoice and get paid by say 2 or 3 clients a month, I have some expenses and I need to pay myself dividends. So from an accountant I think for now I just need some advice, probably not even payroll. I'm happy to pay for the filing of accounts as a one-off sum when it comes to that point.
Really I just need some advice on whether I'm doing the right thing dividend/salary wise and if/when I should register for VAT. What's the best way to approach an accountant for this - do I just pay for one-off advice?
That sounds like larger organisations.
You may find that using a small, local, or even one-man band Accountant is more cost-effective. It is best to identify a suitable resource based upon personal recommendation. I am paying between £1k and £1.2k per year and that covers all the monthly payroll, quarterly VAT returns, annual accounts, SA returns (x2) and answering any adhoc queries I have during the year.0 -
onetimeatponycamp said:The amount you pay seems quite good? The packages around £100pm I’ve seen don’t tend to include the SA part.
My FiL pays less for his Accountant but always complaining about mistakes (which may be my FiL's fault as I think he interferes too much)0 -
I used to do most of it myself when I had a ltd co. I did all the invoicing, payroll and vat that's quite easy and you can use HMRC software (or could) for payroll.
I left the basic accounts and tax submission to an accountant as that requires electronic submission.
You should consider paying yourself a basic wage up to the pa though, you'll need to do it via payroll, Eg £1k a month.
Consider though the earnings in your last job for the current tax year so it may be worth not paying yourself a wage until after 5th April
Paying yourself in dividends isn't that tax efficient compared to paying yourself up to the personal allowance and does assume you've made a profit. You can pay yourself a wage without having to make a profit.0 -
onetimeatponycamp said:DullGreyGuy said:You must register for VAT when your turnover is going to hit the current threshold (£85k) in a 12 month period, there are limited circumstances when it is beneficial to voluntarily register for VAT before having to (eg if you sell 0% rated products/services, if all your customers are themselves VAT registered etc). For the majority, VAT registration is put off as long as possible.1
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