Freelancer limited company accounting

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? 

Comments

  • DullGreyGuy
    DullGreyGuy Posts: 9,014
    First Anniversary First Post Name Dropper
    Forumite
    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.
  • uknick
    uknick Posts: 1,597
    First Anniversary Name Dropper First Post
    Forumite
    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?
  • Grumpy_chap
    Grumpy_chap Posts: 14,361
    First Anniversary First Post Name Dropper Combo Breaker
    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? 
    Where are you looking for "monthly packages for limited companies" for accounting support?
    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.
  • 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.
    Thanks yes so I’m not sure if I’ll hit that in a year, mainly because I’m unsure at this point how long I will continue freelance full time. But I did wonder if it’s worth registering anyway in order to pay flat rate.  My customers are mostly VAT registered and my flat rate would be 11% so possibly I’d be better off? 
  • 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? 
    Where are you looking for "monthly packages for limited companies" for accounting support?
    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.
    Yea those were the bigger companies. I’ve asked around but haven’t managed to get a recommendation of a small/local accountant, which would be my preference. The amount you pay seems quite good? The packages around £100pm I’ve seen don’t tend to include the SA part. I’ll try again to find someone local. I’d rather pay less now knowing I’ll have a bigger amount to pay when it comes to the accounts etc as by then hopefully there will be a bit more money coming in.
  • Grumpy_chap
    Grumpy_chap Posts: 14,361
    First Anniversary First Post Name Dropper Combo Breaker
    Forumite
    The amount you pay seems quite good? The packages around £100pm I’ve seen don’t tend to include the SA part. 
    I think I have a fair price.  It includes SA returns for my wife and for me.
    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)
  • Veteransaver
    Veteransaver Posts: 310
    Name Dropper First Post
    Forumite
    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. 

  • DullGreyGuy
    DullGreyGuy Posts: 9,014
    First Anniversary First Post Name Dropper
    Forumite
    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.
    Thanks yes so I’m not sure if I’ll hit that in a year, mainly because I’m unsure at this point how long I will continue freelance full time. But I did wonder if it’s worth registering anyway in order to pay flat rate.  My customers are mostly VAT registered and my flat rate would be 11% so possibly I’d be better off? 
    Do you have enough scheme allowable expenses to qualify for the 11%? Many freelancers don't so have to pay 16.5%, which you pay on your gross revenue, and so are only getting a 0.2% benefit
Meet your Ambassadors

Categories

  • All Categories
  • 341.6K Banking & Borrowing
  • 249.7K Reduce Debt & Boost Income
  • 449.1K Spending & Discounts
  • 233.5K Work, Benefits & Business
  • 605.8K Mortgages, Homes & Bills
  • 172.4K Life & Family
  • 246.7K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.8K Discuss & Feedback
  • 15.1K Coronavirus Support Boards