As the title suggests I am looking at setting up a Ltd company, I know that I have to register with companies house, and I am awaiting a tax accounting firm via the Business Gateway to get in touch.
So I am trying to find forms for things like corp tax, how I would not collect a salary as would need to reinvest, and dividends.
It is also a bit complex as I am a Carer for my son, so In the long run it would need to be cost effective for other half to give up part time work and change to be my boys Carer and stop all the other benefits.
If anyone been in same situation and setup an ltd advise greatly appreciated
Setting up a limited company is very easy but does introduce costs and complexity depending on the type of business you’re running. Are you sure that a limited company is the right choice for you? There are industries where it’s important for liability and credibility reasons but often for small businesses it is more cost effective to operate as a sole trader.
Although you can do limited company accounting yourself it is usually worth having an experienced accountant involved because small mistakes can be costly, and there are a lot of considerations that go in to minimising your tax burden. Managing your own accounts is viable if your business is small and you’re open to investing your time in learning about how to maximise the benefits of running a limited company, because the information you need is available online, however for most business owners their time is much better spent working on their business not accounts.
If you’re confident that you wish to setup and manage your company yourself then I’d recommend setting up a limited company through an agent as they can provide a service address so you are not publishing your home address on the Companies House register – I’ve used and recommend The Formations Company but there’s a lot of companies out there that can do it for you at a low cost (<£10 total if you just want the registration and no additional services).
The issue with being a sole trader is that you have to pay Tax and NI, which straight away can cause issues with the benefits currently receiving.
The reason I am looking at an Ltd Company is that I do not need to take a salary, as I would be doing web hosting, servers, web design etc about 75% not time consuming as majority except website builds can be automated, from invoicing to payments received the servers auto created, then it is any support requests.
So I would have time do the accounting myself, I have looked into things like Quickbooks etc but there is a facility called WHMCS that does all the invoices and receipts so I think it maybe easier if I do it.
With the right online accounting service (I recommend Xero), running an Ltd is pain-free. Xero handles all Companies House and HMRC returns. It really couldn’t be easier.
You can also incorporate directly with Companies House for ÂŁ12. The company will be created within a few hours and the process is entirely online (no need to send any documents).
If you need a mail forwarding address to use, I would recommend the Hoxton Mix…
The good thing about Xero and similar services is that they have a community of qualified accountants who you can call upon (for a very reasonable fee usually), so if you are unsure about something, it’s very easy to get help from a professional who is familiar with the service you are using.
Yeah it’s good for invoicing (they have funky graphs now) but how would you deal with the bills associated with your business? You’d need to tie that into accounting software really
Possibility of a WHMCS addon?, I have seen that you can add a “monthly cost” against say a server and I believe not sure this would then calculate additional income from that?
I take it this would be the “bank reconciliation” for bills in Xero?
Yeah you can link it to xero. Xero is for the large part a really good product, it does have some quirks that drive me insane
I’ll have a poke around on WHMCS when I get a chance but I think you’d need the accounting software to properly reconcile the bills against your business bank account
I use what was set up when I started working there also id need to check wit the boss before I’d go into detail about what we use, but I will certainly have a look for you at what the available options are
Also looking at VAT, I know unless I reach the ÂŁ85,000 threshold I do not need to register for VAT or charge it, but reading somethings online it says it is good to register for VAT as you can claim the VAT back on thinks like a computer for the business, so would i then be able to claim all VAT back from everything I purchase for the business or is it just physical goods rather than services?
That’s not strictly true, a business (whether that’s a sole trader or limited company) pays tax on profits, not revenue. There is differences in the most effective tax strategies for limited companies and sole traders, but if your business doesn’t make any profit, you don’t pay any tax or national insurance regardless of your business type.
Also it’s worth noting that if you’re on benefits there is often support available from your local council and/or job centre and/or the government to support your business, from mentorship to grants. The government is very motivated in getting benefit claimants to start businesses.
You can reclaim all VAT but then you must charge your customers VAT, often for small businesses registering for VAT is not financially beneficial.
If I am a sole trader then I take it I would be giving myself a wage and then have to pay Tax & NI on that, but as a director of an ltd I do not need to take a salary and reinvest it into the company?
Without knowing your benefit situation and keeping in mind how complicated they make it, you can normally work and claim carers allowance. It goes by the number of hours a week to look after them. With a child this is worked out on how much more care they need than a child the same age without that condition. Not sure how’s this work since if you’re in a universal credit area
Tax credits wise there’s a good taper on earnings
@Rat_au_van Rough idea of the income and benefits last year £13000, that is for wife’s part time work and my carers allowance.
As I have 2 kids and my boy was last tax year meets disability component of child tax credits CTC, and based on our income we got roughly ÂŁ170 a week.
This financial tax year the income will again be around the same with an ÂŁ80 for the year increase to CA, as of March this year my son has now met the severe disability component of CTC that goes up by roughly ÂŁ30 a week on top.
We won’t go on to universal credits until they sort the issue with disability components of CTC which looks like at least 2022 and by that time “social security Scotland” my be in control of these.
We also get housing benefit which ch ages monthly based on wife’s wages and council tax reduction.
Take a look at FreeAgent, I use it for all my accounting and invoicing needs and it’s very good. As for cost, I believe it’s free if you open an account with NatWest so that might help.
Also, can’t you just be self employed instead of going ltd as the costs as so much more, you don’t have to take a wage and I’m assuming you will get paid via the invoices ?
I’m sue you can do everything in FreeAgent, invoicing and taxes, it’s a very popular software package, have a look at their website. www.freeagent.com
Alternative you may have to get an accountant which could be expensive for a ltd company but will be at least ÂŁ300 per year etc for self employed
