Limited Company Formation Advice Needed!
rankwarrior started this topic @ 21:47 on 26/11/2009
Hi
I am looking to set up a limited company, and will be the only director.
I currently have one client who will be paying me £300 per week for my services once the company is formed.
How will this work in paying myself a wage?
For example, if for the next year, I do not find another client, and only make £300 per week (15600 gross) for that year, how would it work from a tax point of view?
Obviously its not a great income, and do hope to find another few clients, but worst case senario ... what would be the best option to give myself the highest possible wage, and to pay the least tax?
Hope you guys can help.
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RE: Limited Company Formation Advice Needed!
jamescartwright | 27/11/2009 11:06 AM
Probably your best option is to visit an accountant. They can then offer you advice about what you have said here and if this changes in the future they can help you with tax planning accordingly.
If you would like some advice about this see: http://www.wisteria.co.uk/?q=taxadvice
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UK Limited Company Formation - £24.99
RE: Limited Company Formation Advice Needed!
Typically I would only recommend setting up a limited company to save tax if you have profits of over £25,000 per year. There may be other reasons though for setting one up.
The ltd co will allow you to pay part of your income to yourself as a dividend - saving you national insurance (about £800 in your case). You need to weigh that against the hassle and extra costs of a limited company.
If it's purely for tax why not start as a sole trader, see how things go, and become a ltd company later on if everything is going well?
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Jonathan Ford BSc (Hons) FCA
Jonathan Ford & Co Limited
Chartered Accountants
www.jonathanford.co.uk
RE: Limited Company Formation Advice Needed!
jonnyporter | 28/11/2009 01:05 AM
You only need one more client paying £200 a week and you are earning enough to make the ltd company more attractive option.
It depends what kind of business it is, and how likely you are to earn more. Think about the impression a Ltd company gives to potential clients, could this help clinch a deal. Similarly for being VAT registered. I lost clients in the early days by not appearing like an orgnisation that seemed substantial enough to deliver. Also the word Limited means that you personally have limited liability if your company ends up with debts for whatever reason, which is an advantage in some cases.
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