Originally Posted by thepoorman
This is for business advice - Keep non-business politics out of it here because I am quite often tempted to argue with you and I don't want to argue with you...
This is for business advice - Keep non-business politics out of it here because I am quite often tempted to argue with you and I don't want to argue with you...
For a small business it's not complicated. However, as the company gets larger a good accountant will be able to save you more tax than any software can, I would think.
If you're interested, you can see the UK income tax, and links to other tax, thresholds here: http://www.inlandrevenue.gov.uk/rates/it.htm
thank you very much. very interesting.
And no I was not trying to stir political debate. I apologize if that was seen as insulting or something. But to myself anything around half is utterly ridiculous.
Question: If you have a corporation in the UK are you taxed twice? On your Corporation and then on your income?
Last edited by thepoorman; 01-17-2005 at 03:02 PM.
I haven't formed a company as there isn't any advantage for me to do so at the moment. So I'm no expert. But as far as I understand it, yes. The corporation is treated as a seperate entity and gets taxed on its profits. It also has to pay Employer's National Insurance contributions on behalf of its employees. The employees have to pay National Insurance too and also income tax.
Well, kind of. Any income you had would come out of profit, so you would have less profit to pay tax on. E.g. keep the $10k as profit and pay 50% tax, or pay it out as wages and pay income tax on that, but then pay no tax on profit since there was none. I think. This is probably where an accountant would be useful. We need to get a friendly accountant on here
An accountant is not necessarily the same as a bookkeeper. An accountant should be someone you can talk to, in advance, about what you are thinking of doing and get advice about how best to structure it to minimize your taxes.
For example, if you are thinking of buying/renting office space, in the USA there are advantages to buying the property with a limited partnership and then leasing it to your company.
Paul
You are right, you do have to pay NIC BUT the thing you can do when you have a company is pay yourself a miniscule wage (a few hundred a month), then extract the rest in the form of dividend. Yes the company will have paid tax on its profits, but this in many circumstances; certainly mine; still works out less.
A.
Edit; I should have said, because you pay miniscule wage, you pay miniscule tax and NIC. I pay myself £500 a month as wages, of which only about £25 comes off in NI and tax! Once the company has paid its corporation tax bill, the dividends I take I don't pay any tax on.
Last edited by aj8; 01-18-2005 at 07:08 AM. Reason: added extra comment
Hmm Interesting. I wonder if it would be more cost effective for me to set up a company then and just take dividends. Being self-employed I have to pay a set £2 a week class 2 and then 8% NI on all profits. With my student loan repayments and all the tax stuff it adds up to about 40% of my income at the moment.
I am fairly sure your student loans only need to be paid after you start earning £12K or something. Now I'm FAIRLY sure (although you would need to ask an accountant) that if you set your PAYE'ed salary to £6k a year; i.e. £500 a month, and stick with it, your dividends do not count as part of your pay.
Obviously you don't want to 'not pay' your student loan, as it'll be racking up interest, but if you wanted to save for something specific etc etc ... it does give you loads of options ...
IANAA but i'm fairly sure this is right.
A.
Here's a tip: You are allowed up to £100 (I think) on meals per employee (including the owner) per year tax free.
Yeah, the threshold for student loan repayment is £10k (I'm already well over that) and then £15k as of April this year (I think). But as you say, I should really pay it off ASAP.
I wish I had got into web publishing before my degree. Then I wouldn't have even needed the loan. Or I could have used it to make a profit.
You write off everything to do with your business, thus reducing your corporation tax liability. My computer at home, my mobile phone, my business mileage, etc etc... all paid for from the company, reducing it's taxable profit.
All office equipment, furniture, computer gear etc is depreciated annually which gives another write-off, again reducing corp tax.
A.
Going back to the original topic of this thread....(!)
My main business banks with the Bank of Scotland (now owned by Halifax). This is not the same bank that bought Natwest - it's the small friendly one. They've always been pretty good BUT you bank postally, online and by phone NOT at a branch.
Anyway... regarding receiving dollar cheques I put in a call to them about arrangements. They have told me that they can setup an account in US$ quite easily, alongside one for UK£. Apparently here in the UK a dollar cheque drawn on an American bank will take five to six weeks to clear, and not be drawable until cleared.
Once funds clear, a exchange and transfer can be requested from US$ to GB£, and this will be at the current exchange rate for selling. It doesn't *sound* like any paying in fees are applicable however (although I may get more information on this in due course).
A.
This seems to be true in pretty much all cases apart from HSBC which will make the funds available next working day. Barclays (who I'm with) seem to take 4 weeks.
How much do Halifax / Bank of Scotland Charge?
Nat West charge about £5 / $10 per item (and for a 3-4 week delay) then a % of value over the certain minimum
I also enquired at Woolwich and they send cheques off to American Express so a similar delay and slightly more expensive
For small cheques $10 represents a high % of the value of the actual payment received.
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