Limited Accounting Newbie - "Give a guy a little help this Christmas"

[fwd]

Just started contracting again after years of being permanent. The last time I was a contractor I paid my accountant £150pcm to use an online tool but this time around I wanted to see if I could do it myself. After some researching I'd like to share my current understanding and hopefully someone can point out any mistakes.

I am VAT registered and on the Flat Rate Scheme, as it's my first year its charged at 13.5%, my only expense is my monthly travelcard.

+Invoice
+VAT
=Gross Income
-VAT (13.5% of VAT amount)

=Net Income
-Salary
-Employer NI
-Expenses
=Pre Tax Profit
-Corp Tax
=Profit After Tax (Net Dividend)

For salary I am paying myself above the minimum at 878pcm but will not pay any Employer NI as its below the allowance but will pay Employee NI. Below is my understanding for take home pay.

+Salary
-PAYE Tax (0 as I will be within the allowance)
-Employee NI (I am calculating as I go along so I can keep track)
+Expenses
+Dividend (I aim to pay enough dividend not to breach the allowance)
=Net Pay

Appreciate any assistance given and thanks in advance.

[Fred Bloggs]

There's a couple of recent relevant threads. Firstly, £150 a month is way too much to pay.

Secondly, look very closely at FreeAgent, it does what you want. Try the 30 day trial.

[chopper]

Contractor accountants should be about £85 + VAT a month (e.g. Gorilla Accounting, others are available) and that includes the Freeagent web based accounting software which alone is £29 + VAT per month if you buy it direct.

That, IMHO, is a small price to pay to not have to come onto an online forum and ask accountancy questions, the paperwork is probably more intensive than you are expecting.

You'll find there are other expenses which you haven't thought of (mobile phone, "use of home as an office", insurance, christmas party etc), the tax savings on all that will pay for your accountant.

[Michael at BI Accountancy]

Secondly, look very closely at FreeAgent, it does what you want. Try the 30 day trial.

+1

FreeAgent can be a great help if your are trying to take care of your own accounting responsibilities.

Of course, being an accountant I would advise on appointing an accountant! Forum advice is all well and good, but we do not know your situation to give a 100% accurate answer.

Best of luck.

[pr1]

if you have to ask this level of question, you aren't ready to go at it alone - appoint an accountant but not at £150/m

[northernladuk]

Appreciate any assistance given and thanks in advance.

Seriously. Get an accountant. Many are much cheaper than that. My guys Gorilla Accounting are about 89 quid and some offer about 2 free months and you get freeagent thrown in. Trying to do it yourself and having to ask that is just stupid.

[jamespoole]

Can you really rely on the knowledge you have about accounting? Although the majority of your calculations aren't a million miles away, you have to consider the more complicated side. I agree that £150pm is a lot, I think you could find it cheaper and not have to worry. Being part of an accountancy firm, I am familiar with the 'do it myself' attitude. I wish you the best of luck, but you wouldn't need as much luck with an accountant.

[fwd]

Thanks for the comments so far and agreed the cost is extortionate but it's not the focus of my question.
I've put various controls in place and organised reminders so I don't miss payment dates etc and will get an accountant to review at year end but for now I just want to know if my calc basics are in line.

[northernladuk]

Yes they are.

[pr1]

Thanks for the comments so far and agreed the cost is extortionate but it's not the focus of my question.
I've put various controls in place and organised reminders so I don't miss payment dates etc and will get an accountant to review at year end but for now I just want to know if my calc basics are in line.

no

"=Gross Income
-VAT (13.5% of VAT amount)"

the VAT you pay to HMRC is 13.5% of "Gross Income", not 13.5% of "VAT amount"

get an accountant