Limted company on flat rate scheme

[Newbie Simon]

I have just paid my VAT return at 14.5%, my accountant has told me if I leave 15% in my account it will be more than enough to cover my taxes.
I don't know how this is possible when I've just paid out 14.5% on my VAT return and I presume I need to pay 20% corporation tax on any profits but I won't need to pay any tax on dividends as I'm on the basic rate.

[LisaContractorUmbrella]

The first thing you should do is ask your accountant how he arrived at that amount and get him to give you a breakdown

[Contreras]

I have just paid my VAT return at 14.5%, my accountant has told me if I leave 15% in my account it will be more than enough to cover my taxes.
I don't know how this is possible when I've just paid out 14.5% on my VAT return and I presume I need to pay 20% corporation tax on any profits but I won't need to pay any tax on dividends as I'm on the basic rate.

Your accountant needs to explain this to your satisfaction. Ask them for a worked example.

To be using 15% as a rule of thumb sounds low to me. However remember that 20% CT is on profits after deducting salary, pension, travel and other expenses. The company doesn't ever pay tax on dividends, even if you were personally on the high rate.

[StrengthInNumbers]

Rough

Roughly as follows:
£100 Earned
£20 collected in VAT

CT £20
Vat on Flat rate £15

Left £85
Thus Liability in Total £15 on £100 earnings or 15%.

[Newbie Simon]

Say I take home £100 a week I need to include VAT onto that so my earnings would be £83.34+£16.66 collected in VAT
CT £16.66
VAT on flat rate £15

Left £68.34
Thus Liability is Total £15 on £83.34 earnings or 18%

Is this correct ?

[TheCyclingProgrammer]

£100 + VAT = £120
Flat rate VAT at 14.5% = £17.40

That leaves £102.60 which assuming that was all gross profit, would leave you £82.08 after CT so approximately 82% of your daily rate ex. VAT or 68% of your gross turnover.

In reality you would have tax deductible expenses that would that would reduce your CT bill so I would say put aside 25-30% of your gross turnover.

OR, forget the guess work and use software gives you a real time indication of your turnover, profit, VAT and CT liabilities. You need to know how much retained profit you have in order to declare a dividend anyway.

[TheFaQQer]

Say I take home £100 a week I need to include VAT onto that so my earnings would be £83.34+£16.66 collected in VAT
CT £16.66
VAT on flat rate £15

Left £68.34
Thus Liability is Total £15 on £83.34 earnings or 18%

Is this correct ?

If you're taking home £100 a week, then that would be after VAT, tax, expenses etc. have already been deducted. If not, then you're doing it wrong.

[Newbie Simon]

£100 + VAT = £120
Flat rate VAT at 14.5% = £17.40

That leaves £102.60 which assuming that was all gross profit, would leave you £82.08 after CT so approximately 82% of your daily rate ex. VAT or 68% of your gross turnover.

In reality you would have tax deductible expenses that would that would reduce your CT bill so I would say put aside 25-30% of your gross turnover.

OR, forget the guess work and use software gives you a real time indication of your turnover, profit, VAT and CT liabilities. You need to know how much retained profit you have in order to declare a dividend anyway.

Is there any free software out there?

[stek]

Best not to count VAT as a true tax, it's more like tax-collected, it was never yours. it was never part of your daily rate, not part of your income figure.

[TheCyclingProgrammer]

Is there any free software out there?

A spreadsheet?

Or stop being a cheapskate and get a FreeAgent, Xero, or Kashflow account (I'd recommend FreeAgent). It will cost you about one day's work.