Accountancy service/ online payroll software/company closure options

[dagenheis]

For last couple of years, I have been using a full accountancy service package for a monthly fee. I have just started a new contract which may run for 3-6 months or beyond, depending on the client’s project. So I might choose to close down the company after this contract (not 100%). In any event, I plan to move to a permanent role after a year.

As my accounting year has just commenced, I am considering using accountant services for annual accounts only -- plus CT and one-off submissions like P11D, CH return – and run my own payroll and VAT submission. I can still use accountant’s online application for recording bank, expenses, invoices etc which can be used for preparation of year-end accounts.

If I close down in a few months, it’s not going to be cost effective paying ca £120 per month for saving 40 quid every month ( if i pay £850 salary)) followed by some additional fee for annual accounts if I continue beyond 6 months. I will also pay around £550 for the company closure, but I understand that I can submit one set of accounts for the last year and this year as long as the company account is closed before 18 months, so there could be potential savings. My business affairs are fairly standard so I don’t anticipate much interaction with the accountant prior to annual accounts.

To evaluate my options, I am wondering if there is an easy to use online tool which I can use for running payroll and submission of payroll related matters (RTI) to HMRC every month. There is Sage 1 payroll service (without any binding long term contract). Has anyone used this software or any other cloud/online software I can use? If I don't stop trading, we can conitnue using this software through to the end of the year.


Thanks for reading my long rant but wanted to make sure that I am thinking along the right lines and someone else might have gone through similar circumstances.

Another potential option is not to process any salary and take dividends or capital allowances if I end up closing the company. There is lower rate tax for the latter option, I believe (capped though)

Appreciate your responses.

[TykeMerc]

If I was considering closing the company at a point in the year I wouldn't be looking at moving from the trusted accountants I use in order to save a few hundred pounds.

Feels like a false economy to me.

[Contreras]

£120 p.m. + £550 to close the company down, ouch.

HMRC PAYE tools software will do the payroll easy. VAT can be managed with a basic speadsheet. P11D + CH return aren't exactly rocket science. However all this has a learning curve so you have to question the logic of starting it now. It's worth doing to gain an undrstanding/control over your business, but it won't save on costs once your time is factored in.

Discuss with your accountant if you plan to go perm - planning this for tax efficiency could more than justify for the accountancy fee by itself.

As for not paying a salary at all, this might make sense if you expect a perm. salary in the same tax year but not simply to save on payroll costs.

[Andrew@Wisteria]

Have you tried to negotiate a better deal with your accountant if you trade for just 6 months? The problem for an accountant is that our cost is not massively reduced if you only trade for 6 months. We still have to do accounts, tax and tax return. £550 to close a company does sound steep if there is no associated advice/retained earnings are below £25k.

[dagenheis]

Thanks for your responses.

I am not thinking of moving accountant due to the timing of it, so trying to work with this accountant and tailor the service based on my circumstances and needs.

@Contreras: I was under the impression that the HMRC PAYE tool is fiddly. That's why I was thinking of Sage1 or something similar. I will check out the HMRC tool. Any word on Sage or other tools HMRC listed on the website.

I have already been doing VAT returns so that's under control. For CH and P11D, I can lean on accountant, or most probably use the previous years' submissions as template because there is not any change in company affairs or circumstances (no BIK)

Have you tried to negotiate a better deal with your accountant if you trade for just 6 months? The problem for an accountant is that our cost is not massively reduced if you only trade for 6 months. We still have to do accounts, tax and tax return. £550 to close a company does sound steep if there is no associated advice/retained earnings are below £25k.

At the moment, it will be monthly fee for 6 months plus close-down (MVL). If they don't process payroll, it'd be the closure fee only which does sound bit high especially when there is only one set of accounts for 18 months, including last year accounts which were paid for in last year's fee. If I close the company account after 6 months period, then I need to pay an additional annual fee (plus closure fee) as there will need to be separate accounts for 2014-15 and 2015-16. Ideally, I would like to keep contract going for 12 months so the closure falls in line with personal tax year-end and saves time from these negotiations.

By the way you folks seem to think this closure fee is high -- what should be a reasonable closure costs in this scenario? And if you are on annual service would you pay for closure fee and another annual fee to do the accounts and CT return for that year although closure requires submission of final year accounts anyway?

I agree, I need to chase for a bit more forward planning around close-down process to have a better understanding of how its going to impact my earnings if I start perm in the same year. For example, implications of retained earnings. I am looking into this now.

[ASB]

If you are going to extend your accounting year you need to be aware of the restrictions related to when it can be done.

You can only lengthen once every 5 years. Also it was the case (but this is not confirmed on the link) that you could not extend you year after the original end date had passed.

https://www.gov.uk/change-your-companys-year-end

[dagenheis]

This is a good link, I left it to the accountant. I will check this with him. Although we have not extended the accounting year before, but the company can pay all debts. You are right, it's not mentioned that we can't extend this after the orginal accounting year end date.

Any other ideas on close-down fees in case retaining earnings are smaller or greater than 25?

I am gonna give HMRC tool a try if the installation module works