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newbie alert ;)

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    newbie alert ;)

    hi all

    New to the board, as only just formed ltd co. today Would just like to ask for opinions on Abraxas. (ie. what have I let myself in for..) !

    Just got offered my first contract (quite nice as its initially for 1yr) and have very little (read: none whatsoever) idea about this whole contracting malarky. Have been reading this forum (and others) furiously however so have some basic ideas on things like ir35 / opting out etc.
    Had a meeting with the accountant today and decided it would be wise if I get them to do absolutely bl00dy everything for me. Its going to cost me £120pcm, but hey, I figure as im new to all this I need as much hand holding as possible at first Sure I can always change accountant in the future, but right now I need handholding and these guys were recommended to me (uh oh... )

    Im figuring that I will pay myself pretty much what I earn now as a permie, and let the rest of the moolah accumulate in the company account each month, and then a couple of times a year pay out a dividend. What Im trying to figure is the best thing to do with the money in the company account, as I dont want it to just sit there, I would like to put it to work - but in the most tax efficient way (of course).
    Other thing I will do is join the PCG and get the ir35 insurance cover as that seems like a good idea.

    Sorry for the generality about this post, but Im just getting things off my chest -- would appreciate any pointers from any of you not-so-wet-behind-the-ear contractors

    cheers

    #2
    G'day to contracting.

    Well for starters, that 120pcm seems bl00dy high to me. I would say the median cost would be closer to 50-70/month. Even if he is 'doing everything'. Sounds as though he may be taking advantage of a newbie!! Did he at least set your ltd up for you?

    Piers

    PS not sure if that's very useful to you, but I'm sure others on here can give you some constructive advice!

    Comment


      #3
      Hate to say it newbie, but you really should have asked for advice before committing yourself to this expense. Handholding is what accountants are supposed to do anyway and there are some that will do it for less than half the price and set up your limited for free as well.

      Comment


        #4
        Anyway, it's done for now. You can always change to someone sensible in a few mnonths, once things are up and running. For comparison, I use SJD (not the cheapest, but very good) at £75pcm.

        Since you've heard of the PCG anyway, have you read (and understood!) their Guides to Freelancing? If not, you should. And if you join - I think you should, BTW - you'll get even more opinionated advice from their fora than you do here (is that a good thing?!).

        How to maximise idle company money depends on where you keep it - for example I've got a current and higher rate deposit business accounts and roll spare or needed cash between them as necessary, other people use high-interest (well, as high as anyone is paying these days!) building society accounts - but you have to keep it all totally separate from your own money.

        Rather than pay yourself the same as before, pay yourself as little as you need, since divis are currently more tax efficient. The logical conclusion is to pay the absolute minimum necessary and take frequent divis, but that is said to be a good way to get the IR to take a look at you, which is not wise.

        Oh yes - good luck. It will feel strange for a while, but most of us are on your side

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          #5
          thanks for the replies chaps

          Yes I can see that they are certainly more expensive than a few other firms that have been mentioned, but they're literally 10mins from me and being recomended, I thought I'd give them a go. If they dont cut it I figure can always move.

          Could anyone point me in the direction of a good business account ? What Im thinking of doing is setting up a business account, and then doing something like a direct debit from it into (for example) an ING Direct account on a regular basis - although I'll have to speak to my IFA as Im not sure if this is the best solution; just one that comes to mind.

          cheers

          Comment


            #6
            >setting up a business account, and then doing
            >something like a direct debit from it into
            >(for example) an ING Direct account

            You don't want to do that unless you are telling the IR that you're getting salary every month.

            People who take dividends every month have ran into IR who maintain (quite rightly) that if you're paying yourself dividends every month then it should be treated like salary (and the NI that goes with it).

            Comment


              #7
              thanks for the info partimer

              so is my only option to leave the money in the business account ?

              cheers

              Comment


                #8
                >leave the money in the business account

                As a newbie you should know that the money is your companys until you decide to pass it across as salary or dividend or expense, etc.
                Your business account is not your personal slush fund
                You have got to pay the taxes and VAT, etc.
                You'll be surprised by the number of newbies that go and spend the VAT money and not realise that you are actually a VAT collector for HMCE !!

                Once you've calculated all the debits from your business, the money you have left you can try to extract it in any of the ways I've previously mentioned.
                Most business accounts nowadays pay gross interest (you are a business after all) and if your account doesn't then you're with the wrong bank.

                There are other ways of "making your money work harder" but not at this point in your business. Speak to your business advisor (you normally get one when you open a business account at most high street banks).

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                  #9
                  Hey Malvolio

                  Two recommendations for SJD in just the few posts I have read in the last few minutes.

                  Are you getting commission now?

                  Comment


                    #10
                    Response to partimer

                    "People who take dividends every month have ran into IR who maintain (quite rightly) that if you're paying yourself dividends every month then it should be treated like salary (and the NI that goes with it). "

                    Not sure where you get that idea.
                    Your accountant should tell you that dividend regularity is not an issue. It may raise a red flag but it certainly does not condemn you to pay "salary" taxes.

                    Comment

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