Please Help!

[kay106]

Hi Everyone,

I have recently formed my own limited company,
with a authorised share capital of £100 and shares of £1 each,
where i have appointed my self as the director and a shareholder.

I really really need help on how to do my accounts, i am on a contract at the moment, can someone please guide me through with what i should do. i dont really understand the stuff about the authorised share capital, as well as what i should do with my limited company after i have finishied the contract.
what taxes do i pay? how do i pay it? how do i pay my self tax efficiently?


all help will be greatly appreciated.

[TheFaQQer]

OK, I'll bite....

1 - Read the first timers guides

2 - Get an accountant

If you don't even know what kind of taxes you might need to pay, I'd pack up and go permie if I were you.

[pmeswani]

OK, I'll bite....

1 - Read the first timers guides

2 - Get an accountant

If you don't even know what kind of taxes you might need to pay, I'd pack up and go permie if I were you.

A bit harsh. When I first started contracting, my knowledge was somewhat limited. When a child is born, they are not gifted with the art of speech, mobility and immunisation to all the elements that most of us are accustomed to. I bet your answer is for the child to go back into the mother's womb rather than be hand-holded as much as possible? I'm not implying that the OP needs to be hand-holded, but at least point them in the right direction....

However, the first step for the OP is already highlighted in steps 1 and 2. Have a look at www.pcg.org.uk and get your contract checked for IR35 compliance.

I chose an all-inclusive service (whilst being in control of the business bank account and Tax submissions). My Accountant submits my invoices for me whilst I am still learning the game. I may look for a cheaper service once my year end has come. The OP may want to look for something similar. The OP would need to look at spending over-the-odds to get the job done whilst they understand what needs doing.

It is prudent for the OP to search the forum and read up as much as possible to understand their obligations.

[xoggoth]

Nowt really urgent at moment. You ought to register for PAYE, some could be due at start January, although not a prob if you dont pay any then, only interest from April. The CD they send has a calculator on it and all the other guidance you need. You should decide on IR35 before April. Accounts/corporation tax are over 20 months away.

Keep records of invoices, payments and expenses inc. receipts. If you aren't sure it's claimable for business, keep it anyway.

Getting an accountant may be good advice but my advice would be don't rely on them, they make some awful mistakes and the bigger the firm, the worse they are in my experience. Make the effort to get to know the main tax principles and be able to check your accounts to filter out the dafter errors.

Authorised capital is a notional thing if only one director, it is the shares theoretically available to allocate to different directors if there were any.

[TheFaQQer]

A bit harsh. When I first started contracting, my knowledge was somewhat limited. When a child is born, they are not gifted with the art of speech, mobility and immunisation to all the elements that most of us are accustomed to. I bet your answer is for the child to go back into the mother's womb rather than be hand-holded as much as possible? I'm not implying that the OP needs to be hand-holded, but at least point them in the right direction....

Not at all - if they can't find out where to find a first timers guide, given that there is a link on the right hand side of each page on CUK that says "First Timers" then they shouldn't be contracting.

If they have managed to get a contract, then I would expect them to be able to work out how to click on a link, or how to use the search button to look for the answer which has been asked so many times on here before - a newborn has no way of learning without being taught and nurtured. If you think contractors can get by with the same level of nurturing, then you are in the wrong career.

However, the first step for the OP is already highlighted in steps 1 and 2. Have a look at www.pcg.org.uk and get your contract checked for IR35 compliance.

Bit late for that now, although it might help in the future.

It is prudent for the OP to search the forum and read up as much as possible to understand their obligations.

That's what I said originally.....

[slackbloke]

Not harsh - if you have children you will know they do the majority of the learning themselves, over time, with a lot effort on their part. I think you will also find The FaQQer did exactly what you said 'point them in the right direction', read the first timers guide and get an accountant.

A bit harsh. When I first started contracting, my knowledge was somewhat limited. When a child is born, they are not gifted with the art of speech, mobility and immunisation to all the elements that most of us are accustomed to. I bet your answer is for the child to go back into the mother's womb rather than be hand-holded as much as possible? I'm not implying that the OP needs to be hand-holded, but at least point them in the right direction....

However, the first step for the OP is already highlighted in steps 1 and 2. Have a look at www.pcg.org.uk and get your contract checked for IR35 compliance.

I chose an all-inclusive service (whilst being in control of the business bank account and Tax submissions). My Accountant submits my invoices for me whilst I am still learning the game. I may look for a cheaper service once my year end has come. The OP may want to look for something similar. The OP would need to look at spending over-the-odds to get the job done whilst they understand what needs doing.

It is prudent for the OP to search the forum and read up as much as possible to understand their obligations.

[TCL]

At the risk of being helpful (and I am not an accountant, this is just notes on what I figured out as I went along)

Register with HMRC as an employer. You can do this online.

Taxes you will pay, some depending on how much you pay yourself:
PAYE, NI (employers and employees), Corporation Tax, VAT (get VAT registered)

Also, I would suggest you look at the Flat Rate VAT scheme: your agency/clientco will expect you to add it to your invoices at the current rate of 15% and then your ltdco repays back to HMRC an amount based on the gross invoice total at a lower rate - currently 11.5% for IT contractors, although there is a 1st year discount of a further 1% (making it 10.5%). The difference is retained profit for your company. FRS isn't for everyone, but its worth looking into (for a typical IT contractor its usually worthwhile)


You should look at the implications of changing your accounting reference date as well. By default its approximately 1 year from your company formation date, however you can stretch this by up to 6 months (IIRC) during the first year, giving yourself extra time to deal with year end accounts. Companies House website will give you more information on this.

Don't get too hung up on the share capital thing. When I formed my ltdco I issued 1000 (don't know why I picked that number) shares at £1 each but so far haven't actually paid it into the company, although I plan to soon. In any case, you can pay some of it back to yourself as expenses for company formation costs and other business expenses you may have incurred so far (assuming you kept the receipts).

Don't forget you can also claim back travel expenses to your place of work for the first 24 months - for a car, you can claim 40p a mile for the first 10,000 miles per year tax free. you can claim more than that but you'll pay BIK rates if you do this.

As others have said, its probably worthwhile getting an accountant, if only till you get the hang of it
Start nosing around the HMRC website (www.hmrc.gov.uk), you'll find some useful guidance notes on there to get you started.

HTH

[BrilloPad]

A bit harsh. When I first started contracting, my knowledge was somewhat limited. When a child is born, they are not gifted with the art of speech, mobility and immunisation to all the elements that most of us are accustomed to. I bet your answer is for the child to go back into the mother's womb rather than be hand-holded as much as possible? I'm not implying that the OP needs to be hand-holded, but at least point them in the right direction....

However, the first step for the OP is already highlighted in steps 1 and 2. Have a look at www.pcg.org.uk and get your contract checked for IR35 compliance.

I chose an all-inclusive service (whilst being in control of the business bank account and Tax submissions). My Accountant submits my invoices for me whilst I am still learning the game. I may look for a cheaper service once my year end has come. The OP may want to look for something similar. The OP would need to look at spending over-the-odds to get the job done whilst they understand what needs doing.

It is prudent for the OP to search the forum and read up as much as possible to understand their obligations.

Its better than what Mal would have posted.

[pmeswani]

Its better than what Mal would have posted.

Is that a compliment or an insult?

[TheFaQQer]

Don't forget you can also claim back travel expenses to your place of work for the first 24 months - for a car, you can claim 40p a mile for the first 10,000 miles per year tax free. you can claim more than that but you'll pay BIK rates if you do this.

That's not right.

You can claim back your travel expenses to a temporary place of work for a period up to the point at which you know that you will be there for more than two years - this may be two years, or it may be zero days depending on the contract term.