Making my first company salary/dividend payment (SJD)

[jamda]

Hi All,
I am in the process of making my first company payment to myself, in the form of salary and dividend. I should say I am with SJD accountancy, but as they do not go back to the office until the 4th I'm in need of a spot of advice.

The advice I recieved was to pay myself a gross annual salary of £12,000, i believe this is their standard advice. This obviously equates to £1,000 gross per month. I have recently sent them my P45 and they are setting up my payroll and inform me that they
"will advise you quarterly in advance of the monthly amounts you need to pay yourself as net salary and the small amount of tax and National Insurance to be paid for the quarter."

This is where I find confusion, do I therefore, pay myself £1,000 and the remainder in dividends (ignoring the money set aside for VAT), and then when i find out how much i should earn net (as i am already a in the higher tax band), pay the income tax, national insurance, and employers national insurance back from my personal account?

This seems wrong as paying the employers national insurance contributions back from my personal account cannot be correct.

Therefore, it would seem that I cannot draw salary until i find out the figures i should be paying myself net from the accountant, and therefore I cannot pay myself dividends until i pay myself the first salary (as the HMRC would hardly look favourably on this suspect)

Lastly, and perhaps a strange question, should I be paying myself a month in arrear, i.e. pay myself for Novemeber in December, sorry this probably sounds obvious but my accountant threw me a curve ball with an email she sent me and im a bit confused.

Thanks very much in advance from a slighty confused and currently unpaid IT contractor.

Regards,

David

[CarterUK]

Pay yourself a dividend (so long as there is a retained profit in your company i.e. your invoices have been paid into your company bank account and it has made a profit to cover the dividend payment along with the corporation tax). That should tide you over.

Then just wait until SJD send you the payslip information and pay yourself the salary.

If any of the above confuses you, you can always download the SJD guide to running a limited company/being a contractor.

[Fred Bloggs]

Yet another example of why the "contractor sausage machine" accountancy firms like SJD and the others fail their customers. This is not confined to SJD. They should all make it crystal clear to a first timer what to do. But they don't.

Every 3 months I remind my accountants to send me my VAT figures. I'm sure it should be the other way round...............

I have thought seriously on more than one occasion about moving accountants in the past, but it seems they're all pretty much the same when you ask around.

[malvolio]

Yet another example of why the "contractor sausage machine" accountancy firms like SJD and the others fail their customers. This is not confined to SJD. They should all make it crystal clear to a first timer what to do. But they don't.

Every 3 months I remind my accountants to send me my VAT figures. I'm sure it should be the other way round...............

I have thought seriously on more than one occasion about moving accountants in the past, but it seems they're all pretty much the same when you ask around.

Disagree. SJD always remind me to do everything I need to do. And all the required information is on the website, and very easy to find. Plus I always thought the golden rule for a freelance was to think for yourself...

[ctdctd]

Yet another example of why I don't have an accountant:-)

Load HMRC CD, type in salary, click next, pay myself what it tells me.
Every three months pay HMRC wot the CD tells me to do.

Simples

[Fred Bloggs]

Disagree. SJD always remind me to do everything I need to do. And all the required information is on the website, and very easy to find. Plus I always thought the golden rule for a freelance was to think for yourself...

Obviously not working for this bloke though. However, thinking for yourself, I 10000000% agree with you there. When I started, I rapidly realised accountants weren't going to help me much if at all, so I did all my own background work, flat rate VAT scheme, cash accounting VAT, insurances etc.... The OP would be wise to do the same.

[ctdctd]

Obviously not working for this bloke though. However, thinking for yourself, I 10000000% agree with you there. When I started, I rapidly realised accountants weren't going to help me much if at all, so I did all my own background work, flat rate VAT scheme, cash accounting VAT, insurances etc.... The OP would be wise to do the same.

WHS - try and understand how it all works even if you have an accountant.

[VectraMan]

Please find attached your Wages Book for the 4th and final quarter of the 2009/10 tax year. Please pay yourself the amount shown under Net Pay for each month.

Please use the Monthly Summary attached to pay the total due to HM
Revenue & Customs for January 2010, February 2010 and March 2010 which
are months 10, 11 and 12 respectively.

If you make monthly payments to HMR&C, the due dates are 19th February
2010, 19th March 2010 and 19th April 2010 respectively. If you make
quarterly payments to HMR&C the due date is 19th April 2010.

That's what they tell me every quarter. They also notify by email and text about VAT, end of year stuff, SA returns, and CT payments.

Okay, so it may lack the personal touch, but to be fair the OP has obviously been caught out by starting his company just before Christmas. And you can hardly blame SJD for that.

[Fred Bloggs]

That's what they tell me every quarter. They also notify by email and text about VAT, end of year stuff, SA returns, and CT payments.

Okay, so it may lack the personal touch, but to be fair the OP has obviously been caught out by starting his company just before Christmas. And you can hardly blame SJD for that.

Possibly, but should that really be a valid excuse if it were to be offered as such?

Client- "You didn't deliver xyz design on time, you're sacked"

Me- "Ah but Christmas got in the way"

Client- "Bo11ocks, you're still sacked".

Huh?

[xoggoth]

I would think they mean pay 1000 salary gross per month as that has been fairly standard advice since yonks. You transfer to your account the net amount after deducting income tax and employee's NI. Employer's NI is not included in gross salary.

On that salary you can pay tax/NI quarterly and that would be usual. Payable by the 19th of Jan, Apr, Jul and Oct. The company pays the employer NI and (on your behalf) the employee's NI and tax. Keep separate records of employer and employee NI. There is some guffy and pointless form called P11 you are supposed to keep for your records, and employee's NI appears in accounts.

Divis you just pay to your account. The tax on them is a notional thing deemed to have been covered by CT, unless you are higher rate when they will want more later from you. Note in company book, do a search on here for tax certificate.