Has anyone set up payroll / dividends etc in early days of Ltd Company

[GloriousCat]

In the first year when profit was there but not high.

Did you do payroll for just you

Ie without an accountant, just by working it out through HMRC etc

HMRC basic tools is quite straightforward, although the reports are rubbish.

Dividends don't need a payroll, just sufficient distributable profits & correct declaration.

Thanks. I’m trying to decide how to access initial profit of say £15k for first year, for just me as sole director

Dividends look easier but maybe payroll better as a business expense?

Any advice appreciated

I have contacted an accountant for a quote on services but I feel I should be able to handle this somehow

Have a look at moneysoft payroll software, cost effective and easy to run yourself.

We have run several businesses using the MoneySoft Payroll. It's great (can also be linked to their accounting software to save duplicating figures), really easy to use and can be scaled if the business grows. We began with the tiny one and ended with the 50+ employees.

Thanks for software suggestions

On the first £15k would people do payroll or dividend?

(it’s just me)

There's a "magic number" when it comes to tax and NI that I've been advised triggers an NI tick box without having to actually pay any and no initial income tax - this year it is £758 per month.

So that's on payroll.

Then you get 2k dividend allowance tax free.

So that's £11,096 tax free.

Then "vote" and pay dividends on any profit (minus corporation tax) above that.

I pay accountants to do Corporation Tax return and for annual tax planning advice but do my own payroll via HMRC Basic PAYE software. It took a bit of getting used to and might be worth paying someone a one off fee for some advice / training.

Dividends are much easier to process but have to be paid from profit and are not tax-deductible when calculating your corporate tax liability. You will need to ensure you have enough left to cover corporate tax. Might be worth paying an accountant to train you on how to run payroll? I found HMRC stuff a bit baffling.

Think you don't pay NI on dividends but tax is due. Used to be £4k tax allowance on dividends but now reduced to £1k.

Hope this helps!

You need to speak to your accountant about the best way to take money out of your company.

You can run your own payroll though, and like PP I would recommend Moneysoft Payroll Manger. HMRC Basic Tools is so faffy that Payroll Manger is well worth the money. It is cheap and very easy to use.

Amazing thank you. I thought there might be a number where it was good to do payroll and then dividend over that

Great advice. Thanks everybody, that’s really helped.

As a limited company, don't try to do it yourself. You need an accountant to do the accounts properly. Ask around and contact small firms who'll be less than the bigger firms. Yes, you can do your own payroll and can probably work out the dividends, but it's not worth the stress of getting it wrong. Dividends should only be taken from profit after tax.

Yes good advice. I’ve posted on a local group just now and have accountant recommendations.