Just bought an established business and have some questions!

[VillageFete]

Hi,

I’ve been freelance/self employed forever. Can easily manage my tax return. It’s all straightforward.

Some months I earn well, other months not so much, and so when this business popped up I carefully considered taking it on (Lots of meetings with my accountant and the current owner) As I need a more stable income (Will still remain in my other freelance work)

It’s a no brainer, so I’ve taken the plunge. The books are good, my accountant is more than happy, but because this opportunity has come from nowhere (I’m friends with the current owner and she and her family are emigrating, so she offered me first refusal) I literally have no idea of how to manage things from a financial point of view. Turnover is approx 85k. Outgoings aren’t extortionate, and so there’s a nice profit in it.

I’ve opened a Ltd co, my friend will dissolve hers. I have a new lease on the premises and have taken over her social media and client booking system. Today, I need to open a business account - Any recommendations?

I have an accountant who is brilliant, always available at the drop of a hat, but i’m wondering do I need something like free agent or quickbooks? Is this required if you have a decent accountant?

I will employ one member of staff (She works there already) - Need to educate myself on sick pay/holiday pay etc… Any advice on that? Any websites where I can learn more about becoming an employer?

There’s another member of staff but she’s self employed, working on a commission basis.

Basically in a nutshell, I wanted to know how paying tax as a Ltd Co works. I will meet my accountant and discuss this, but he’s now on holiday for two weeks.

I’m guessing I simply keep track of all business bank statements, and my accountant works from them? I can’t seem to figure out if I should pay myself a wage or just stick to dividends? As is the case for self employment, can you put expenses through the books for a Ltd Co, such as electricity, staff training, stock etc?

Thanks in advance.

Beware of having to register for vat. Best to keep your existing business completely separate as a sole trader with different suppliers, different customers, ideally no overlap at all if you want to avoid having to be vat registered as even with different legal entities, HMRC can aggregate them if enough links between them.

Gov.uk 'becoming an employer' will give you all the info. you need. The self employed person, they are free to work elsewhere, provide their own tools/equipment etc.? Be careful that they wouldn't actually be classed as an employee, you can check this on gov.uk 'false self employment'. Penalties apply, so you need to be aware.

You can only take dividends from a Ltd company if there is sufficient profit, after taxes are due. Most Directors pay a low wage & take dividends when possible, your accountant will advise the required procedure. Overheads/expenses etc. are put through the accounts but you need to think of the Company as a separate entity & any funds belong to the Company, not you, so a little different to being self employed.

Make sure you understand your responsibilities as a Director & what filings etc. are legally required by Companies House.

Depending on number of transactions per month, simple spreadsheet accounts might be ok instead of any accounting package, your accountant will advise what they prefer.

Lots of useful info here, differences between Ltd & SA, VAT etc.
https://www.cheapaccounting.co.uk/blog/

The FSB is fairly inexpensive to join and has lots of advice, free templates for HR and Health and Safety and much more. It's worth investigating for a small business.

Good luck

You bought a business without having the faintest idea how to run it?

@OurStepsWillAlwaysRhyme I did. Natural risk taker. I’m a quick learner and it was a no brainer - plus I have an excellent accountant who will be back in two weeks to talk me through things.

Im a little confused, you have any excellent accountant who is available at the drop of a hat to deal with things... so ask them as they are a trusted professional who knows you and has already studied the accounts. Don't source information of an Internet forum!! Good luck with it all you sound like me in business buy something then learn how to do it ha ha. Ive taken booking for jobs then learnt how to do it before I go. But when it comes to tax and HMRC I would stick with advice from HMRC or the accountant not mumsnet

Hope you are figuring out the answers!

The only thing that worries me about your questions was when you said that your friend is Going to dissolve her limited company and you are going to open a limited company. Have you had advice from your accountant that that’s the best thing to do tax wise? I’m just wondering whether it might not be better to buy the existing company…..