Childcare fees are killing me!!!

[bacon]

How do you cope with your drawings against these childcare fees? Our net profit for 2010 was £45,000 on income over £200,000. We draw £1500pm combined (partnership). How do you work out what salary you pay yourself? I am constantly going o/d on my personal account and this incurs fees. The type of business we are heavily machinery and labour (construction) so our spending is extremely high. Our accountant has told us to be more careful on the spending however we cant manage on this combined salary with the addition of childcare fees (£300pm DS2 2 days per week + some warp around + school club for DS1). We have another 2 years left on childcare. Food bills, personal car finance, tiny HP on an household item & childcare = £1200.

I'm really concerned whether I should get another job and work harder in the evenings (actually do loads already). Hubby works very long hours so I have no help with the childcare.

Would it be more adventagous to draw a larger salary which would go against the profit and pray that we can increase our profit in this flakey area of construction???

If you are a partnership there is no such thing as a salary, only drawings.
Whatever you take out is UNTAXED so you have to put money aside for the tax and class 4 NI bills.
If you were a limited company you could be employees and get childcare vouchers - your accountant would be able to advise.
On 200k turnover the dividend route may well be advantageous ....
as then you save the class 4 NI etc etc
a good chat with your accountant will probably save you a heap of money.

Extra jobs with small kids are rarely a good idea if you can help it.

Thanks TalkinPeace2, interesting. I dont think we'll go Limited as there is little risk with our business.

I was going to speak to our accountant but wanted to see if there were any others in the same boat.

I am struggling with the kids as it is.

Risk is not the only reason for Ltd.
In my DH's case, the £5000 drop in his tax bill for the same turnover and extracted profit was a major factor.
Lots are in the same boat. But don't pay more tax than you have to. The people you vote for certainly don't. :-)

On £45,000 profit between 2 of you, you should be saving about £2,500 a year in tax and NI from operating as a company. Find another accountant.

My accountant is fine thanks, well up on the type of business we are in - construction including agriculture (which is another field -pun). She has advised us on the pitfalls of both. We are happy as a partnership and to be honest we get away with alot already. We can put alot through the business anyway so not wanting a huge drawing. AT the end of the day we live and breath here on the business, the business is our only future so investment is critical.

The childcare costs are a major problem at the moment. I can only see to make a bigger drawing and for me to work harder to win work (currently gaining the ISO mark). Hubby was keen for me to drop the childcare altogether but I think its impossible to get anything done with a mad 2 year old.

I will speak to the accountant in the week to see what's the max drawings I can make.

Bacon,
seriously,
consider Ltd as then you can claim childcare AND you avoid class 4 etc etc

for the turnover of your partnership, the accountant should not hassle much about doing Ltd co for similar fees
Privacy : abbreviated accounts tell nothing and the limit for them is HUGE
sector - I'd sat its utterly irrelevant.
I don't know MrAnchovy - we only bump into each other on here and UKBF -Tax saving accountancy advice is just that and your accountant needs to convince you more of your own advantages.

Bit off topic but don't forget term after your DS is 3 you will get 15 free hours in term time -and some nurseries will do that as 2 full days now
food bill you probably can cut them a fair bit - if you need to - at least we have - better menu planning and some visits to budget super markets mainly
moneysaving expert is good for all of these things - eg petrol, bill etc