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Original poster

Limited company help - please!

50 replies

Fabpinky · 04/01/2018 19:07

I have just started my own limited company and have quite a few questions, I'm hoping someone can help!

How and when do I pay tax - do I NEED an accountant or can I do it myself? Is there a form to fill out and send away, when do I need to do this by?

Do I pay tax on profit only or whole turnover?

How do I claim VAT back?
Can I claim VAT back on items I buy to make products? E.g fabric, thread which I then use to make a product which I then sell
Can I claim VAT back on getting my sewing machine fixed? Buying a new machine?

Can I claim VAT back on postage costs?

As I am only making a small profit it wouldn't be worth my while getting an accountant, so I am trying to get my head around everything and do it myself

OP posts:
saladdays66 · 04/01/2018 19:12

These might help
www.gov.uk/limited-company-formation
www.gov.uk/running-a-limited-company
www.gov.uk/prepare-file-annual-accounts-for-limited-company

www.telegraph.co.uk/business/becoming-self-employed/limited-company-benefits/

If you're not earning over £35,000 per year it may not be worth setting up a limited company (from the Telegraph article).

ClashCityRocker · 04/01/2018 19:17

Have you registered for vat? If you're selling to the public it would be unusual to register for most businesses if your taxable supplies are not above the vat threshold

Original poster
Fabpinky · 04/01/2018 19:22

Salad - thank you

Clash - no I haven't registered for vat as I am no where near the threshold. Does this mean I can't claim VAT back? Probably not which is fine I am just trying to work everything out!

OP posts:
ClashCityRocker · 04/01/2018 19:29

No to claiming the vat back, in that case.

www.gov.uk/corporation-tax

May be a good starting point for Corp tax payment and return dates.

Don't forget filing obligations with company's house.

As to whether you need an accountant, I would recommend one for a limited Co, at least initially - it's quite easy to fall foul of company law.

AlexanderHamilton · 04/01/2018 19:29

If you are not VAT registered then you can't claim it back but it also means you don't have to charge your customers VAT making you either cheaper (more competitive) or you keep more profit instead of paying VAT over to the tax man. It's reallybonly businesses selling to other businesses who find registering for VAT under the threshold worth it.

Also why are you setting up as a limited company? Unless you are taking on a lot of risk (loans, overheads etc) it's much simpler & easier to start as a sole trader.

Original poster
Fabpinky · 04/01/2018 19:31

Alex - I decided to set up as a limited company as I am still working full time and didn't want it to affect my taxes from that. I read online that if you are a sole trader and in full time employment then you receive a new tax code etc, so thought the limited company would be easier

OP posts:
ClashCityRocker · 04/01/2018 19:32

I also think if it wouldn't be worth your while getting an accountant in terms of the size of the business, it's almost certainly not worth your while incorporating, unless you need to do so for a particular reason.

AlexanderHamilton · 04/01/2018 19:33

No, that's not true. Both my husband & I have run self employed businesses alongside being a sole trader.

You can opt to pay your s/e tax via PAYE (some people find it easier that way) but it's not compulsory.

ClashCityRocker · 04/01/2018 19:34

Ah.

No, there's no reason why it should affect your paye code.

You can request it, if you wish. Just as you can request dividend income to be adjusted for in your payroll code, but it's not compulsory.

It can be an additional complication running things through a company.

BritInUS1 · 04/01/2018 19:36

Please get an accountant. You need to sit down with someone and get them to explain exactly what you need to do and when

Cbaanymore123 · 04/01/2018 19:39

I would get an accountant even if you only get them to do your vat returns and tax returns.

Mines 30 quid per return and 70 pound a month.

It isn't that much money vs getting yourself into a mess.

reetgood · 04/01/2018 19:40

You should still be reporting income you receive through your business, whether you’re a ltd company or sole trader. To not report it is avoiding paying tax on earned income. I would strongly recommend not incorporating with a small turnover as the costs aren’t really worth the benefit unless you have a particular situation. You should take some advice before doing this. Easiest would prob be to just run as sole trader. Depends on your anticipated turnover?

AlexanderHamilton · 04/01/2018 19:45

The OP hasn't said she won't report income. She hasn't received any income yet.

She won't have to do her first self assessment until Jan 2019 though she must register as self employed with HMRC & get a UTR number.

Original poster
Fabpinky · 04/01/2018 19:47

Reetgood - when you say the costs aren't worth the benefits, what costs do you mean?

I was under the (naive) impression that you set up company, paid your taxes and that was that.

OP posts:
ClashCityRocker · 04/01/2018 19:49

That's the self-employed deadline.

If she's set up a limited Co, the tax payment will most likely be nine months this and one day after the year end, with the Corp tax return due twelve months after the year end.

Although I would strongly suggest op considers whether a limited Co is the way to go with this.... It can be quite easy and quite expensive to cock it up!

KittiKat · 04/01/2018 19:50

AlexanderHamilton OP is NOT self employed.

But, she will still need to do a self assessment as a Director of a limited company so will need a UTR if she does not have one.

She will also need to electronically submit statutory accounts to Companies House within the timescales permitted for first submission of limited company accounts.

If the OP does not have any concept of either of those, then I would respectfully suggest she did seek the assistance of an accountant.

clarrylove · 04/01/2018 19:54

HMRC offer many free webinars for small businesses/self employment. I suggest you book on one asap to understand the best option for you. They can answer all your questions too. I think you might find details on their website but you can call them too. I found it really useful.

Original poster
Fabpinky · 04/01/2018 19:55

Thanks everyone. I think an accountant will be the best option for me, if I decide to continue as a limited company.

Quick question RE accountants- do they do everything for you? So all that was mention in Kittikats comment? Do I just say to them "here's a list of my sales and my out goings" and they do it all?

I'm sorry if I sound daft but it's a lot to get my head around.

OP posts:
Original poster
Fabpinky · 04/01/2018 19:55

clarry - thank you I will take a look!

OP posts:
ClashCityRocker · 04/01/2018 19:58

Some things to consider op:-

  1. Remuneration planning - how are you going to extract the profit from the company? Dividends? Pay yourself a salary - in which case you'll need to run a payroll, although I suspect in your situation this would not be tax efficient.
Remember, the money belongs to the company - you can't use it as you like.
  1. Benefits in kind - buying stuff through the company and using it for personal stuff? You will need to consider the BIK implications and possibly complete an annual return.
  2. Corp tax return
  3. Possibly a self assessment tax return. Hmrc like directors to do them an you will need to do one if you have more than 5k in divs
  4. Company's House filing - annual return and accounts submission.
  5. Company bank account - I think there are charges for most of these. You will want a separate account.
  6. Directors loan account - buying stuff in your own name rather than the company? Taking money out the company?

Remember, the company is an entirely separate legal entity. The above isn't insurmountable, but is a lot of faff for no good reason in your position, I suspect.

KittiKat · 04/01/2018 19:59

There a lots of accounting firms that will take all your invoices and receipts, bank statements etc and put together a set of accounts for you. Lots of them do it for a set fee each month which will help you spread the cost. Visit a few and see which accountant feels best for you, they will all give you a free initial consultation.

BritInUS1 · 04/01/2018 20:00

Accountants will give you a price based on what you want them to do. It will obviously be more expensive if you don't do any bookkeeping yourself, but yes they will be able to do everything

ClashCityRocker · 04/01/2018 20:00

X-post!

A good accountant will go through everything with you at the start.

Honestly, sometimes you can't afford not to take advice.

Ingurr · 04/01/2018 20:11

You can use an accounts programme like Sage to record all your customer and supplier invoices. There are some online versions which are inexpensive. Sage is easy to use. Items are put under different nominal codes and you can print reports to give to your accountants at your year end along with the paper copy of invoices and bank statements. The accountants can then put this information into a suitable format for Companies House and HMRC. Obviously if you have very few transactions you can compile this information manually using a paper ledger.

AlexanderHamilton · 04/01/2018 20:17

Limited companies have so many obligations. I really would re-consider being limited.

Accountants will charge according to the work they do. Some people find it cheaper to employ a book - keeper if they don't have the time or inclination to do the book keeping themselves then they can get cheaper accountancy fees because the legwork is done.

Thankfully MTD has been shelved (for now at least) so being self employed rather than limited will be so much simpler OP.

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