Hi,

this site isn't really for business owners but you're straight out of Uni so lets add a bit of flexibility for you.

For IT contract work you may be caught under something called IR35 which effectively prevents payment in dividends.

The only reason for dividends is to reduce national insurance. But remember also, even if you could pay dividends. They are not always better than PAYE. For example, PAYE is an expense where dividends are paid out of taxed profits so if you paid dividends you would pay tax even though you are under the tax threshold.

It sounds as though you have already considered many of the things that you need to . Remember that you are an employer and will need to register as such in order to process your payroll. In general people file monthly but there is an option to file annually.

Your idea of the accounts and your responsibility as a director is too simplistic. You are looking at the company as a payment engine rather than realising that becoming the director of a company creates similar legal obligations that a parent has for its child. Even though you are running a company it has a life of it's own and you are it's gaurdian.

There is a legal requirement to keep adequate books and records that may be examined at any time.

You are talking about company income as though personal income by assoicating your tax threshold to the company. You need to consider the companies taxes and your own completely seperately.

It is better to get an accountant on board from the start rather than later when you may have already cost yourself more than the accountant would have cost you.

As for how much an accountant would cost. It would not generally cost you any more than £1500 and generally a lot less. I would not expect it to cost less than £600 though. Thats a wide range I know and you need to make the trade off between cost and how confident you are that the accountant understands you and your business. Don't go for the cheapest, go for the best that you can afford (which is often not the most expensive).

I've not answered your questions as such as I think that whilst you are on the right lines there are some fundamental issues in your thinking so I've started the ball rolling with a generalised reply rather than specifics.

All the best,

Shaun.

thebigbojo wrote:

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2. Are the hmrc's free paye tools adequate for my situation?  If you don't need payslips it's fine, but it's very basic.

3. Are there any drawbacks to the free starling business bank account in my situation? I don't deal with cash and have no foreign transactions.  It's a great business bank account and two of my client's use it.  Only one drawback I can think of is that you can't use the card at pay at the pump.

6. Say come January I've stuck to contracting and made above the income tax lower threshold. How much will it cost to get an accountant to check over everything then compared to getting one now. Shaun's advice is crucial here, as is Joanne's, get one on board before you start, it won't be much different as the main cost is doing the year end accounts and tax return. You won't need to pay a lump sum, most accountants will let you pay monthly.  If you wait til the end of your financial year you will have an upfront cost to pay to finalise the accounts and do the tax return.  Unless you know what you're doing, don't attempt to do the year end accounts and tax return yourself.  It isn't straightforward and people often come unstuck.

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-- Edited by Leger on Monday 5th of August 2019 09:15:04 AM

Arrrghh sorry Shaun. I read the sentence you wrote and linked it to Joanne's post.

Looking back Joanne also said about getting an accountant on board at the beginning, but it was your post I had in mind.

I've amended my post.