Employer, Employee, Member, Officer - what am I?

[André]

I've just started up a Limited company. I've found lots of information about PAYE, but they talk about Employers, Employees, Officers and Members like everybody knows exactly what they mean, which I don't! I know that I am the Director and that I have one Company Secretary. We have no desire to pay ourselves anything until we actually start trading in a few months. So, in the eyes of the Inland Revenue, what are we (apart from poor!) - are we both Employees, even though we're not paid? Am I an Employer, even though I'm not paying anyone? And what's the difference between a Member and an Officer? Please help!

[Alpha]

Andre

technically directors are classed as employees of the company although they do not neccessarily have to be paid. Should the company wish to pay the directors over the minimum threshhold for tax and NI (currently £4895) you will have to set up a PAYE scheme(register as an employer to deduct and pay PAYE/NI).

Directors are officers of the company.

Shareholders are members of the company

[André]

Alan

Thank you for the clarification. Is the Company Secretary also classed as an Employee and/or Officer?

André

[Alpha]

Company Secretary is an officer of the company not neccessarily an employee.

[BMS]

Andre

With regards to the PAYE sheme that Alan mentioned, give me a ring when your ready to pay yourselves and I will be able to help you there.

[Enigma121]

OK Andre,

Your initial response was quite interesting to us too.

Some additional questions from our point of view.

Do the same NI/Tax limits apply to other employees such as Company Secretary and anyone else?

What other rules apply for hiring people on a small salary for a part-time basis?

We are considering having around 6 employees on a small salary (3 - 4k pa).

Any advice you could offer would be appreciated.

[Alpha]

Enigma

Do the same NI/Tax limits apply to other employees such as Company Secretary and anyone else?

Yes the tax and NI rules apply to all employed people

What other rules apply for hiring people on a small salary for a part-time basis?

Other rules which apply are often the same whether full or part time.
If you have 5 or more employees then there must be a pension scheme set up for them to join(although the company does not have to contribute), relevant health and safety legislation must be adhered to. The provisions of the minimum wage and working time legislation(although by definition would not apply to part time work) apply.
Employers liability insurance must be taken out.

Note that minimum wage and working time legislation does not currently affect directors which allows them to pay the £4895 only and take the remainder as dividends (I'm sure that the government will catch onto to this and legislate for it some time in the future :cry: )

For good general information about starting up and running a company I recommend that you purchase 'The Essential Busines Guide' which is written by one of the forums members and offered to forum members for only £19.95 seehttp://www.ukbusinessforums.co.uk/viewtopic.php?t=3835

[lawspeed]

Note that minimum wage and working time legislation does not currently affect directors which allows them to pay the £4895 only and take the remainder as dividends (I'm sure that the government will catch onto to this and legislate for it some time in the future )

They caught onto this back in 2000, in relation to 'personal service companies', and introduced IR35 (http://www.lawspeed.com/freelancers/ir35.aspx) which treats those dividend payments as salary for tax/NIC purposes in specific circumstances based on the nature of the worker's relationship with the end clients of your ltd co.

[Alpha]

What you say about IR35 is factual James but has nothing to do with minimum wage or working time directives! :D

[lawspeed]

Except inasmuch as a 'wage' could be deemed to have been paid for tax/NIC purposes, so the Director/Shareholder would not then get the in-the-pocket benefit of paying out the remainder in the form of dividends. I was just responding on that specific point. :lol:

[Alpha]

James

Thats fine but wasn't clear from the quotation text you included :wink: