Becoming Self Employed - Online / Phone Accountant for advice

[DesignerNick]

Hi,

I am thinking about going self employed and was looking for some advice.

I currently work full time but then do web design / computer things on the side and want everything to work as a proper business with outgoings etc.

I am a bit worried about that 40% tax when I get to that limit of earnings so as I am sure most people don't want to pay tax if they don't have to.

I am clueless when it comes to things like this so if it is possible for some advice on everything I will need to know, what I can claim back in my situation then any help would be great.

I know I will need to fork out for an accountant so when I do I would like them to be helpful rather than them just bombarding me with jargon.

Any suggestions?

Thanks

 

[elaine@cheapaccounting]

yep - all part of our package starting at £29.99 / month plus vat - limited co (£19.99 / month sole trader)

We get you set up and operating in 'best' way you should be with mail / phone advice when / if you need it:

http://www.cheapaccounting.co.uk/

It tell you ...
Why choose Award Winning CheapAccounting.co.uk?

good luck with it

 

[akirk]

you have been on here for 18 months, so you will know the accountants on here who are always helpful - there are quite a few of them - use that as a guide to their character etc.

you will take quite a time before you need to worry about 40% tax

Alasdair

 

[DesignerNick]

you have been on here for 18 months, so you will know the accountants on here who are always helpful - there are quite a few of them - use that as a guide to their character etc.

you will take quite a time before you need to worry about 40% tax

Alasdair

I thought that was anything over £37k?

Thanks Elaine, I will definately look into your site now!

 

[Truemanbrown]

Hi,

I am thinking about going self employed and was looking for some advice.

I currently work full time but then do web design / computer things on the side and want everything to work as a proper business with outgoings etc.

I am a bit worried about that 40% tax when I get to that limit of earnings so as I am sure most people don't want to pay tax if they don't have to.

I am clueless when it comes to things like this so if it is possible for some advice on everything I will need to know, what I can claim back in my situation then any help would be great.

I know I will need to fork out for an accountant so when I do I would like them to be helpful rather than them just bombarding me with jargon.

Any suggestions?

Thanks

Can I ask how much you earn in your full time job.

You could set up your business as a limited company and then have some control about how you draw monies from the company to avoid becoming a higher rate taxpayer.

 

[DesignerNick]

I earn around 25k

 

[Williams lester]

You need to have a dialogue with your accountant to work out if it is better to go limited or sole trader route first, this will depend how much profit you anticipate making from the business.

We also offer an all inclusive monthly price (clearly shown on our website), and currently offer free company incorporation for new clients who sign up with us.

 

[DesignerNick]

Profit will be at least 2000 per month from the start so at least 24k per year.

This will work out at 49k including my wage so will be above the tax threshold I think.

I think I will just need to discuss with an accountant the benefits of ltd company as I don't think with being ltd I can dip my fingers into the money whenever I want can I?

 

[Williams lester]

You can take as much profit as you wish from a limited company (after making a provision for the tax due), but with some good tax planning you will be able to avoid higher rate personal tax by taking just up to the personal limit and using alternative strategies for the rest of your profit.

 

[akirk]

Profit will be at least 2000 per month from the start so at least 24k per year.

This will work out at 49k including my wage so will be above the tax threshold I think.

I think I will just need to discuss with an accountant the benefits of ltd company as I don't think with being ltd I can dip my fingers into the money whenever I want can I?

Confused here...

From the start you will be diving in at over £4,000 p/m to pay yourself and as profit... you refer to 24K as your salary, so presumably you are making more than this to pay NI of both types and tax etc.

so, by the time you add it all together there could be another 18K+ being earned there... unless you are not making those figures... that is pretty much hitting onto VAT threshold - is that factored in?

you state elsewhere that you are currently working a few hours on the side, and also that you have never projected earnings...

you also talk a few times about being in a learning place - building your reputation etc. / yet your site says you have 8 years of experience...

so I am slightly confused as to your stage of development / experience etc. but I will say that I would be very suprised at moving into that kind of monthly turnover... from the basis of a few hours on the side at the moment...

unless you have some form of guaranteed income - in which case great - then the figures don't add up - I don't know many design companies who dive in with that kind of turnover and profit in year one...

what is your basis for these figures - obviously don't want or need commercially confidential details - but a rough basis would be useful if we can help in advising...

it will make a difference in how you construct things...

Alasdair

 

[DesignerNick]

I am not sure why it would matter the profit I am guaranteed in the first month / year?

 

[Truemanbrown]

Profit will be at least 2000 per month from the start so at least 24k per year.

This will work out at 49k including my wage so will be above the tax threshold I think.

I think I will just need to discuss with an accountant the benefits of ltd company as I don't think with being ltd I can dip my fingers into the money whenever I want can I?

Just remember there other ways of saving tax, such as setting up a pension scheme. You also need to discuss how you account for business expenses.

I can give you a quote for the work at £400 per annum, which includes accounts, CT Return, personal tax return and payroll. Company set up would be free.

 

[akirk]

I am not sure why it would matter the profit I am guaranteed in the first month / year?

In one sense it doesn't, you are of course at liberty to earn as much or as little as you wish

however:

- you are asking on here for advice to gain experience - and one word of experience is not to build optimistic forecasts unless they can be met

- you are asking for advice on how to deal with tax / etc. and the answer will depend based on what you are earning...

but of course you are right, these things don't matter

Alasdair

 

[DesignerNick]

In one sense it doesn't, you are of course at liberty to earn as much or as little as you wish

however:

- you are asking on here for advice to gain experience - and one word of experience is not to build optimistic forecasts unless they can be met

- you are asking for advice on how to deal with tax / etc. and the answer will depend based on what you are earning...

but of course you are right, these things don't matter

Alasdair

Of course what I would earn matters when it comes to tax, but only between me and the accountant

Yes, I want to learn about business and running a business with tax, expenses etc properly.

I think those forecasts were quite pessimistic though

I guess I will speak to a couple of the accountants on here for info about the benefits of being Ltd / Self employed (I have read the thread) and see what they suggest is the best way to go.

 

[elaine@cheapaccounting]

As you say - the best thing is to work through the figures with an accountant who wil lbe able to show your limited v sole trader comparisons.

Have a look at the sticky on how to select an accountant - good luck

 

[MyAccountantOnline]

I am clueless when it comes to things like this so if it is possible for some advice on everything I will need to know, what I can claim back in my situation then any help would be great.

I'm pretty clueless when it comes to websites but as an accountant I am fairly good at accounts and tax

If you'd like to chat please feel free to contact me direct (no jargon or hard sell guaranteed). Hopefully our website will give you a feel for how we operate.