Class 4 National Insurance - Sage

[ktz84]

In Sage I am assuming I can just use 2320 - Corporation Tax and rename it to NIC - Class 4. Is that right? This is for a partnership of 2 people selling through ebay only and I'm attempting to put together our chart of accounts.

 

[elaine@cheapaccounting]

should go to drawings

 

[ktz84]

I had to think about that for a minute but I get it now I think. The profits are split between the partners and we then pay NIC on those profits (assuming there is any to pay). So if we take the money out of the business to pay for the NIC then it is drawings in the same way that if we take anything else of value out of the business.

Is that right?

 

[ktz84]

I think that the thing that I need to get out of my head is that this business has any legal personality of its own, as it doesn't. It is just two people in business together, hopefully to share the profits and everything in the end relates back to those partners.

If I can remember to think along those lines things should hopefully become clearer

 

[elaine@cheapaccounting]

National Insurance for self employed is not an allowable business expense

 

[ktz84]

Thanks Elaine. I had realised that. Though still loads of things to try and get my head round as will be obvious to you by my initial question

 

[MyAccountantOnline]

Thanks Elaine. I had realised that. Though still loads of things to try and get my head round as will be obvious to you by my initial question

Have you considered a limited company? It saves you paying class 4 and class 2 NI and with the reduction in Corporation tax rate from 21 to 20% next month it can be a big saving for some partnerships/soletraders.

 

[ktz84]

Nicola,

To be honest I hadn't. We are very small scale at present. Basically started selling a few bits and pieces and before we knew we had around £10,000 worth of sales and then we started realise that we would have to go Self Employed. We couldn't pretend we weren't "selling for profit". Still it is very much a secondary income for both of us and the selling season is largely restricted to a 6 month period unless we can find new markets overseas or new products with a more all year round appeal.

Enjoying getting stuck into all the admin side of things. I have about another 6 months before I have to decide if I can do this myself or if I will have to employ one of you excellent accountants on here.

 

[MyAccountantOnline]

Nicola,

To be honest I hadn't. We are very small scale at present. Basically started selling a few bits and pieces and before we knew we had around £10,000 worth of sales and then we started realise that we would have to go Self Employed. We couldn't pretend we weren't "selling for profit". Still it is very much a secondary income for both of us and the selling season is largely restricted to a 6 month period unless we can find new markets overseas or new products with a more all year round appeal.

Enjoying getting stuck into all the admin side of things. I have about another 6 months before I have to decide if I can do this myself or if I will have to employ one of you excellent accountants on here.

Good luck with it all

 

[ktz84]

Thanks Nicola.