Do i need to pay my self

[ross satchell]

Hi starting a retail business

Backstory
Year 1 drop ship
Year 2 sell online only uk
Year 3 open store

The first year or so i want to keep all the profits in the company for the following year then get a salary.

 

[Mr D]

Great.

You do not need to pay yourself at all. If you are self employed your profits are your income, if you have a limited company then it is separate from you and you could choose not to receive an income.
Not very efficient tax wise but can be done.

 

[ross satchell]

How would i do it, just not set paye up.

 

[Scalloway]

Are you a sole trader or do you operate through a limited company?

 

[ross satchell]

Limited company

 

[STDFR33]

It may be beneficial to pay a salary.

You should go through this in detail with your accountant.

 

[HomesWarehouse]

would be more tax efficient to pay yourself up the the tax free point as company taxes would apply otherwise

 

[STDFR33]

would be more tax efficient to pay yourself up the the tax free point as company taxes would apply otherwise

We don’t know that yet.

 

[ross satchell]

I dont have an accountant as I'm starting small i will do it my self. I just want to build funds up i dont have to have a income from it as i have another job

 

[STDFR33]

I dont have an accountant as I'm starting small i will do it my self. I just want to build funds up i dont have to have a income from it as i have another job

You are best paying a salary.

Unless you have experience of preparing compny accounts and personal and company taxation, you are going to come unstuck sooner rather than later. The cost of getting is wrong soon outweighs the cost of an accountant.

Good luck nonetheless.

 

[Mr D]

I dont have an accountant as I'm starting small i will do it my self. I just want to build funds up i dont have to have a income from it as i have another job

A self employed person can do their own accounts quite easily, limited company is more problematic and unless you know exactly what you are doing I think most would suggest you use an accountant.
Plus big time saving.

 

[Newchodge]

I agree with getting an accountant, however if you don't do that yet you might like to consider:

Any salary you pay yourself reduces your company's profits by the amount of the salary, thereby reducing the company tax bill. You can pay yourself a salary without taking money out of the company - the payment is credited to the Director's Loan Account and effectively means you, as an individual, are lending that money to the company.

However, assuming you are already paying tax in your other job, the total amount of salary credited to you would be subject to your personal income tax and you would have to pay at least 20% to HMRC. As corporation tax is 19%, doing this costs you 1% tax, at least. You would also have to run a payroll system to do this.

If you pay yourself less than £680 per month there is no NI to pay.

 

[ross satchell]

I dont want to pay for the simply reason at the beginning to profits might only be £100 a month.
As well would you recommended a online accountant and what it the pricing ?

 

[STDFR33]

I dont want to pay for the simply reason at the beginning to profits might only be £100 a month.
As well would you recommended a online accountant and what it the pricing ?

Why have you set up a company?

It might have been better (probably better) starting this venture as a sole trader.

 

[ross satchell]

Not set up yet but will be expanding too over the next couple years so i want to do it now to start

 

[Nighthawk Software]

You dont need to pay yourself a salary.

That's how I started my business.. limited company working on the side, leaving the cash in the business as it got established. I didnt take a salary until year 3.

It may not be the most efficient way of doing it - you may end up paying more in tax - but it can be done if you want to.

Just set up a business with no employees, and dont register for paye

 

[ross satchell]

Thank you Nighthawk Software very helpful

 

[ecommerce84]

It is possible to start off as self employed and move over to a limited company down the line.

Being self employed is easier from a ‘do it yourself’ accounting perspective if that’s what you’re determined to do. But an accountant might be a good investment for you in any case.

 

[alex360]

Hi if ou trade as a limited company pay yourself in divende as they are tax free, if you trade as a sole trader and you are employed you can recover any loss ( if you make a loss) against your tax.

 

[STDFR33]

Hi if ou trade as a limited company pay yourself in divende as they are tax free,.

What a load of tosh!

 

[Mr D]

Hi if ou trade as a limited company pay yourself in divende as they are tax free, if you trade as a sole trader and you are employed you can recover any loss ( if you make a loss) against your tax.

Check out the tax rate on dividends.