Initial company payment.

[dwspritchard]

I've just started a company to basically do what I was doing as an employee before being made redundant. I have a couple of question which someone here maybe able to answer.

1) I need to purchase some supplies and need to get some money into my companies bank account to cover the cost of them. What is the best way to do this. Can I just pay it from my personal current account (as a loan)? and if so what is the best way to then get this money back?

2) A combination of my bank moving slowly setting up my account and getting some business quicker than I had planned as resulted in me needing to travel via train but with no way to pay for it out of the company account (i have cheque book but no cards yet). What would be the best way of going about purchasing the train tickets?

Thanks in advance for any help you can give me

regards
Deryck

 

[Joyous]

If you need to pay any company expenses out of your own pocket as you say treat them as a director’s loan and simply repay yourself when the company has the funds, there are no tax implications.

Regarding the train fare, again do the same – pay for it yourself but record it as a director’s loan.

I’d advise you to get a payment card as soon as possible to cover things like this. There’s no point in giving the Revenue things to question if it can be avoided.

Regards

Joy

 

[dwspritchard]

Thanks for the quick reply Joy, apologies for my slow thank you ;-)

I've now got payment cards from the bank so all is well.

One more question for the forum,
I'm going to bill for my first piece of work and that includes the train fare, now when adding vat do I add it to the total price of the train ticket (coupled with my consultancy fee) or do i take off the vat that is already applied to the ticket (is vat applied to train tickets)?

I thought I understood input and output, but this seems like i maybe charging vat on vat ... friday morning mental blocks don't you just love them

regards
Deryck

 

[Alpha]

Deryck

Just charge your consultancy fees on one line of your invoice and any recharged travelling costs on a seperate line (assuming you are contractually open about this to your clients)

Total the two up and add vat to this total.

Train travel does not have vat charged on it.

Should you have any expenses to reinmburse that includes vat you would normally charge the net amount (It will be shown seperately on any vat invoice that you can reclaim vat back on)

Quite straightforward really.

 

[Joyous]

Whether you charge VAT on things like travelling costs and so forth depends on whether or not they’re to be treated as disbursements.

If they are disbursements then as Alan says show them on a separate line and don’t charge VAT on them.

If (as it sounds in your question) they’re just expenses incurred by yourself in the course of providing your service then you include it in the value of your service and charge VAT on the lot.

Chapter and verse on disbursements can be found in VAT Notice 700 that you should have received when you registered for VAT.

Regards

Joy

 

[datahound]

I would be more worried about working for the same company as a self employed contractor doing the same job. The Inland Revenue frowns on this as your employer is avoiding ERs NI. If this is the only company you are working for you could have problems in the future.

I am not an expert in these matters, I am sure someone more qualified on the board will be able to confirm or deny this. I am surprised noone else pickedup on it so maybe I am mistaken?

Ah re-reading your post maybe you are working for other companies but doing the same job, sorry.

 

[gj]

Actually Datahound has a good point about IR35, which could apply to anyone running a business and supplying personal services - and in this case "doing what I was doing as an employee" sounds like it could be.

The issue is not that you may have just one customer, but that the nature of the relationship may be a disguised employee.

You could have several customers and the contract for most of them could be fine but one may be considered by HM Revenue and Customs to be a disguised employment and therefore caught by IR35.

The best thing to do, if in any doubt, is have a contract that makes it clear that this is not a disguised employment.

This is an area we specialise in, and am always happy to have a chat without cost or obligation, with anyone who is worried about this.

If anyone reading this has any concerns, send me a pm

Graham

 

[dwspritchard]

Thanks for the responses all, most usefull.

Just to explain about my poorly explained comment about doing what I did as an employee. What I mean't to say is I'm using the knowledge I acquired over 10 years in my job and then using that knowledge to provide software and consultancy services to a range of clientele (one of which just happens to be an ex employer).

I think I'm beginning to understand what people told me about spending 80% of my time on administration and 20% on performing tasks that actually bring in money

regards
Deryck