Taking a wage from my ltd company

[Wasteways]

Well I am running my ltd company and have got to a stage where I can take a wage what will be the best way to do this do I have to go self employed ? Also I have someone I use when I need extra help so need to pay them also.

I am lost here need some advise my company does work for another company so only has one customer ?

 

[Cloughie]

Surely if you own it you can just take it as a dividend from time to time?

If you want to pay someone else, you'd need to take them on as an employee or you might be able to take them on as them being self employed, i.e as a contractor.

But, I am not that well versed in this area, so I am sure someone else will chime in

Either way congrats on getting your business to the point where you ca draw a wage from it!

 

[MikeJ]

You need to speak to an accountant. If your company only has one customer, then you'll probably be caught by IR35 and need to make sure you're accounting for NI correctly.

 

[danielmeade]

No need to register as self employed as you are effectively an employee of the company, I'd advise speaking to an accountant but I am sure you need to establish a certain wage and create a contract with the company. With regards to another individual working for the company it may be best for them to register as self employed (if the only do a small amount of hours each month) and you effectively treat them as a contractor.

 

[MyAccountantOnline]

Well I am running my ltd company and have got to a stage where I can take a wage what will be the best way to do this do I have to go self employed ? Also I have someone I use when I need extra help so need to pay them also.

I am lost here need some advise my company does work for another company so only has one customer ?

Generally for most small owner managed limited companies you will be looking at a combination of salary and dividends to take money out of your company. Generally a salary of £5,715 pa and the rest as dividends.

You will need to register your company as an employer with HM Revenue & Customs to pay a salary to yourself of £5715 pa and pay an employee (subject to their circumstances/pay rate) and deal with the necessary PAYE/NIC matters.

Have a word with your accountant about it - it's a very routine matter for an accountant to deal with.

 

[MyAccountantOnline]

With regards to another individual working for the company it may be best for them to register as self employed (if the only do a small amount of hours each month) and you effectively treat them as a contractor.

You need to be very careful with this - what is called employment status is very costly if you get it wrong.

You cant just decide to pay someone as a self employed contractor you have to look in detail at the circumstances - very often they will be employees and PAYE/NIC etc has to be dealt with.

 

[rady84]

I take £500 paye and quarterly dividends, work out by far the most tax efficient way as Nicola said. With regards to you helper get him to go self employed and use him as a sub-contractor. This should be fine as long as he isnt working solely for you.

 

[MyAccountantOnline]

With regards to you helper get him to go self employed and use him as a sub-contractor. This should be fine as long as he isnt working solely for you.

Sadly its not as simple as that - you cant just make someone self employed and just because they work for other people too doesnt necessarily make them self employed. If it was as easy as that lots of people could save huge amounts of tax and NI by doing that

 

[rady84]

Nicola anyone can phone up the hmrc and go self employed. I sub contracted and worked for private customers when i was a soletrader, why would this be any different?

 

[MyAccountantOnline]

Nicola anyone can phone up the hmrc and go self employed. I sub contracted and worked for private customers when i was a soletrader, why would this be any different?

You are quite correct anyone can phone up HMRC and register as self employed and pay tax and NI as a self employed person, but, when a contractor pays that individual they have to be absolutely certain that the arrangement is a genuine case of self employment. It doesnt matter if the subcontractor is registered as self employed.

If the contractor gets it wrong he/she will be charged penalties/tax/interest. Its such easy pickings for HMRC and they will often challenge employment status for that very reason.

If you want to do a little background reading this is quite good - http://www.hmrc.gov.uk/employment-status/index.htm

 

[Chris Ashdown]

Dont forget you need to be able to prove you have enough profit in the company to be able to pay the dividend i.e. balance sheet at time of award, and do the paperwork