Two Companies - One Payroll?

[vhjay]

Hi All,

Quick question for the accounting boffins out there I'm joint MD of a limited company which operates a PAYE scheme, and pays me a monthly salary.

I've now set up a second company to house a separate business venture and am a sole director. I now split my time between the two businesses but I wondered where I stand with regard to salary - will the second company also need a PAYE scheme, and both pay me half a salary? Or can one continue to pay me a full salary and invoice the other for 50% of my time?

Hope I've made the situation clear enough,

Cheers,

Jay

 

[UK Contractor Accountant]

I would recommed setting up a seperate a PAYE scheme for the 2nd co.

 

[Mitchells Bristol]

I disagree with the above. Subject to any VAT complications, I would run with one payroll and cross-charge half the cost. Administratively this would be much simpler than running two payrolls every month, splitting tax codes, complications around National Insurance (if any) etc

 

[UK Contractor Accountant]

I. Subject to any VAT complications
Exactly! thats why I would recommend a new scheme for 2nd co. Especially, if at some stage, you need to take on staff for 2nd co

 

[Business News]

I had two limited companies operating under one payroll. Easily done, the system we operated for the second company was a invoice for the gross payroll (before individual PAYE deductions) + 15% that would cover the employer NI (that'd average 8%) and provide a surplus to cover the processing costs.

As a guide, applying this approach, the net gross profit on that was £7,000 for every £100,000 invoiced or every £87,000 or so paid in net wages.

 

[David Griffiths]

The VAT is not complicated provided that the employee clearly has two employers - and two contracts of employment. The recharge of salary costs from one to the other is not a supply for VAT purposes

Link

 

[vhjay]

Thanks all for your responses. As far as VAT goes, these are two very different companies and I split my time between them 50:50. Neither are VAT registered.

My question now is how exactly to account for the recharge (I.e. would the money coming in from company B to PAYE operating company A show as revenue? Income etc, unsure of which nominal to use) and also, would I need to keep any records to prove that I was indeed splitting my time 50:50 and not 60:40 etc

Thanks again!