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An Accountant's Guide to Company Registration, VAT, Tax and Employment

Discussion in 'Money, Accounts & Finance' started by ladyvgw, Sep 12, 2010.

  1. yus786

    yus786

    Joined:
    Dec 30, 2010
    Messages:
    269
    Was wondering if someone could advise on our situation.

    I work full-time and my wife is a home maker. The business we are starting very soon was my wife's idea but I'm doing a lot of ground work for her as I've dabbled a bit before (all for free).

    Anyway, we will be registering the business on her name and as she'll be working on it, and she will also pull a salary.

    BUT first year or so, she is not expecting to make loads, maybe around the £10K mark. Should we do the accounts ourselves. Normal expenses vs income is manageable but now we have a salary too (albeit minimum wage) - should we get an accountant?

    I'm sure there must guides out there to help one calculated paye/ni etc.

    What say?

    Thanks

    Yousuf
  2. RWA

    RWA

    Joined:
    Dec 21, 2005
    Messages:
    2,989
    Yousuf,

    You could do the bookkeeping and accounts yourself.

    You won't have to worry about PAYE if your wife is going to be self employed. Is the £10k you estimating profit or turnover?

    She would have to pay Class 2 NI contributions and income tax and class 4 NI contributions on any profits over a certain level.

    Of course there are certain business expenses she could claim back to reduce the level of profit, thus reducing the amount of tax and class 4 NIs she may have to pay.
  3. yus786

    yus786

    Joined:
    Dec 30, 2010
    Messages:
    269
    Thanks

    £10K profit.

    So the minimum wage she'll be pulling everyday - is that class as the business expense?
  4. RWA

    RWA

    Joined:
    Dec 21, 2005
    Messages:
    2,989
    Is she going the sole trader route? If so that'll be drawings from the business and I believe you cannot claim tax on the drawings.
  5. yus786

    yus786

    Joined:
    Dec 30, 2010
    Messages:
    269

    Sorry i don't understand this bit.

    Yes she'll be registering as a sole trader and yes she'll be paying herself min wage for a couple of hours a day.

    Thanks for your help
  6. RWA

    RWA

    Joined:
    Dec 21, 2005
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    Drawings are basically money you take from the business for personal use. It's different for a ltd company, I won't go into that here as it may become confusing.
  7. yus786

    yus786

    Joined:
    Dec 30, 2010
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    269
    Thanks mate.

    Sorry but i'm still very confused as to where we stand regarding taking a salary. Would it be best to just take the profit? TO keep in simple?
  8. RWA

    RWA

    Joined:
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    You're confusing a sole trader with a ltd company.

    There is no salary with a sole trader, you use the same personal tax allowance, you are basically the same person, so yes you are paying yourself out of the profits of the company anyway.

    There is no wage as such.
  9. mattee77

    mattee77

    Joined:
    Oct 8, 2010
    Messages:
    116
    can you just have an accountant at the end of the tax year (pay one off fee), or do they normally wish you to pay them monthly to keep a track record. Also i am not VAT reg. but on my purchases of stock where i have paid VAT - does the VAT contribute as expenditure or will it need to be deducted. Also when regestering for sole trader, does it matter if you put a date over the 3 months for comencement of business. say approx 4 months! will they fine you etc.....
  10. RWA

    RWA

    Joined:
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    There's no law about having to use an accountant, however if you were to engage an accountant only at year end, if I were an accountant I'd be pretty annoyed.

    Once you engage an accountant it's best to stay with them throughout they can also save you a lot of tax in the long run.
  11. mattee77

    mattee77

    Joined:
    Oct 8, 2010
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    116
    Not sure how hard it will be to do myself and if its financially worth paying for, Only selling on Ebay at the moment so surely its not worth paying for an accountant. or is it more complicated than i think????
  12. dilan911

    dilan911

    Joined:
    Feb 23, 2011
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    i didnt know i could learn so much in so little time! thanks for this it has really helped me as i have just started out!! :)
  13. Nasher

    Nasher

    Joined:
    Feb 3, 2011
    Messages:
    407
    Vicky, A great and informative thread.

    Just wondered if anyone knew of any book's or ecourses i could get my head into around.

    on Subjects:

    Running an Ebay business and Basic home Ebay book keeping?

    I'm finding these a bit daunting.

    Note I,ve already purchased EAB.
  14. polishgardens

    polishgardens

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    Mar 28, 2011
    Messages:
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    Hi Vicky
    Thanks for the great thread, it was very informative!

    Asim
  15. hatstand72

    hatstand72

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    Do you mean basic things like 'Do I have to print out every ebay invoice?', 'do I have to print out PayPal invoices as well?', 'Can I just keep electronic copies of invoices?', I am with you.

    There is a good thread here on which ladyvgw gives a spreadsheet, to help with basic accounting. I found it simple and helpful.

    Great thread - I'm learning loads.

    I still need to find my niche, but I want to start looking at wholesalers. In order to look properly, I need to prove to them that I am a business, I presume.

    I have filled in the online application with HMRC for sole trader but have nothing back yet. I have also had a business account agreed with my bank and am expecting the confirmation any day now. I have a simple question: what proof do I need to show a wholesaler that I am a business? How would that happen online? A scan of my business credit card, for example?
  16. hatstand72

    hatstand72

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    Sorry - just read my post. I presumed that you did not know that Vicky had posted a spreadsheet at the start, so I hotlinked it. Some users only read the last few pages of a thread. Then I noticed that you used her name, so probably did know that. Sorry about that.

    I too would like a practical guide to what to do. I bet there is already one on here somewhere!
  17. 3225natalie

    3225natalie

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    Jul 16, 2010
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    hi i am starting to sell childrens shoes and clothing but i am importing it from spain and italy the suppilers are asking for my vat number i do not have one do i need one to import childrens wear from euro countrys ?
  18. ladyvgw

    ladyvgw

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    No, it is not essential that you have a vat number.

    Vicky :)
  19. Simple Aquatics

    Simple Aquatics

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    Might be an idea to register though - as arnt childrens cloths still zero rated?
  20. Gary

    Gary

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    I believe they are, one of my suppliers still doesn't charge VAT on childrens clothes at least (the only one that sells them)
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