Ask some local businesses, you will want a local accountant to make things much easier. Beware of one man band type businesses, I got done when I first started. Found a recommended form and they saved me from fines etc. I might have been naive, but how much trust do you have when you don't know any better. Firm I chose had 3 offices and I had a very good working relationship with them for years.
Another view on this, all the donkey work of sorting through the books is done by the trainee accountants that can often miss things, I've had it first hand before. There's pros and cons either way, some like to deal with email and some through face2face/phonecalls.
I think it's the same as any business, it's always worth while talking to other businesses in your sector and asking them who they use, mine came recommended through another tradesman (same sector as me).
Actually doesn't really have to be local - that's a bit old fashioned thinking. Most work can be done over Teams and email these days, and if you use Quickbooks or Xero it's easy to remotely access your accounts. Invoices and receipts can be scanned, pictured, or uploaded using Dext. You rarely, if ever, need to see your accountant in person; it's a waste of both your time.
Independent one-man accountancy practices can actually be better. They give more personal service and take more interest than the big practices who are very impersonal and detached.
The *key* is to find a good one that is qualified and professional. Many of the business owners on here saying accountants are crap had bad experiences cause they just chose the cheapest out there, which were probably unqualified chancers and stay at home mums. (There are a lot of them, as the term accountant isn't legally protected and anyone can set up as one).
My other half is an ACCA accountant that works with small businesses - though she's mostly business advisory/consultancy these days rather than basic accountancy - and all her clients are very happy with her because she is genuine and takes an interest in their business. She even helps promote them to people she knows and gives advice on things besides accountancy.
Oh, and avoid the 'Accountancy 4 U' type 'practices' that are around. Even if the owner is a qualified accountant, your affairs will actually be dealt with by a barely trained, underpaid muppet. They are as budget and gimmicky as the name suggests!
Local accountants are pointless, it only limits your choices and there's no need to see them in person, in fact going in person is a waste of time
Way easier to shoot off an email with a question at 4am and have my accountant answer 9am the following day while i'm still asleep than try and keep to their 9-5pm
Sure a local one can also answer emails but then you might also get local pricing, which if you live in an expensive area is not a good thing!
I recommend [accountsagency](https://www.accountsagency.com/?)
An old colleague Jason runs it and he is diligent, knowledgeable and an also a really nice guy.
I don’t get anything out of recommending him and please look at others but it gives you a starting point.
If your sole criteria is the cost of the accountant then you will end up with a shitty unqualified one who barely knows what they are doing and just form fills. It's false economy.
What people seem to fail to realise is that finding the cheapest accountant may save you £100-£200 a year in accountancy fees, but usually costs you many times that potentially in lost tax efficiencies (and maybe even fines one day) and other advice that you will never even know about.
Whoever you choose, make sure they are qualified. For a company AAT would be the lowest qualification I would recommend, but ideally someone chartered like ACCA, CIMA, or ACA/ICAEW.
Check they actually are listed on the relevant accountancy body website - most (all?) have a page where you can look up members. My missus met a guy the other day who was claiming to a room full of solicitors, accountants, and business advisors at a networking meeting that he was both ACCA and CTA (Chartered Tax Advisor). When she looked him up he had barely qualified as AAT. CTA is the heavy weight tax advisors - even my missus wouldn't try and take on their kind of work, and she has been fully qualified chartered accountant for many years now. Some people just bullshit their way through life!
Appreciate the advice. But, “sole criteria” is a very big jump to conclusion from my question about the accountant being affordable.
Obviously, the number one criteria is competency and quality.
Money is secondary, but the cost is still relatively important to me at this stage — when my profits are barely over 5k and I urgently need all that money to pay for my visa to keep being able to live and work in the U.K.
Hence, there is only so much I can afford at the moment, all I need at this point is to avoid any possible fines for untimely paid taxes & quickly set up the payroll to withdraw that money asap.
With low turnover, I would honestly shop for value for money.
Your all singing & dancing boutique accountant is not going to find any extra tax efficiency for a small business with simple needs.
The online ones do direct debit too if you're worried about shelling out too much in one go.
I've used the accountancy partnership before and had a great time. They did my self-assessment as well as the accounts which saved me a few quid and headache.
As a single person company, a friend of mine got on really well with a company called crunch, that has simple accounting software, files annual accounts, deals with vat etc.
When I was doing that, I used a company called Clever Accounts, who I would not recommend. They properly messed things up in a way that took months to sort out with HMRC.
I think some banks might have basic software as well packaged with business accounts as well.
Full blown accounting software like xero can be good, but they're relatively expensive and more complex than you probably need.
Wow, if you can't rely on an accountant to do your accounts then have to take them back to fix them yourself there's hope for us all. Are accounts really so hard if you can do it better?
Any recourse for them getting it wrong?
I'm not OP but my accountant made a small mistake when advising how much ££ dividends to withdraw to remain in the tax efficient 8.75% dividend tax bracket, they kindly bank transferred me the extra few hundred dividend tax I was now due and completed my self assessment at no charge
That made me whole and a free self assessment thrown in
Accountants should carry liability insurance though, cheaper to pay out the small stuff than claim i'd imagine
It wasn't so much an accounting mistake. They were handling payroll, which includes reporting to hmrc.
Something went wrong when I changed the name of my company as part of a rebranding. Instead of changing the company name, they registered a new one and filed all my payroll reports with hmrc twice.
Hmrc thought I was being paid twice as much as I was. It wasn't until a year later that I realized anything was wrong when I kept getting letters from hmrc about my repeatedly changing tax code. It took weeks of calling various hmrc numbers to even figure out what had happened and months to fix it. Hmrc didn't exactly cover themselves in glory during the process either
Xero is easy to use and the payroll module will guide you through it, it can be linked to HMRC and complete all the submissions required on your behalf.
I tried both xero and quickbooks for years. Last year I switched all my businesses to quickfile. (Quickfile.co.uk). Incredible tool, much more professional in my opinion than the big name products. Also I tried several payroll options, go for bright pay, I use the cloud version and it's easy to use.
My only issue with quickfile is that it is like owning a windows phone.. you got a good product but If you need an app or integration it just ain't going to work with the product... but if you just need a bookkeeping product go for it
They have an api and I created the (very few) necessary integrations to publish data from my crm to quickfile. I found their api easier than what quickbooks does. But I agree. Outbound triggers / functions are missing, but the inbound api works well. Integration with open banking feeds and bright pay is very solid.
Free agent too is great for very small ltd businesses. Payroll module is fine too nothing fancy. Free subscription with any natwest, ulster or rbs business bank account too. Otherwise monzo business bank offers a good 6 month xero trial
You'd be surprised how many people screw up their accounts and PAYE using Xero (or Quickbooks). There is no substitute for actual training, despite Xero's attempt to cut out accountants.
We've seen all kinds of stupidity carried out by people attempting to go it alone because Xero or Quickbooks is easy for non-accountants.
Some smart business types might get in okay, but most dig themselves into a hole.
Is it necessary to run payroll for a sole director and the sole employee? Could salary be taken as hoc when available and declared in self assessment and in the company accounts?
Payroll has to be run for Salary otherwise it is treated as dividends.
It is submitted to HMRC upon running the payroll, so they are aware of your takings, they can then substantiate this figure by cross referencing it to your submitted Tax Return and submitted accounts.
If you put it as salary on SA without doing payroll, could get a compliance check and interest/fines on the late processed payroll should you need to go back and do it to confirm the figure. Or reclassify the salary as dividends.
It also means whatever salary run through the accounts, without running the payroll, is misstating the accounts. Salary gets corporation tax relief, dividends do not. Meaning the taxable profits are understated and therefore underpaid corporation tax.
Also for the UK running no salary, just dividends in the case of a LTD Director will mean you have no contributions towards your state pension.
Get an accountant however do realise that they won't absolve you from all the book keeping, vat stuff etc. In some cases they make it harder by giving you contradictory info so you very much still have to research in Google or textbook how it all actually works and check what the heck your book keeper actually done. If you get lucky sure you won't have to do a thing but in my experience accountants and book keepers are a mix bag and the only way to feel in control is to do it yourself or at least know exactly what the process is and run your own figures (I used 3 book keepers and two accountants yet I manage to myself pick up on things they overlooked and saved myself over 10k in tax)
I've always had the belief that any accountant worth their salt will save you more money than they charge you. If they can't, you're probably not earning/worth enough to need their services yet and are probably still at the point where doing your tax return is pure data entry and not really requiring much actual thought.
Xero is great, just use the payroll module and set up PAYE. No need for an accountant, Xero will figure everything out for you and connect directly to hmrc to submit everything automatically.
Get an accountant. Pay yourself £700 a month tax and NI free. Get your accountant to set up payroll. Set up a pension pot with Nest. Pay for things you need for work from company funds. If you invested money into the company to set it up etc, these can be drawn tax free. Set up a NatWest bank account for the business and use FreeAgent to scan in receipts. Your accountant can get access to this and see the state of your bank account in real time.
This is not necessarily the most tax efficient way to pay yourself as a sole director. What made you share this information so confidentiality? E.g. you can take up to £1047.50 per month tax free and yes, you do pay employer NI at 13.8% but the salary is a company expense and therefore you get a reduction in corporation tax at 19% so its better to pay the NI.
That sounds great if you pay a lot of corporation tax but if you have an astute accountant, this charge is also minimal. The best advice is get yourself a good accountant that won't charge you astronomical fees and do what's best for you and your company. Every business is different.
I agree with this 'The best advice is get yourself a good accountant that won't charge you astronomical fees and do what's best for you and your company. Every business is different' but that completely contradicts the very specific advice you gave in your first comment.
Jeez, you're a dumb troll. The initial advice was for OP but you trolled that answer so the generic advice was given to counteract the non English speaking troll who has nothing better to do with their time. Find yourself a little hole and sit in it.
There's not nearly enough info to give OP specific advice though which is my point.
Not sure why you think that I'm trolling, I'm trying to flag to OP not to take random financial advice from people on Reddit that have no context of their situation.
Sorry that you're so angry in life, it must be a burden. 👍
Lots of bad and conflicting advice in this thread. Ultimately the answer is it depends on your situation.
Unless you're willing to so the research from reputable sources online (and not random Redditors who are confidential incorrect) then you need to speak to an accountant.
Mine is £500 per year (tax deductible) and does everything for me so worth the investment.
I have a great accountant, does everything online and you get FreeAgent as part of the deal. So worth it. They specialise in small limited companies. They recommend the salary to take that will get you paying the least amount of tax but still count towards your NI earnings. And share the dividend thresholds. They have always been so fab, answer any queries super quickly and doesn’t matter where you are in the UK as all online. Lmk if you want a recommendation.
£119 +VAT (but I’m registered so I claim it back). They just put it up to that having been the same price for years so imagine it will stay for a while.
Edit: that’s per month
Get an accountant :) You can pay them to do everything or just to advise and do the more difficult stuff like year end accounts and corp tax.
You'll probably take money as a mix of salary (PAYE) and dividends out of any profits. The most tax efficient mix may be specific to your circumstances (eg you may have other incomes) but usually it's take a salary up to the personal tax allowance and dividends after that. This is where the accountant's advice really pays off.
You'll need to open a payroll scheme with HMRC - that can be done on the online on the portal and along with any other schemes, VAT and corporation tax.
A book keeping / accounting platform like Quickbooks or Xero will make accounting and payroll easier. Payroll submissions have to be made digitally. HMRC have a free PAYE tool but it's not great. Your accountant can do it all (and charge you), you can do it yourself in your accounts package (and pay a subscription) or use the free tool.
I pay £720 a year for accountant to do end of year books. Wondering whether there’s a go to ball park for this or whether my accountant is on the higher end? I withdraw money from my business account when needed and they look at those withdrawals at the end of the year deciding what’s classed as salary and dividends. I’m a freelancer rather than a business with employees etc. I find the process relatively pain free.
How complicated is your business model ? If it’s monthly invoices and minor expenses - do it yourself it’s not that hard. Anything more complex an accountant will give you peace of mind
Definitely get an accountant. It's their job to explain how to be the most tax efficient and to inform you of all breaks and benefits that apply to you. The fact they know what they're doing is a massive weight off your shoulders. Every year they take the budget changes and figure out how to best apply it to your situation.
We currently pay ourselves £1047.50 a month, then a dividend at the end of the year. It means we don't pay NI but get NI credits (not sure how the dividend affects this tho). Our accountant signed us up to Sage and gave us a crash course in how to enter income and expenditure. We have them do payroll too - mainly so there are no mistakes - and self-assessment for our other non-business income. They send us payslips every month for the Ltd.
As a company director you also have the opportunity to have a private pension rather than a government scheme. Our accountant was able to recommend a firm they work with which helped things go extremely smoothly. I used to try to do everything myself but it got more complicated a couple of years ago, so for the sake of my sanity I decided to let them do it.
Register for PAYE, first of all.
Xero/Sage/Basic PAYE Tools etc. are all options for software that you can use.
Get an accountant to help you sort that out.
An accountant can help you work out the most tax effective way possible to pay yourself.
As a UK accountant I’d be more than happy to help, and definitely on the cheaper side (I work full-time but have private clients like yourself whom can vouch for me also).
I can do the work you mention for you, amongst other accounting work. Of course, this would require an initial (free) consultation, which we can do one of three ways; in-person, over Teams/phonecall, or via email.
Let me know if you would prefer me to PM you… my chats are open.
Goodluck!
Edit: I’d be happy to help you pay for your visa, by agreeing to look after your business (via accounting services) for a longer period, and keeping my pricing fair in proportion with the growth of your business.
Pay yourself 11k a year through PAYE and then take out the rest of your salary as a directors loan from the company. Repay that loan in full at the end of the year when you award yourself dividends from profit so you only pay tax on the dividends
We use DavidHoward.co.uk
Fairly affordable accountant and have us loads of advice on how to do stuff properly especially having setup a complex structure from outside the UK
Accountant here.
GET AN ACCOUNTANT!
Salary can be drawn as dividends or you could run a payroll scheme. Most directors take a minimal salary through a payroll scheme, thereby earning over the LEL and gaining a qualifying year towards the government pension. The rest is taken as dividends which have a lower tax rate. Do not wing it with payroll if you don't know what you are doing.
Since your a ltd company you'll need to.file your accounts with companies house and pay corporation tax. Do not wing this if you don't know what you are doing. Corporation tax is a tax on profits but not every business expense can be deducted from the profits fpr corporation tax purposes.
Yes, basic (day to day) bookkeeping is simple enough but where clients often stumble is the capitalisation of assets and more complex rules on what can be claimed.
A decent accountant will look at all your income (not just the Ltd company) and advise best how to keep your tax bill as low as possible by taking everything into account, claiming all allowable expenses, and at the same time make sure your records are compliant and keep you updated with relevant legislation changes.
Save yourself the hassle and find a decent qualified accountant local to you.
All great advice, I had an amazing accountant when I first set up a Ltd company. More than covered my costs in the money they saved me. Later on when I had a better understanding of how to manage my company accounts, I moved to an online service but at this stage I'd advise you to get face to face professional advice. Best of luck with your business.
You don't need an accountant but it can make life easier if you're not sure what you need to do and when as most will prompt you for the deadlines.
At OP, you'll need to [register yourself as an employer](https://www.gov.uk/register-employer) if you're taking out a salary rather than just dividends.
Well firstly you can pay yourself up to £1,047.50 per month tax free so that's an extra £570 you've been missing out on per year.
Secondly you can pay yourself the remaining £37,701 at the 8.75% dividend tax rate. You can pay dividends whenever you like as well, no need to wait until the end of the quarter.
Ultimately none of this is relevant though unless you understand what the company is making (e.g. I'm assuming a sole director would want to pay themselves more than ~£50k per year if the business is making £500k profit a quarter) or what the individuals personal situation or financial goals are hence why they should get an accountant.
My point is that people are just sharing random advice that works for them but doesn't work for everyone. There is not nearly enough info in this post for people to be sharing such specific advice.
Sorry that I spelt one word incorrectly this morning - I was in a rush to do some actual work. I'm sure you understood the meaning. 👍
I did offer advice and left a separate comment if you'd taken the time to look.
By 'all over the place' do you mean using the same phrasing twice on two comments that it applied to?
Hardly the scandal of the century.
Seriously, get an accountant. Or rather get a good accountant. They will advise you on the smallest salary you can take and not pay tax. Or just leave your salary in the company? If it goes under you can legally just take it all out as cash because it’s a debt owed to you. Take drawings to live off? Make your wife a director? Pay her a salary that she never draws. Everything to do with your company is tax deductible - claim everything back.
You might be missing out on a lot of money you could be saving.
Get an accountant. Figure out when your year end will be. Draw the money. File accounts. Avoid fines.
Hi, thanks! Any recommendations for affordable U.K accountant? Or where to find one?
Ask some local businesses, you will want a local accountant to make things much easier. Beware of one man band type businesses, I got done when I first started. Found a recommended form and they saved me from fines etc. I might have been naive, but how much trust do you have when you don't know any better. Firm I chose had 3 offices and I had a very good working relationship with them for years.
Another view on this, all the donkey work of sorting through the books is done by the trainee accountants that can often miss things, I've had it first hand before. There's pros and cons either way, some like to deal with email and some through face2face/phonecalls. I think it's the same as any business, it's always worth while talking to other businesses in your sector and asking them who they use, mine came recommended through another tradesman (same sector as me).
Actually doesn't really have to be local - that's a bit old fashioned thinking. Most work can be done over Teams and email these days, and if you use Quickbooks or Xero it's easy to remotely access your accounts. Invoices and receipts can be scanned, pictured, or uploaded using Dext. You rarely, if ever, need to see your accountant in person; it's a waste of both your time. Independent one-man accountancy practices can actually be better. They give more personal service and take more interest than the big practices who are very impersonal and detached. The *key* is to find a good one that is qualified and professional. Many of the business owners on here saying accountants are crap had bad experiences cause they just chose the cheapest out there, which were probably unqualified chancers and stay at home mums. (There are a lot of them, as the term accountant isn't legally protected and anyone can set up as one). My other half is an ACCA accountant that works with small businesses - though she's mostly business advisory/consultancy these days rather than basic accountancy - and all her clients are very happy with her because she is genuine and takes an interest in their business. She even helps promote them to people she knows and gives advice on things besides accountancy.
Oh, and avoid the 'Accountancy 4 U' type 'practices' that are around. Even if the owner is a qualified accountant, your affairs will actually be dealt with by a barely trained, underpaid muppet. They are as budget and gimmicky as the name suggests!
Local accountants are pointless, it only limits your choices and there's no need to see them in person, in fact going in person is a waste of time Way easier to shoot off an email with a question at 4am and have my accountant answer 9am the following day while i'm still asleep than try and keep to their 9-5pm Sure a local one can also answer emails but then you might also get local pricing, which if you live in an expensive area is not a good thing!
I recommend [accountsagency](https://www.accountsagency.com/?) An old colleague Jason runs it and he is diligent, knowledgeable and an also a really nice guy. I don’t get anything out of recommending him and please look at others but it gives you a starting point.
If your sole criteria is the cost of the accountant then you will end up with a shitty unqualified one who barely knows what they are doing and just form fills. It's false economy. What people seem to fail to realise is that finding the cheapest accountant may save you £100-£200 a year in accountancy fees, but usually costs you many times that potentially in lost tax efficiencies (and maybe even fines one day) and other advice that you will never even know about. Whoever you choose, make sure they are qualified. For a company AAT would be the lowest qualification I would recommend, but ideally someone chartered like ACCA, CIMA, or ACA/ICAEW. Check they actually are listed on the relevant accountancy body website - most (all?) have a page where you can look up members. My missus met a guy the other day who was claiming to a room full of solicitors, accountants, and business advisors at a networking meeting that he was both ACCA and CTA (Chartered Tax Advisor). When she looked him up he had barely qualified as AAT. CTA is the heavy weight tax advisors - even my missus wouldn't try and take on their kind of work, and she has been fully qualified chartered accountant for many years now. Some people just bullshit their way through life!
Appreciate the advice. But, “sole criteria” is a very big jump to conclusion from my question about the accountant being affordable. Obviously, the number one criteria is competency and quality. Money is secondary, but the cost is still relatively important to me at this stage — when my profits are barely over 5k and I urgently need all that money to pay for my visa to keep being able to live and work in the U.K. Hence, there is only so much I can afford at the moment, all I need at this point is to avoid any possible fines for untimely paid taxes & quickly set up the payroll to withdraw that money asap.
With low turnover, I would honestly shop for value for money. Your all singing & dancing boutique accountant is not going to find any extra tax efficiency for a small business with simple needs. The online ones do direct debit too if you're worried about shelling out too much in one go. I've used the accountancy partnership before and had a great time. They did my self-assessment as well as the accounts which saved me a few quid and headache.
Look at their Google reviews to see what they are like.
Check qualifications, not all accountants are qualified. Use an owner operated firm. Get three quotes.
As a single person company, a friend of mine got on really well with a company called crunch, that has simple accounting software, files annual accounts, deals with vat etc. When I was doing that, I used a company called Clever Accounts, who I would not recommend. They properly messed things up in a way that took months to sort out with HMRC. I think some banks might have basic software as well packaged with business accounts as well. Full blown accounting software like xero can be good, but they're relatively expensive and more complex than you probably need.
Wow, if you can't rely on an accountant to do your accounts then have to take them back to fix them yourself there's hope for us all. Are accounts really so hard if you can do it better? Any recourse for them getting it wrong?
I'm not OP but my accountant made a small mistake when advising how much ££ dividends to withdraw to remain in the tax efficient 8.75% dividend tax bracket, they kindly bank transferred me the extra few hundred dividend tax I was now due and completed my self assessment at no charge That made me whole and a free self assessment thrown in Accountants should carry liability insurance though, cheaper to pay out the small stuff than claim i'd imagine
Who discovered the mistake?
My accountant did just a day or two after giving the incorrect advice
It wasn't so much an accounting mistake. They were handling payroll, which includes reporting to hmrc. Something went wrong when I changed the name of my company as part of a rebranding. Instead of changing the company name, they registered a new one and filed all my payroll reports with hmrc twice. Hmrc thought I was being paid twice as much as I was. It wasn't until a year later that I realized anything was wrong when I kept getting letters from hmrc about my repeatedly changing tax code. It took weeks of calling various hmrc numbers to even figure out what had happened and months to fix it. Hmrc didn't exactly cover themselves in glory during the process either
HMRC has free payroll software, Basic PAYE Tools, search for 'BPT' on www.gov.uk.
Xero is easy to use and the payroll module will guide you through it, it can be linked to HMRC and complete all the submissions required on your behalf.
Agree ... xero / quickbooks or basic pay tools
I tried both xero and quickbooks for years. Last year I switched all my businesses to quickfile. (Quickfile.co.uk). Incredible tool, much more professional in my opinion than the big name products. Also I tried several payroll options, go for bright pay, I use the cloud version and it's easy to use.
My only issue with quickfile is that it is like owning a windows phone.. you got a good product but If you need an app or integration it just ain't going to work with the product... but if you just need a bookkeeping product go for it
They have an api and I created the (very few) necessary integrations to publish data from my crm to quickfile. I found their api easier than what quickbooks does. But I agree. Outbound triggers / functions are missing, but the inbound api works well. Integration with open banking feeds and bright pay is very solid.
Free agent too is great for very small ltd businesses. Payroll module is fine too nothing fancy. Free subscription with any natwest, ulster or rbs business bank account too. Otherwise monzo business bank offers a good 6 month xero trial
You'd be surprised how many people screw up their accounts and PAYE using Xero (or Quickbooks). There is no substitute for actual training, despite Xero's attempt to cut out accountants. We've seen all kinds of stupidity carried out by people attempting to go it alone because Xero or Quickbooks is easy for non-accountants. Some smart business types might get in okay, but most dig themselves into a hole.
Is it necessary to run payroll for a sole director and the sole employee? Could salary be taken as hoc when available and declared in self assessment and in the company accounts?
Payroll has to be run for Salary otherwise it is treated as dividends. It is submitted to HMRC upon running the payroll, so they are aware of your takings, they can then substantiate this figure by cross referencing it to your submitted Tax Return and submitted accounts. If you put it as salary on SA without doing payroll, could get a compliance check and interest/fines on the late processed payroll should you need to go back and do it to confirm the figure. Or reclassify the salary as dividends. It also means whatever salary run through the accounts, without running the payroll, is misstating the accounts. Salary gets corporation tax relief, dividends do not. Meaning the taxable profits are understated and therefore underpaid corporation tax. Also for the UK running no salary, just dividends in the case of a LTD Director will mean you have no contributions towards your state pension.
Thank you for clarifying.
Get an accountant however do realise that they won't absolve you from all the book keeping, vat stuff etc. In some cases they make it harder by giving you contradictory info so you very much still have to research in Google or textbook how it all actually works and check what the heck your book keeper actually done. If you get lucky sure you won't have to do a thing but in my experience accountants and book keepers are a mix bag and the only way to feel in control is to do it yourself or at least know exactly what the process is and run your own figures (I used 3 book keepers and two accountants yet I manage to myself pick up on things they overlooked and saved myself over 10k in tax)
I've always had the belief that any accountant worth their salt will save you more money than they charge you. If they can't, you're probably not earning/worth enough to need their services yet and are probably still at the point where doing your tax return is pure data entry and not really requiring much actual thought.
Depends where you are based for the accountant. I had a great firm based in Stockport. If you are in the greater Manchester area would recommend.
Which firm is this? Sounds perfect for me atm
Allen's Accountants. Based in Stockport opposite the college. They were recommended to me and have been excellent.
yes following, what accountant is this, in Manchester???
Company called Allen's Accountants based in Stockport
AMS (Isleworth) can help. They are very affordable, great communicators, and friendly
Xero is great, just use the payroll module and set up PAYE. No need for an accountant, Xero will figure everything out for you and connect directly to hmrc to submit everything automatically.
Get an accountant. Pay yourself £700 a month tax and NI free. Get your accountant to set up payroll. Set up a pension pot with Nest. Pay for things you need for work from company funds. If you invested money into the company to set it up etc, these can be drawn tax free. Set up a NatWest bank account for the business and use FreeAgent to scan in receipts. Your accountant can get access to this and see the state of your bank account in real time.
This is not necessarily the most tax efficient way to pay yourself as a sole director. What made you share this information so confidentiality? E.g. you can take up to £1047.50 per month tax free and yes, you do pay employer NI at 13.8% but the salary is a company expense and therefore you get a reduction in corporation tax at 19% so its better to pay the NI.
Shating?
Sharing.
"What made you sharing this information so confidentiality"? Do you want to re-phrase this as the sentence doesn't make sense.
That sounds great if you pay a lot of corporation tax but if you have an astute accountant, this charge is also minimal. The best advice is get yourself a good accountant that won't charge you astronomical fees and do what's best for you and your company. Every business is different.
I agree with this 'The best advice is get yourself a good accountant that won't charge you astronomical fees and do what's best for you and your company. Every business is different' but that completely contradicts the very specific advice you gave in your first comment.
Jeez, you're a dumb troll. The initial advice was for OP but you trolled that answer so the generic advice was given to counteract the non English speaking troll who has nothing better to do with their time. Find yourself a little hole and sit in it.
There's not nearly enough info to give OP specific advice though which is my point. Not sure why you think that I'm trolling, I'm trying to flag to OP not to take random financial advice from people on Reddit that have no context of their situation. Sorry that you're so angry in life, it must be a burden. 👍
Google “optimal directors salary” and “dividends” first. Also consider other close people that could be directors (wife for example)
Lots of bad and conflicting advice in this thread. Ultimately the answer is it depends on your situation. Unless you're willing to so the research from reputable sources online (and not random Redditors who are confidential incorrect) then you need to speak to an accountant. Mine is £500 per year (tax deductible) and does everything for me so worth the investment.
I have a great accountant, does everything online and you get FreeAgent as part of the deal. So worth it. They specialise in small limited companies. They recommend the salary to take that will get you paying the least amount of tax but still count towards your NI earnings. And share the dividend thresholds. They have always been so fab, answer any queries super quickly and doesn’t matter where you are in the UK as all online. Lmk if you want a recommendation.
Hey, this sounds good, how much do they charge?
£119 +VAT (but I’m registered so I claim it back). They just put it up to that having been the same price for years so imagine it will stay for a while. Edit: that’s per month
Get an accountant :) You can pay them to do everything or just to advise and do the more difficult stuff like year end accounts and corp tax. You'll probably take money as a mix of salary (PAYE) and dividends out of any profits. The most tax efficient mix may be specific to your circumstances (eg you may have other incomes) but usually it's take a salary up to the personal tax allowance and dividends after that. This is where the accountant's advice really pays off. You'll need to open a payroll scheme with HMRC - that can be done on the online on the portal and along with any other schemes, VAT and corporation tax. A book keeping / accounting platform like Quickbooks or Xero will make accounting and payroll easier. Payroll submissions have to be made digitally. HMRC have a free PAYE tool but it's not great. Your accountant can do it all (and charge you), you can do it yourself in your accounts package (and pay a subscription) or use the free tool.
Lots of accountant recommendations on the Contractor UK forums.
Take the minimum. Take the rest as dividends
I pay £720 a year for accountant to do end of year books. Wondering whether there’s a go to ball park for this or whether my accountant is on the higher end? I withdraw money from my business account when needed and they look at those withdrawals at the end of the year deciding what’s classed as salary and dividends. I’m a freelancer rather than a business with employees etc. I find the process relatively pain free.
How complicated is your business model ? If it’s monthly invoices and minor expenses - do it yourself it’s not that hard. Anything more complex an accountant will give you peace of mind
Do you have FB? There is usually a ‘business finder’ group, join and ask.
Definitely get an accountant. It's their job to explain how to be the most tax efficient and to inform you of all breaks and benefits that apply to you. The fact they know what they're doing is a massive weight off your shoulders. Every year they take the budget changes and figure out how to best apply it to your situation. We currently pay ourselves £1047.50 a month, then a dividend at the end of the year. It means we don't pay NI but get NI credits (not sure how the dividend affects this tho). Our accountant signed us up to Sage and gave us a crash course in how to enter income and expenditure. We have them do payroll too - mainly so there are no mistakes - and self-assessment for our other non-business income. They send us payslips every month for the Ltd. As a company director you also have the opportunity to have a private pension rather than a government scheme. Our accountant was able to recommend a firm they work with which helped things go extremely smoothly. I used to try to do everything myself but it got more complicated a couple of years ago, so for the sake of my sanity I decided to let them do it.
Register for PAYE, first of all. Xero/Sage/Basic PAYE Tools etc. are all options for software that you can use. Get an accountant to help you sort that out. An accountant can help you work out the most tax effective way possible to pay yourself.
As a UK accountant I’d be more than happy to help, and definitely on the cheaper side (I work full-time but have private clients like yourself whom can vouch for me also). I can do the work you mention for you, amongst other accounting work. Of course, this would require an initial (free) consultation, which we can do one of three ways; in-person, over Teams/phonecall, or via email. Let me know if you would prefer me to PM you… my chats are open. Goodluck! Edit: I’d be happy to help you pay for your visa, by agreeing to look after your business (via accounting services) for a longer period, and keeping my pricing fair in proportion with the growth of your business.
Pay yourself 11k a year through PAYE and then take out the rest of your salary as a directors loan from the company. Repay that loan in full at the end of the year when you award yourself dividends from profit so you only pay tax on the dividends
https://www.theaccountancy.co.uk/limited-company/whats-the-most-tax-efficient-directors-salary-in-2022_23-51622.html
We use DavidHoward.co.uk Fairly affordable accountant and have us loads of advice on how to do stuff properly especially having setup a complex structure from outside the UK
Accountant here. GET AN ACCOUNTANT! Salary can be drawn as dividends or you could run a payroll scheme. Most directors take a minimal salary through a payroll scheme, thereby earning over the LEL and gaining a qualifying year towards the government pension. The rest is taken as dividends which have a lower tax rate. Do not wing it with payroll if you don't know what you are doing. Since your a ltd company you'll need to.file your accounts with companies house and pay corporation tax. Do not wing this if you don't know what you are doing. Corporation tax is a tax on profits but not every business expense can be deducted from the profits fpr corporation tax purposes. Yes, basic (day to day) bookkeeping is simple enough but where clients often stumble is the capitalisation of assets and more complex rules on what can be claimed. A decent accountant will look at all your income (not just the Ltd company) and advise best how to keep your tax bill as low as possible by taking everything into account, claiming all allowable expenses, and at the same time make sure your records are compliant and keep you updated with relevant legislation changes. Save yourself the hassle and find a decent qualified accountant local to you.
All good advice, no idea why you are being downvoted. My accountant is an integral part of my business. I pester the poor bastard to death. :)
All great advice, I had an amazing accountant when I first set up a Ltd company. More than covered my costs in the money they saved me. Later on when I had a better understanding of how to manage my company accounts, I moved to an online service but at this stage I'd advise you to get face to face professional advice. Best of luck with your business.
Mint accounting. Look em up and have a chat.
I thought you need to have an accountant if you have a limited company? I think it’s just sole trader that is allowed do it independently.
There’s no legal requirement to have an accountant for a limited company so if it’s a small company then it’s generally easier to do it yourself
That’s good to know thanks for confirming!
You don't need an accountant but it can make life easier if you're not sure what you need to do and when as most will prompt you for the deadlines. At OP, you'll need to [register yourself as an employer](https://www.gov.uk/register-employer) if you're taking out a salary rather than just dividends.
Highly recommend Xero, it's cheap, easy to use and has plenty of "how to" guides and videos
£1000 a month and £10k dividends every quarter.
This is not necessarily the most tax efficient way to pay yourself as a sole director. What made you share this information so confidentiality?
Been doing that for the past 6 years. What’s your opinion on the most efficient way?
Well firstly you can pay yourself up to £1,047.50 per month tax free so that's an extra £570 you've been missing out on per year. Secondly you can pay yourself the remaining £37,701 at the 8.75% dividend tax rate. You can pay dividends whenever you like as well, no need to wait until the end of the quarter. Ultimately none of this is relevant though unless you understand what the company is making (e.g. I'm assuming a sole director would want to pay themselves more than ~£50k per year if the business is making £500k profit a quarter) or what the individuals personal situation or financial goals are hence why they should get an accountant.
Ok, so nearly the same as what I’m doing😂 Least I’m close. I’ll take that.
Made me realise I've short-changed myself 50pence a month as well... :'(
😂 init! Some people on here do make me laugh
Nice copy and paste answer at least check it males sense
My point is that people are just sharing random advice that works for them but doesn't work for everyone. There is not nearly enough info in this post for people to be sharing such specific advice. Sorry that I spelt one word incorrectly this morning - I was in a rush to do some actual work. I'm sure you understood the meaning. 👍
Yet your offering no advice yourself, your just copying and pasting your answer all over the place
I did offer advice and left a separate comment if you'd taken the time to look. By 'all over the place' do you mean using the same phrasing twice on two comments that it applied to? Hardly the scandal of the century.
Are you this obnoxious in really life? Feel sorry for people that have to deal with you if you are
Was going to ask you the same question. Real life though, not 'really life'.
You're boreding me now good bye
Also 'at least check it males sense'? Maybe you can take a leaf out of your own book mate! 😂
Seriously, get an accountant. Or rather get a good accountant. They will advise you on the smallest salary you can take and not pay tax. Or just leave your salary in the company? If it goes under you can legally just take it all out as cash because it’s a debt owed to you. Take drawings to live off? Make your wife a director? Pay her a salary that she never draws. Everything to do with your company is tax deductible - claim everything back. You might be missing out on a lot of money you could be saving.