Thinking about going "limited", need advice...

Shareholders in a company withdraw profits as dividends. Profits are (simplistically) all Income less all Expenditure and Tax.

"Holding deposit"? If you are holding a deposit you must hold it rather than distribute it?

It depends on loads of other considerations. Talk it over with an accountant or post more details here, because you aren't making a lot of sense.

I think that might be deeply problematic.

Agreed.

Anyway an accountant will charge according to the work he has to do, the number of transactions, and the state in which the records are presented to him.

Think about £2k +/- 1k IME.

DG

So how does one differentiate a 'dividend', just write out a cheque and put "dividend" on the cheque stub?

So it has to just sit there; why can't it be given to a director for them to hold?

I'm sure that's possible, but I'm sure it's also possible to estimate based on the above.

There are some tax advantages, principly you don't pay NI as there isn't any on dividends. However IR35 nullifies a lot of this and you need proper specialist advice, HMRC have been changing the rules a lot here and the exact answer really does depend on what the business does. A few years ago incorporation was nearly always the correct advice, now it really does depend.

Peter

First of all you do some draft accounts. If you are sure you have distributable reserves (which most definitely will not include other people's deposits,which they have given to the company for safekeeping), you organise a shareholders's meeting. Over tea and cakes you vote yourselves a dividend, and record what you have done in the minutes.

Whether you have to inform the Inland Revenue don't know. You used to have to - perhaps someone will let us know.

Suppose Abbey National gave all our deposits to their Director's to "hold"? :)

I have this sorted now.. I'll simply have the deposits paid directly to me.

Then you will lose any corporate protection you had aimed for.

Tony

In message , Simon Earl writes

Basicly yes. There needs to be company resolution to declare the divi. Many small firms just allow directors to make withdrawals and at the end of the year they figure out the most efficient way of dividing the payment into divi or salary or loan.

That would be a loan to the Director.

Somewhere between £500 & £2000.

That wont make any difference. To whom will the cheques be payable? You or the Company? If you get the cheques paid to you then you are robbing your own company.

"john boyle" wrote

Is that a Director's Resolution -- or a Shareholder's Resolution?

"john boyle" wrote

If they "decide" salary at the end of the year, won't the PAYE payments to HMRC then be late?

Apparently not. The deposits can be paid under separate agreement and I don't require "corporate protection" for these transactions. The other side of the business agreements will still take place via the ltd co and I will still enjoy "corporate protection" for this.

However, another problem has now come to light. It seems that the most tax efficient method of drawing funds from the Ltd Co is to draw a lump sum as a director, within the current year's tax/ni threshold and draw the rest via dividends. What my dopey accountant failed to mention is that I cannot take a bloody dividend until the annual accounts have been done. So that's once a year at the *end* of the year!

So, I must live on £4,895 for the entire year, and leave perfectly good cash lying around in the company until the end of the tax year. What bloody use is that?

I clearly need to find someone who can advise on all aspects, and offer some 'clueful' foresight within that advice.

In message , Simon Earl writes

Thats wrong. You can take a dividend whenever you like, just so long as you are sure there are sufficient accumulated profit & reserves to enable the payment of a divi to be made. Also, in a year or so it will be far easier for a company to buy back shares from sharehoders.

In message , Tim writes

Depends on how you arrange your timings.

If you pocket the deposits then it will be clear your company is a sham alias of yourself and you will lose any corporate veil of protection.

So take a salary or a Director's fee in the interim and a dividend at the end of the year. Please forgive my observing that your business plan is totally obsessed by tax considerations :-)

Tony

Nope you can do interim accounts. It costs but the accounts for the months done already don't have to be re-done at the year end. But it seems you don't get a 100% rebate for them. :-(

A decent accountant.

Where are you?

Be aware ISTM that accountants are a bit of a secret go-between a small private client and the taxman. Mine does me no favours, though I pay his bills, I have to come up with all the initiatives.

The trade off is I don't get odd probing telephone calls from the taxman. With whom, it seems he has a good working relationship.

DG

"john boyle" wrote

How did you mean?

If you withdrew more than the personal allowance, within the first 9 months (if paying PAYE to HMRC quarterly; 11 months if paying monthly) of the tax year, it will be late won't it?

In message , Tim writes

Withdrawals could be made by overdrawing the director's loan account and converted to a salary single payment.

Not if the withdrawals are by way of a director's loan, and the actual salary is paid *annually* (not monthly or quarterly).

The loan withdrawals are in effect an advance against the sum of salary and dividends you will in due course be receiving just before year end, and of course the outstanding advance would be deducted from the salary or dividend on the day(s) they're actually paid.

Ok, thanks for that.

May I ask, how do the "reserves" and share value aspects work? Is the company required to hold funds equal to the share value in order to pay a divi over and above that amount (assuming profits will also match) ?