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im looking to buy a cafe, it will be in my name what is the best way to pay myself just take from the business account what i need or have a set amount as in a yearly salary? what is the difference in tax i will be paying.(not vat reg) TIA
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Difficult to say without knowing how much money you want to take out or how much money there is in the business. You cant just take money out of the business unless you've put the money in as a loan or similar. You really need to look at the figures of the business to see how much salary, dividends, bonuses you can pay yourself.
Contrary to Twenty20's advice, you can just take out money when you want if you are a sole trader.
Dividends are only payable for directors of Limited Companies.
I understand that you are busy but a course really would help you. You also need to speak to an accountant for advice on this type of issue. It may be better for you to start the whole thing as a limited company rather than a sole trader but that is not a question that can be answered on here.
Try http://www.businesslink.gov.uk as they have some decent advice on their website as does http://www.startups.co.uk
There are also some events in the evening that might be of use to you. I doubt that you are in Norfolk but if you are there is an event locally called neat business club which is held once every two months specifically to help new start businesses. http://www.neatbusiness.co.uk/ You have a panel of experts (accountants, business finance broker (me!), bank, solicitors etc) who are all there to answer your questions for free.
It is associated with our local chamber of commerce, so I really would (if you don't live in Norfolk) ask your own Chamber for advice.
Dividends are only payable for directors of Limited Companies.
I understand that you are busy but a course really would help you. You also need to speak to an accountant for advice on this type of issue. It may be better for you to start the whole thing as a limited company rather than a sole trader but that is not a question that can be answered on here.
Try http://www.businesslink.gov.uk as they have some decent advice on their website as does http://www.startups.co.uk
There are also some events in the evening that might be of use to you. I doubt that you are in Norfolk but if you are there is an event locally called neat business club which is held once every two months specifically to help new start businesses. http://www.neatbusiness.co.uk/ You have a panel of experts (accountants, business finance broker (me!), bank, solicitors etc) who are all there to answer your questions for free.
It is associated with our local chamber of commerce, so I really would (if you don't live in Norfolk) ask your own Chamber for advice.
No matter what drawings you take to pay yourself, the tax will remain the same as it's the business profits which are taxed, and profits would incude any money you withdraw from the pot. So take a hundred pouns or a penny, the tax will remain the same.
As for how much todraw out? Look at your takings, leave what you need to run the business or invest into the business and take the excess. Keep about a third of any perceived profits to one side to cover your tax liability.
As for how much todraw out? Look at your takings, leave what you need to run the business or invest into the business and take the excess. Keep about a third of any perceived profits to one side to cover your tax liability.
Not quite, Jedimistress but I understand your sentiment and I'm not criticising.
There are differences in small business taxation between being self-employed and limited company, but Gordon's been working hard to close the gaps being exploited by those running small Ltd Companies. Its beyond the scope to explain in a few words, but as self-employed you pay tax and NI similar to that if you were employed. As a Ltd Co you have to pay employers' NI of about 10% in addition - but you pay yourself less, than take the money out of the business as Dividends (on which no Employers NI has been paid. The small business Corporation Tax is roughly the same as the basic rate of tax of 22%. So why go Ltd? - because you can avoid much of the 40% tax band if your business profits would put you in that band.
That's a very simple economic summary but there are other swings and roundabouts and I doubt recommend deciding purely on that basis.
There are differences in small business taxation between being self-employed and limited company, but Gordon's been working hard to close the gaps being exploited by those running small Ltd Companies. Its beyond the scope to explain in a few words, but as self-employed you pay tax and NI similar to that if you were employed. As a Ltd Co you have to pay employers' NI of about 10% in addition - but you pay yourself less, than take the money out of the business as Dividends (on which no Employers NI has been paid. The small business Corporation Tax is roughly the same as the basic rate of tax of 22%. So why go Ltd? - because you can avoid much of the 40% tax band if your business profits would put you in that band.
That's a very simple economic summary but there are other swings and roundabouts and I doubt recommend deciding purely on that basis.
Sorry, I assumed you would be operating this as a company, with employees etc, when you cannot take out money as and when you wish without paying tax etc on it. I think to answer this properly you'd need to give a lot more info about what youre doing - or employ the services of an accountant, at least for advice.
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