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business tax
hi, i am in process of buying a shop. i'm going to be a sole trader paying myself a wage.
what is the best way to pay less tax?
shall i pay myself less wages and let the shop take more profit or the other way around?
how much tax do i pay on my annual shop net profits??
pls help me....
happy easter
what is the best way to pay less tax?
shall i pay myself less wages and let the shop take more profit or the other way around?
how much tax do i pay on my annual shop net profits??
pls help me....
happy easter
Answers
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For more on marking an answer as the "Best Answer", please visit our FAQ.It won't make any difference. The wage you pay yourself is just an advance on the annual profits of the business, it's not a deductible expense. As for how much tax you'll pay, it'll be 20% unless you get into teh higher rate bracket. Don't forget the national insurance, though; Class 2 and Class 4...
Yes, the only way to 'let the shop take more profit' is to establish a limited company for the shop with you (and at least one other) as Directors. Then you can play tunes on deciding where the money sits - you either pay yourselves as employees or leave the money in the shop, some of which you can extract as dividends.
-- answer removed --
Not quite Roaldo.
If you pay yourself as a Director of the LtdCo, you lose about 43% - 22% PAYE tax, 10% employees NI, 11% employers' NI.
If you pay out as dividends, the business loses 20% paid as corporation tax on the profits, then nothing more to pay in income tax if you keep your earnings below the higher rate tax threshold.
If you pay yourself as a Director of the LtdCo, you lose about 43% - 22% PAYE tax, 10% employees NI, 11% employers' NI.
If you pay out as dividends, the business loses 20% paid as corporation tax on the profits, then nothing more to pay in income tax if you keep your earnings below the higher rate tax threshold.
from day one establish your gross profit at a lesser % value than it is,
like most sole traders this is done by trousering a fair amount of cash in advance of book-keeping,
the tax man knows this is what happens and providing you chuck a bit of tax over without taking the p!$$ such as running a ferrari and making �10 per week all will be well!
like most sole traders this is done by trousering a fair amount of cash in advance of book-keeping,
the tax man knows this is what happens and providing you chuck a bit of tax over without taking the p!$$ such as running a ferrari and making �10 per week all will be well!
I wonder which minimum security prison helpmetoo writes from? Sure, you can get away with tax evasion for years, if you're lucky . But you'll get caught eventually - and besides, what's wrong with paying your fair whack? People who wink at tax cheats don't usually have the same attitude to benefit fraud but what's the difference?