new business

[beanie]

Hi,

I'm exployed by a IT firm and earn around 38k per year.

I started a ltd business also to see if i could earn extra income, the company wasnt doing much for the first 12 month and basically dormant. The ltd company only has myself as a director.

The company is being run by my partner who is currently out of work and isn't taking any income.

The company has started making money in the last two months but not a great amount (2-4k per month), the company is not VAT registered. It was incorporated March 2009, next accounts are due Dec 2010.

What is the best way to get money out of the company and paying the least amount of tax possible? Can i use my partner to get the money out?

Thanks

[mlleodashuta]

yes your thinking not bad. go ahead

[Generix]

Hi,

I'm exployed by a IT firm and earn around 38k per year.

I started a ltd business also to see if i could earn extra income, the company wasnt doing much for the first 12 month and basically dormant. The ltd company only has myself as a director.

The company is being run by my partner who is currently out of work and isn't taking any income.

The company has started making money in the last two months but not a great amount (2-4k per month), the company is not VAT registered. It was incorporated March 2009, next accounts are due Dec 2010.

What is the best way to get money out of the company and paying the least amount of tax possible? Can i use my partner to get the money out?

Thanks

Usually (I'm making an assumption you are IT consultants) these types of firms have very little overheads (please feel free to correct me). And therefore it is a benefit to register on the flat rate scheme for VAT and make profit from the difference you are charging customers in VAT and the amount you pay to HMRC in VAT.

I've earnt my father an additional £2k profit this year just from this simple VAT planning - obviously this scheme is only beneficial where your customers are VAT registered and your inputs are negligable.

Food for thought.

[RAL]

Hi,

I'm exployed by a IT firm and earn around 38k per year.

I started a ltd business also to see if i could earn extra income, the company wasnt doing much for the first 12 month and basically dormant. The ltd company only has myself as a director.

The company is being run by my partner who is currently out of work and isn't taking any income.

The company has started making money in the last two months but not a great amount (2-4k per month), the company is not VAT registered. It was incorporated March 2009, next accounts are due Dec 2010.

What is the best way to get money out of the company and paying the least amount of tax possible? Can i use my partner to get the money out?

Thanks

I think I have seen similar post to this one and this was posted by the "partner". When you say run by your partner, does it mean your partner does admin work? Or actually does the consultancy and it work for the client? If your partner actually work for the company than you can her salary for working for the company.

[Incredulum]

If you are below the VAT registration threshold and make supplies to private or partially exempt (e.g. banks, landlords) customers then it is unlikely that registering for VAT is a good idea.

[Generix]

If you are below the VAT registration threshold and make supplies to private or partially exempt (e.g. banks, landlords) customers then it is unlikely that registering for VAT is a good idea.

Yuh - should have mentioned the banks/insurance firms wouldn't be most happy if you begin charging them VAT - however if its the larger banks your VAT charges will be negligible versus their total VAT bill, so wouldn't worry too much.

[abelljms]

there are only three ways of getting money out of an on-going company:-
1. salary
2. expenses reimbursed
3. dividends

dividends are great as they can be directed all over the place to optimize tax, but do it with care. you sound like you need to talk to someone soon.