Using a limited company to manage tax

[petjons]

I'm employed in a PAYE job but have a sideline in writing. I think I'm going to be successful in getting a couple of paid contracts for writing work and - since I'm worried that those payments might take me into the higher tax bracket if they all come in one financial year - I've set up a limited company. My plan is to put the payments into the company's accounts, pay corporation tax, and then take the remainder as dividends next year when I'm more likely to be broke than earning loads of money. Is there a flaw to my plan? Would I need to sign contracts in the name of the company and use a business bank account or can I just use my own name and a standard bank account so long as I'm scrupulous about financial detail?

Thanks for any advice you can give me!

Peter

[GlobalTaxAdviser]

Dear Peter

A limited liability company is a separate legal entity which is distinct from yourself.

While there is no legal requirement definitely advisable to have all contracts, invoices, payments go through the company hence a company bank account will make that distinction

There are a number of reasons why it would be prudent to have a separate bank account. For example if you were unfortunate to get a HMRC investigation they would review bank accounts which could get messy if there are both business and personal transactions

Kind Regards

Sash