• Bookkeeping
• Sole trader versus limited company
• Personal tax versus corporation tax
• VAT
• Tax savings

2 p.m. Wednesday, 22nd May 2013
The Skiff, 49 Cheltenham Place, Brighton,
East Sussex, BN1 4AB

Only four slots available. Please email:
info@nldaccountancy.com to secure your place.

Your first and and foremost way to profit is, if you were to become a limited company, you may be able to save tax.

Take Mr Smith. He is expecting to make a taxable profit of £35,000 in the year to 5 April 2013. He would have to pay £5,379 in tax, but pay a further £2,466 in National Insurance on his tax return. This adds up to £7,845 tax as a self employed person, or 22% of his income. If he had traded as a limited company in the year, he wouldn’t have received a bill for the National Insurance and his tax (if his accountant structured the business effectively) would have been £5,503, or 16% of his income.

These saving amounts to £2,342 in one year and means you keep an extra 6% of your income. Even if your taxable profits were £21,000, you will still save £1,082 and keep an extra 5%!

The other side of my question was why do people see these legal tax savers as more professional, and why doesn’t everyone do it? Many freelancers say it’s because of the compliance and reporting requirements that companies are besieged with. But this in turn can be more profitable for the company as it means customers would be more willing to trade with these professionals.

The reporting can be daunting, unless you have an accountant in place. A common misconception with limited companies are the stress that the owner would be under to complete all necessary forms and file them in a timely fashion. As accountants, it is our nature to undertake this burden from you, leaving you free to run your business your way.

On top of the tax savings you make and the prestige associated with Companies, there are many other benefits including;

·         Limited liability – your personal assets are separate from your   business

·         Pension contributions become a taxable expense

·         Childcare vouchers are available as a deduction

·         There are no Payments on Account to make to the taxman (so no prepaying next year’s tax)

At NLD Accountancy, we take care of all the forms, filing requirements and deadlines for you. You therefore have peace of mind and can run your business. All we ask is for you to record your income and expenses – or alternatively we can do this for you.

If you would like a chat over a coffee about this, just drop us an email atinfo@nldaccountancy.com and we will be happy to discuss your situation.

I therefore advised him not to withdraw any money from the limited company until 6 April 2013, as that is the start of the new fiscal tax year. From there, he would drop back down into the 20% bracket. The cherry on the cake is that as he is trading through a limited company, he can take remuneration under a small salary and then take quarterly dividends, which if done correctly should mean he has a zero personal tax liability in the next financial year. This does mean however that he would need to get by until then on any accumulated savings he has.

Opportunity to have a 25 minute one-to-one meeting to discuss aspects such as:
•    When to form a limited company
•    The benefits of trading as a limited company
•    What trading as a limited company involves
•    Tax savings
Only four slots available

Email us at info@nldaccountancy.com to secure your place.

When and where:

12 pm Wednesday 6th February 2013

The Werks, 45 Church Road, Hove BN3 2BE

Although it has to be said that for many people the office provides an escape from the petty tyrannies of home, they are the married ones, usually with children, men who treat their workplace like a shed or a train-set in the attic, devoted presenteeists who thrive in the impersonal environment of a twenty-first-century workspace.

Freelancing, working from home, is only tolerable for such characters if they can be alone in the house, working close to the phone in a rigidly demarcated office plot. As soon as the wife or the children arrive, they get nervous.

And there are plenty of women for whom four suburban walls and a ten second walk to the kitchen can never be anything but a tyranny, a sofa cage from which office work represents a paid escape. When freelancing or working from home, they feel dissatisfied and unproductive, no matter how productive they actually have been.

This more or less describes my wife and me, before a fraught and unexpected combination of circumstances lifted us out of our separate workplaces and deposited us back at home, forced to rely on our own skills as designers, yoked together of necessity. When the companies we worked for collapsed and dissolved, we created our own firm and determined to prosper regardless.

That was a decision which tested us and our relationship not quite to destruction. We started out sharing a converted attic space, each with a desk at opposite ends, and with two separate telephones. We bought a Chinese screen decorated with mountains and hermits and placed it between us. We bought a top of the range coffee machine, despite having a perfectly serviceable cheap one. We communicated by messaging each other, which included such messages as: “Bring one cafe latte and a biscuit”.

When we had to collaborate face-to-face we would immediately start arguing. We would waste precious hours fuming to ourselves before finally agreeing to play nicely, in a series of last ditch rescue operations. We hadn’t planned to be a freelancing couple, and we had not given any thought beforehand as to how we might work happily and effectively together.

Instinctively, we made our own spaces, new little narrow-walled separated offices. When we emerged from our screened-off corners, we at once came into conflict.

It’s a wonder that we ever made it work, although we did, and our relationship now is certainly different, and probably stronger.

The European economy is trapped in what seems to be an endless and inept game of political brinkmanship. Life can be cold for designers. Others may find themselves in a similar situation to us. So here are a few meant-to-be-helpful suggestions after six months of failure and a full year of co-working success:

Plan the office space in detail beforehand and get files and reference materials in place before you start. It takes time to orientate yourself to a new working environment, but that’s doubly difficult when you’re constructing it as well.

Work if you can at a single large desk, with some kind of token divider. Communicate by mouth.

Assuming there are two of you, put one in charge according to the needs of the job. That way, one person takes overall responsibility and the other can relax in the feeling of being delegated to.

This is particularly true of tax and invoicing and all the tedious stuff – same with phone calls – put it on one person’s shoulders and leave it there. Anything else gives rise to confusion.

Each of you will probably have a slightly or wholly different working style and methods. One is a procrastinator, the other puts in their tax return the day it’s due, etc. This is perhaps the single hardest thing to negotiate. The very worst thing is to try to change the way your partner works from the outset. It’s better to view him or her as a colleague you’re stuck with, and work out a way to work around them. Attempting to impose changes, at least by non-stealth approaches, is a discourtesy which at once promotes resentment and tension.

Of course creative conflict can be intensely productive and energizing, but if you’re working with your life-partner they know who you are, and the psychological armour you may rely on in a less personal working environment is no help at all.

So praise each other; it doesn’t matter whether or not it’s especially merited; the more intimately you know somebody, the less likely you are to be able to judge their work objectively, anyway. Being both a couple and a company involves an extra burden of trust: you need to have confidence, most of the time, in the work your other half does, and it helps to maintain this if you have different, but complementary skills.

You can start work at more or less the same time if you start it with coffee. End work when your tasks for the day are done. It doesn’t matter if your partner is still beavering away. Make them a sandwich. Presenteeism is what you left the corporate world to avoid.

Never criticise your partner for engaging in distraction activities. They’re getting used to things.

It’s best to keep the coffee machine in the kitchen. You have to leave the room to make it, which relieves inner tension and exercises the legs.

Try not to discuss work in the bedroom.

This article is written by Tom Watts for TODO Magazine

We are currently looking for an experienced accountant to join our team. The ideal candidate should meet the following requirements:

-       A degree or professional qualification in accountancy

-       Minimum 5yrs experience in an accountancy firm

-       Ideally some managerial experience

-       Tax knowledge on allowable expenditure for freelancers

and small businesses

Daily duties will include:

-       Preparation of sole trader / limited company accounts, tax

computations and returns

-       Meeting existing clients / potential clients

-       Drafting emails to clients

-       Communication with HMRC and Companies House

-       Managing staff

-       Recording time sheets and preparing billing decisions

-       Submitting annual accounts, annual returns, personal and

corporation tax returns

-       Dealing with annual payroll for company directors

-       Reviewing and submitting VAT returns

-       Company formations

-       Bookkeeping

-       Management accounting

We are looking forward to hearing from you!

Take Mrs X. She’s currently employed as a consultant on £40,000 per year, and her employer deducted £6,505 of tax over the year. In her spare time, she began to work on her start up with the aim of growing her company into a full time career. In the year to 5 April 2012, although she made sales of £8,000, her start-up business costs amounted to £20,000 creating a loss of £12,000. A simple ‘tax computation’ would be as follows;

Employment income:                                      £40,000, tax paid £6,505

Less: Sole trade loss:                                        (£12,000)

Net income:                                                         £28,000

Less; Personal tax allowance                             (£7,475)

Taxable income                                                  £20,525

Tax due on £20,525:                                         £4,105

Tax paid (as above):                                         £6,505

Refund due to Mrs X:                                      £2,400.00

At 5 April 2012, the personal tax rate was 20%, therefore this percentage was due on her £12,000 loss, which is £2,400. This is only possible because Mrs X had employment income in the year which had tax deducted on it, and made a self employed loss. You can’t offset Limited Company losses against your employment income.

If you’re thinking about starting a start-up business, or have taken the dip already and want some advice, why not drop us an email to arrange a free, informal meeting to discuss your concerns and how we can help.

No responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this blog post can be accepted by us.

Many see this as an unfair way of means testing a family’s income. If one parent is earning £60,000 and the other is a stay at home parent, the whole family loses their benefit entitlement. Whereas a family whose parents each earn £50,000, creating a household income of £100,000 will still be entitled to this credit.

Further to this, many parents are still unaware of this change as HMRC are only writing to those earning above £50,000 on the Pay As You Earn scheme. Therefore, business owners earning over this in dividends or sole trade profits are yet to be told about this imminent change. Moreover, those whose income fluctuates year on year through bonuses, commission or extra dividends, will be told to carry on claiming the benefit but that this will be clawed back each year if the earners income is above the threshold.

If you’re worried about your personal circumstances on this, check the Personal Tax Computation your accountant would have supplied to you with your tax return. The total income on this, before any deductions and the personal allowance, will demonstrate to you whether you should elect to stop your child benefit. Remember, it’s based on the highest earning parent, not household income. If you are over the limit, tell HMRC using this link http://www.hmrc.gov.uk/childbenefit/change-circs.htm after 7 January 2013.