Hi there. If bookkeeping and Accounting services was a part-time job what would you suggest starting up as? What are the tax benifits of starting up as a ltd company and also what would be the process in going down each of the routes and the costs etc?
Hi there. If bookkeeping and Accounting services was a part-time job what would you suggest starting up as? What are the tax benifits of starting up as a ltd company and also what would be the process in going down each of the routes and the costs etc?
Thanks
Hello,
What kind of accounting services are you offering?
Could the whole years earnings be taken as a whole lump sum? What are the tax thresholds for this under a ltd company?
Re your first question, I presume you mean for a company. So yes as a dividend.
Re tax thresholds - if it's taken as a dividend, it has no effect on the tax position of a company. You obviously (a) have to make sure that there are sufficient reserves available to declare a dividend and (b) watch the personal tax position of the recipient.
Under the services you are offering, you put corporation tax. If you don't mind me asking, what do you mean by corporation tax?
I don't wish to appear rude, but as you are offering services such as self assessment, Vat, payroll and corporation tax then I would have thought that you should already have a good understanding (at the very least) of the tax system especially regarding taxation rates and thresholds for the senarios you mention. Do you feel you are adequately qualified to deal with these areas ?
Unusually for me I didn't actually answer this one as I started putting a response togteher a couple of times then, being of a like mind to yourself I thought, no, better to say nothing at all on this one.
Not specific to this instance but I don't think that some people have any idea of the level of knowledge that Accounting actually entails or the fact that if they offer their services the quality of such services are governed by the supply of goods and services act (1982).
The model that Michael seems to be going for (combining this with the other posts) is to basically run an accountancy practice however, one of the posts talks about what happens at ICB level III making me think that he's either qualified ICB level II or studying towards it.
Assuming the above to be correct PII would not cover him for the services that he is looking to offer as there is always the catch all phrase in there that one will not be cover for services that you are not qualified to offer and of course, in offering them you invalidate the onsurance for services that you are allowed to offer.
Whilst being a limited company does offer some perosnal protection against claims for negligence the veil of incorporation is very easily lifted by a court where it is deemed that the only reason for such incorporation was as protection against claims for work which one was not qualified to offer.
Mmm, this comes accross as a bit nasty where it's not intended that way. Right, I'm going to write a seperate reply to Michael.
Talk later,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Correct shamus, I am working towards ICB level II. As I mentioned the services 'i WOULD like to offer'. This post was a genuine enquiry as I would be interested in starting my own practice (part time) once fully qualified. I am fully aware that to do this I would require all relevant experience and qualifications. I was just curious to know how you guys on here have setup.
Thanks
I'm going to cut through everything else and my answer is based on all of your questions not just this one.
My assumption is that you either have or are studying towards ICB level II. That will give you a good foundation in the basics of bookkeeping but once you set up in business you will realise that the real learning begins where the books stop.
The services that you are looking to offer seem to go well beyond your current level of knowledge and I think that you should stop and reconsider you business model.
For starters it would seem that your business should concentrate on bookkeeping only. Whilst building your business think about expanding your services by taking the ICB Payroll and Self Assessment exams and then include those services in your business model.
When you have completed ICB level III, only then think about expanding into preparing accounts for small traders.
If the business model that you are looking at is how to set up now for how you will be trading in the future I'm firmly in the limited company camp as that gives total segregation between the business and private finances.
If however you go down this route remember that you have a fiduciary duty of care for the company not dissimilar to the duty of care that a parent has for a child. The company has rights of it's own including the right to expect it's owners / directors to act in a manner benneficial to it.
A limited company is quite different to being a sole trader in that as a director you are an employee of the company. You do not have unfetted right to use the companies funds as your own even though you may own 100% of the shares of the company. This gives you right to withdraw invested capital, take dividends, receieve a salary, etc. But you cannot use the company bank account as if it were your own.
Taking on the responsibility of a limited company should be regarded as a serious undertaking and you will be legally bound to act in the best interests of your company.
Much of my last two responses are based on reading between the lines of your initial posts. Would you like to put us all right and introduce yourself to the forum detailing your qualifications, experience, etc. It's quite obvious that your aspiration is to be an accountant in practice but whilst legally there is nothing to stop you setting up and doing that no matter what your experience, there is a reason why it takes accountants so long to train to achieve their qualifications and to attempt to circumvent that process will end up with tears before bedtime.
Sorry, I don't ever like to pour cold water on peoples dreams and aspirations but I think best that you slow down a little now in order to run faster later on.
kind regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
was still writing my follow up when you posted yours so we crossed in the post.
Phew, puts my mind at rest a little.
As mentioned above, personally I'm in the limited company camp.
Setting up a limited company is normally quite cheap. Some accountants don't even bother charging to set the company up, others will charge you £500 for the privellage. Setting one up yourself you should budget around £100 to use the services of a professional company to do it for you.
If you buy an off the shelf company you can always change the name later, but you may find it easier just to get the company name that you want from the get go. Just changed mine after 20 years trading (ACCA told me that I couldn't have the word associates in my comapny name unless I did in fact have some associates) and was quite surprised at how little the various departments within HMRC share data with each other... Don't suppose that I should be after having dealt with them so much but there you go.
When you have a limited company it comes with the responsibility of maintaining it. That involves paying companies house each year a filing fee to keep your companies details up to date. You will also need to keep your companies finances totally seperate to your own so it will need it's own bank account(s).
As mentioned in my previous post, as a director of a limited company you are an employee of that company which is quite different to the self employed status of sole traders.
You could actually take the route of setting up self employed and then incorporate as you become more successful although this can be slightly messy depending on how segregated you kept your business finances when self employed.
For more general information on initially setting up I posted a response yesterday that may be of interest to you. See this thread :
Even though it's still a way off yet, good luck with the new venture and welcome to the forum,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
