I mentioned before that I have Ltd company and I know have to file some accounts.
I've not made any profits so far just invested about £4000.00 apart from the physical expenses I can see what other transactions should I be posting? Here are my questions??
1) Should I be posting an adjustment of some kind for home office space - pretty sure the answer is YES but could someone tell me about this and the double entry required.
2) I don't pay myself a salary and don't have any cash in the bank to pay myself. Can I recognise a liability to myself (director) for a nominal salary and how can decide on what salary to pay myself?
This point is kind of related to my other question on pay in a way as when the company is profitable I would pay myself in salary and dividends to make it tax efficient.
Do I have to specify somewhere now that, for example, I will only pay myself £8060 as a nominal income and withdraw any other profit as dividends
3) I have produced 4 apps which are selling worldwide although not in any great volume yet any advice on how to value and account for these?
In my mind I am thinking I have to show a realistic view of the business so should put through all the expenses as are realistic whereas someone else my wish to limit the perceived loss to make themselves feel a little better. I understand that in future years when the company become profitable I can offset prior year losses against tax.
I mentioned before that I have Ltd company and I know have to file some accounts.
I've not made any profits so far just invested about £4000.00 apart from the physical expenses I can see what other transactions should I be posting? Here are my questions??
1) Should I be posting an adjustment of some kind for home office space - pretty sure the answer is YES but could someone tell me about this and the double entry required.
Unless able to legitimately justify more the rate is £4 per week taken to the DLA in a similar manner to capital introduced (The company owes that money to the director).
2) I don't pay myself a salary and don't have any cash in the bank to pay myself. Can I recognise a liability to myself (director) for a nominal salary and how can decide on what salary to pay myself?
Yes, take to the DLA in a similar manner to capital introduced (The company owes that money to the director).
This point is kind of related to my other question on pay in a way as when the company is profitable I would pay myself in salary and dividends to make it tax efficient.
Do I have to specify somewhere now that, for example, I will only pay myself £8060 as a nominal income and withdraw any other profit as dividends
You are paying yourself a salary which you do not take out of the company. If over the bandings you still have to pay the tax and NI on that salary even though it was not taken out of the company.
Dividends can only be taken from taxed profits.
So, if you pay £8060 salary you minimise your tax and NI liability.
There would be no dividend in the equation if you do not have the profits to award one.
Remember also that profits are reduced by the salary that you have not physically taken.
HMRC are informed of the salary taken by the monthly RTI FPS return that you must file (penalties for failing to file are now automatic).
3) I have produced 4 apps which are selling worldwide although not in any great volume yet any advice on how to value and account for these?
This is a seperate question that could overtake the rest of the thread and should be posted seperately. You are getting into the issue there of where the sales are actually made. I'm not going to take that part, someone else can have it. As I say though, seperate it out into it's own thread.
In my mind I am thinking I have to show a realistic view of the business so should put through all the expenses as are realistic whereas someone else my wish to limit the perceived loss to make themselves feel a little better. I understand that in future years when the company become profitable I can offset prior year losses against tax.
You don't get a choice on what you report. Your financial statements MUST give a true and fair view of the affairs of your company during the period.
Taking salary can create a loss to carry forwards.
Any advice appreciated,
Jay
Shaun.
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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.
Can you tell me what this stands for and what this is?
I haven't been filing one as I assumed I wouldn't take a salary until the company was profitable? This is the first set of acctive accounts I am filing last year the company was dormant.
"HMRC are informed of the salary taken by the monthly RTI FPS return that you must file (penalties for failing to file are now automatic)."
It means in a nutshell - You have to report what payroll you are putting through before you pay any payroll. When I say pay - that even means if you dont physically pay it but dump it to your DLA. So if you have already reached your year end and not put any payroll trhoguh then you cant or you will be fined, so you cant create further losses in this way which you can carry forward.
Can I ask Jay - where are you up to in your bookkeeping/accountancy training?
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Just Googled it....Real Time Info and Full Payment Submission....
Need to do some more work here as it may be too late for me to do anything about it although I do not have to pay myself a salary presumably but it would make sense from a Tax perspective.
Also if I am not physically paying myself but rather recognizing a liability to pay myself when the company becomes profitable would the company still need to pay the related EMPR?But this would only be on any salary over the £8,060?
You either need an accountant, or a good bookkeeper. Focus on what you do best - running your business. Leave the compliance to someone who is equally as good at running an accountancy business. The subject is too vast to get by on bits and bobs.
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Johnny - Owner of an overly-active keyboard.
A man who can read, yet doesn't, is in no way wiser than a man who can't.
Just Googled it....Real Time Info and Full Payment Submission....
Need to do some more work here as it may be too late for me to do anything about it although I do not have to pay myself a salary presumably but it would make sense from a Tax perspective.
Also if I am not physically paying myself but rather recognizing a liability to pay myself when the company becomes profitable would the company still need to pay the related EMPR?But this would only be on any salary over the £8,060?
Thanks, Jay
Jay - be careful what you read on google - there is a mountain of completely out of date information, even on RTI!
We cannot say whether or not it will make sense from a tax perspective as each persons tax situation is individual to them. Eg - you might have your own company, but you might also be on the payroll for another or have pension income etc.
As I said earlier even if you are not physically paying yourself, you still have to report the payroll BEFORE you pay it (for that read, recognise the liability!)
Can you please answer my question about your studies????
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Thanks for the advice I was in the process of posting at the same time as you by the looks of it.
The issue isn't exams or training it's more one of experience. I have never worked in Practice preparing accounts for businesses and I am actually learning more now than I ever did in the past through working on a live Ltd of my own. Something which I am more engaged in.... Not overly concerned about missing out on the opportunity to put through additional costs in terms of salary (but its another area for me to read up on!) as I believe when my business takes off it will me very immaterial based on my business model. I will then engage an expert to do my accounts for me =D
That said I would like to learn a little more before just giving up and passing the work on to someone else to do as I am actually beginning to find all this stuff interesting for the first time....
Can you tell me what this stands for and what this is?
I haven't been filing one as I assumed I wouldn't take a salary until the company was profitable? This is the first set of acctive accounts I am filing last year the company was dormant.
"HMRC are informed of the salary taken by the monthly RTI FPS return that you must file (penalties for failing to file are now automatic)."
Thanks, Jay
In simple terms this means that you took no salary last year as you were not running a payroll.
If you were taking a deemed salary but not retporting it via RTI then you owe HMRC a small fortune in automatic penalties.
Basically, by not using a professional accountant from the start you have just with this one issue cost yourself more than the accountant would have charged you for the year.
You say that there were no profits so no dividend was available.
You cannot include salary / PAYE / EMPR expenses as you did not declare them. I suspect however that still does not turn your first year loss into a profit.
I am a little confused as I thought that you were working as a bookkeeper? I mean no insult or disrespect but these do not seem the sort of questions that anyone working in this business would not know the answers to.
As a mater of interest, which professional body are you qualified with?
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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.
I went to the HMRC site when I googled it...but I take your point.
Thanks, John
Thats ok - just wanted to check as Ive seen some junk out there
Sounds like someone's been to UK Business Forums! lol.
Some of the answers on there (and on a site that has a name not dissimilar this one) just make you want to put your head in your hands and sob. Well, at least the guy down the pub gets there own forum!
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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.
Not overly concerned about missing out on the opportunity to put through additional costs in terms of salary (but its another area for me to read up on!) as I believe when my business takes off it will me very immaterial based on my business model. I will then engage an expert to do my accounts for me =D
Putting the salary through is not just about allowing additional costs, but gives you certain benefits as an employee, which you might not have if you are not an employee elsewhere. Also - such might be considered immaterial in £££ terms, but not doing things in a certain way just means you will pay more tax when the business model starts to take off, and why would you want that! I will guarantee you wouldnt want to when you do start making the millions. Plus if you leave it until then to get the right advice (legal and accountancy) you could be creating a whole pile of damage, financially, for yourself and your business, in part in relation to business in general but also per your other thread)
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
No I'm not working as a bookkeeper I helped a friend out with some accounts that's all....they were then signed off by a practicing accountant.....I saved her 50% on the bill by doing the leg work.
I did a stint in practice years ago after my exams and almost closed the door on accountancy all together. It's a long story but I worked in an office where their sole objective was to knock every ounce of confidence out of me and I said I will never work in practice again! I tolerated it for 2 years before handing in my notice and moving on to another role.
Previously the advice I've had from this forum is to do a 3 year stint in practice and I can see how working as a general practitioner would be really helpful but its not an option as I have a family to support and can't afford a drop in salary at the moment.
What I would say though is this......
I am now working on Ltd company accounts and learning on the job and asking questions from qualified professionals such as yourselves - How is this substantially different to working in a practice environment?
When I have exposure to some of the issues which I raise on this forum such as TAX, NI Ltd's, Sole Traders etc etc... I am continually learning and it doesn't take me long to figure stuff out once I am aware of it or provided with pointers. I'd imagine in a practice setting I would be faced with a barrage of insults which would do nothing but hinder my progress if I were to allow it. I am much more emotionally resilient these days so I could probably take it but would I want to? No not really!?
I really do appreciate everyone's help on this forum, I do, but it would be a shame if everyone suddenly started to unintentionally knock my confidence by questioning my CV and telling me what I should and shouldn't know....no disrespect to anyone.
It's the friendly, welcoming, helpful, positive nature of this forum which has kept me coming back. I would hate to have to close my account and move on if it were to suddenly turn negative and judgmental.
I have to file my accounts at the end of the month so need to get working....I take your point re the mistake costing me more than the cost of an accountant Shamus but I didn't have the cash to pay an accountant in any case so in this scenario not sure how relevant that point is to my particular circumstance, if you see what I mean. It's an excellent point though which I will take on board for the future....lesson learned!
Thanks guys and I hope I haven't offended anyone with my candid response.
Jay
I wasn't trying to knock your confidence. As a matter of fact, I'm trying to save you accruing fines, left, right and centre. Without experience, you will definitely need to do some training / exams. After you've completed that stage, having acquired the basics, then start looking at the advanced questions. Until you are at that stage, I still recommend a professional.
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Johnny - Owner of an overly-active keyboard.
A man who can read, yet doesn't, is in no way wiser than a man who can't.
I am no doubt in a damage limitation scenario for this filing deadline and have made a mistake re the salary piece.
If I know about the fines then I can avoid them so....
1) I am aware of the late filing penalty so I am working on getting my accounts in on time...
2) I was not aware of the RTI FPS so thanks Shamus & Jo for this valuable advice....I will not put salary through in my accounts and that way I should avoid a penalty there!?
Are there any other penalties that I could potential be hit with or that I have overlooked?
Thanks,
Jay
The benefit of hiring an accountant from the outset is not only dealing correctly with the compliance filings and deadlines, but to provide bespoke tax advice depending on your circumstances, e.g., planning around your and your wife's total taxable income, WTC etc. There may also be the possibility of claiming R&D tax credits on expenses developing the app and you would have to pay a salary to get 230% tax relief.
