Glad that I was of help - and that you did not take offence at my
cautious suggestion.
I do not know how much you already know about running a UK Ltd
Company, so some of what I say may be obvious.
I can understand you wanting to protect your house, however remember
that banks will not lend you a cent without a personal guarantee, and
if you want a merchant account for taking credit cards - they'll want
a personal guarantee.
Also watch out with banks, they take it on themselves to fleece
business customers. I suggest you shop around for a bank account
rather than use your current mob. Normally the swine charge you for
depositing cheques.
They can even charge you for taking the manager out to lunch.
I dont't think you really have any problems with the US taxation, they
need know nothing about the Ltd company - all they will see is income
from dividends.
I imagine that you are currently making IRS declarations.
You can simply continue as before.
As for UK taxation, there is something called Tolley's Tax Guide,
which is what accountants use.
When dealing with accountants /always/ negotiate a fixed fee, and
don't let them do anything you can do yourself. Also put things in
writing.
It is really important to keep pristine books, not difficult if you
are good at paperwork. Unless you have some massive operation, you
should be able to keep your books on Excel. I wrote my own little
system, but I am a programmer.
The important thing is to keep things simple, one folder containing
receipts/invoices for expenditure all numbered 1,2,3 etc, and another
for invoices sent out - and everything goes in the folder immediately.
It sounds obvious, but it is surprizing how many people make a mess of
it.
That system can work for quite a large company. The Medicis did not
know about computers - if they had done 'double entry' bookkeeping
would never have existed.
If you and your wife are not good at paperwork (or loathe it) then
consider hiring a bookkeeper (note: not an accountant). My somewhat
disorganized brother ran a smallish Ltd company for years like that.
Another tip is to be dead straight, if you can nick any cash without
it showing up, then go for it, but don't get cute with expenses or try
charging the grocery bill to the company. At some stage you will get a
VAT/National Insurance inspection (they are curiously interlinked). I
had two in ten years, and they went through /everything/. Another
reason for keeping really organized but simple books is that the
inspectors give a sigh of relief when they see them.
Don't get the idea that having a Ltd company entitles you to expenses,
the IR are wise to that one and have a little beauty called the P11d
that forces your company and you personally to declare everything -
even stuff you bought for the company and got re-imbursed for. You
then have to go through a rigmarole of declaring it and claiming it
back.
You will not be able to get a company credit card for some years, but
it is worth getting another personal credit card and using it as if it
were a company one. However you still need to religiously keep all
receipts, I recommend stapling small ones onto A4 paper and filing
them with all other expenditure.
ie: in the same file as inbound invoices
Company cars are not worth having, you can however do quite nicely out
of mileage. In my opinion this is stupid, because companies can
generally provide a car for far less than it costs an individual to
run one.
A company van is a different proposition.
At some stage you might consider becoming an employee along with your
wife, simply to get a flow of income out of the company (be very
careful about borrowing from the company). There is some sense in this
as declaring a small but 'average' income from employment tends to
make you less of a target. I happen to know that from a tax
inspectoress who has since turned poacher.
Also, recently they have been sending out menacing letters to self
employed people declaring GBP 15,000 p.a. or less.
It might be an idea to check out your local DTI small business centre.
Normally I consider such Government 'initiatives' a joke, but I've met
two guys from my local one, and was impressed - and I don't impress
easily.
Also, mixing with the local mafia is not necessarily a bad thing,
you'll make useful contacts - and it is handy to talk with people in
the same boat.
The main thing I have found is that if you keep really good records,
and are reasonably friendly with 'officials' they tend to, at worst
not give you grief, and can sometimes be helpful. Partly this is
because they have to inspect utter messes, so a neat set of books, a
cup of tea and a biscuit is a relief to them.
Partly because they are really after blatant fraudsters.
In my experience accountants are not much use. I have never had any
good advice from them, and generally found them to be glorified copy
typists.
However, they and the industry, surround themselves with a mystique
that allows them to charge ridiculous sums.
I sacked my last one when I found that I was paying GBP 800 to them
for something I could do in half a day on an Excel spreadsheet.
The problem is that there are various things that one needs to do,
none of them particularly complicated, but knowing what they are /is/
problematic.
For example I was blissfully unaware that I needed to pay Class 2(?)
National Insurance (about GBP 100 per year) until I found a reference
to it in the small print on a tax return.
Accountants know about these things - but they are an expensive and
parasitic source of knowledge.
Perhaps I should add that my (deceased) long term girlfriend was an
accountant, and that years ago I coached her through her
qualification. Fortunately I have forgotton most of what I got her to
translate into plain English so that we could both understand it, but
I do remember that there were no Damascene revelations. |
