We will soon be opening a delivery business. This is a new business which will be created as a limited company with 1 director and 1 employee. Could you please send us quote about your fees and services for small companies.
Also, company formation service if you do.’
I refer to our telephone conversation. I do understand that you need a little bit more time before you decide on your financial adviser.
I am happy to work with you until such time that you are at the stage to make a decision.
I also understand that you may wish to appoint an adviser close to you. I can assure you that you have as much proximity to advice with me as to anyone else.
At the start of a new business you need plenty of advice whether it be corporation tax/vat/payroll/personal tax planning and I want to do this for you until such time as you are ready/ or not to appoint me as your accountant.
Bookkeeping
Many companies now offer cloud computing and indeed this is one of the services that you can complete for yourselves. It will save you money and time.
Company formation
I would now like to turn my attention to the question of company formation being something that we discussed at length at the telephone.
Company structure
If both you and your wife are entering into this business together then it is wise that you are both directors of the company and hold one share each. It is better to have the registered office at a place not only where the management and control of the business takes place but also at where it is best that you receive all correspondence both from HMRC and Companies House and in my opinion that is your home address. If you are not sure how to best form your limited company then I can do this on your behalf at a cost of £75 being £30 for the costs of the company and £45 for my work (this excludes the company seal-which is something that you may like to consider if you think that sealing documents is something that is important to you.)
Otherwise you can complete this task yourself by going online at a formation agent and appoint both yourself and wife as directors and equal shareholders at 1 share each and elect your home address as your business registered office, That is all.
Once formed you can leave the rest of the work to me.
P & L forecast and cash flow forecast.
I would like to ask you if you have put together some sort of cash flow for the business as in this way you can organise in your mind whether the business is viable and cash generative. It will also help you if you are to seek funding for the business and in order to secure bank references should you find the need to secure business premises. Please note I am well used to compiling these for many start-up companies and have produced for 12-60 months at both monthly/yearly figures.
Vat registration
I have recently registered two different clients for vat. What you will need advice on is whether to opt for the normal method (collecting quartely inputs and outputs vat and paying/receiving the balance to HMRC); or instead the flat rate method (which then becomes automatically a fixed rate overhead for your business.)
I find that in start-up situations because the client has spent heavily on business purchases/business utilities/business equipment/legal costs, it is better at the beginning to opt for the normal method and then later on only if found better, to transfer instead to the fixed rate method for vat as in this way you have a set cost to the business each quarter. We can speak about this later.
Paye and monthly payroll
I can formulate and set up the payroll for the company. Directors can be on service contracts at £5,720 per annum as in this way there is nil tax and nil NIC both on the employees and on the company. Further income can be drawn as dividends (but please note that these are not tax deductible for corporation tax.) Therefore implicit is a corporation tax rate of 21% on extraction of dividends.
Annual returns plus registered office address
If required I can form this limited company for you. I can set up the registered office address for the business (it is better if this is your home address and I will explain this at our meeting.)
Annual return of the company
This is not completed until one calendar year after the formation of the company.
Financial statements/corporation tax return
Do not need to be prepared until the end of the financial year of the company.
Personal tax returns for the directors.
Only if the directors agree I will be able to enter into tax planning for the directors by completing their personal tax return forms.
These must be compiled and filed by 31 January following the end of the tax year and so therefore for the year ended 05 April 2011 must be filed by 31012012.
Bookkeeping
If you decide to be in charge of the bookkeeping of the business then I would like to both know and understand what bookkeeping system you plan to use and what software you plan to use. If however, you want some input from me on this then of course, I can go though the various software systems with you both.
Business Bank account
The best two banks in my opinion are either the Nat West Bank and/or the HSBC. Both have good online presence and excellent customer services.
My goals
My goals are to work with you at building your business rather than just presenting to you what services I have to offer. I do hope that this is acceptable to you.
REPRESENTING THE LIMITED COMPANY IN ITS CORPORATION TAX AFFAIRS
Leading on from my previous emails please note that I also need to have the UTR (unique tax reference number of the company ) in order to represent it in the corporation tax affairs of the company and so I look forward to you emailing this to me as soon as it is at hand.
The letter that you will receive from HMRC will have a series of questions on its second and final page that requires personal information on the directors of the company like the tax reference number of the current employers and your own NIC numbers and so these boxes must be completed. Please PDF this form to be before you sign and send it off to HMRC or even better PDF to me and I will send this off for you.
paye
Jonas will be quitting her current job to work full time in the café and will be taking a small wage to keep up her NIC contributions. I will continue to work in my current job as well as part time in the cafe. What do we need to do to set the PAYE scheme?’
Fine: would you agree with me that this email effectively gives me your instructions that you wish to set up a paye scheme for the company.
What I need is the UTR number for the company. Have you received from HMRC a communication asking you to complete a form that has written at its top the UTR (unique tax reference number) number of the company? It is 10 digits long.
Please let me know as soon as you can as if not then I need to contact them on your behalf for its re-issue.
(Please note that I have since telepehoned HMRC and discovered that no letter has been sent out to you but will be sent to you within the next 3-5 working days.) Once at hand please let me know this at once.
A paye scheme cannot be sent up for a company without a tax reference number for it. However do not worry as I will begin to start work at setting up for the company a P11 worksheet (a payroll worksheet that writes on it the weekly/monthly salary for Jonas.) Once the payroll number is set up, I can begin to produce payslips.
Paye tax Planning
I assume from your email that Jonas has not yet handed in her notice to her current employers. This is good as we are about 4 weeks away from a paye scheme for the company. Please remember to inform me of her leaving date from her employers and to retain all payslips and also to not forget to ask for her P45 form at the time of leaving -very, very important as without this it becomes very difficult to allocate the full personal allowance.
Do not worry about this: just follow my instructions and everything will be okay.
Once set up we will begin to discuss her monthly salary.
‘We will definitely need to register for VAT and will complete the form for you at some point this week.’
Be very careful about the page numbers that you need to go on to register for vat. If you like I can complete this task for you but it is better if I have proper written instructions from you at the time that you wish to register.
(hmrc.gov.uk https://registration/organisation?httpmethod=post)
My regards
David Barry
020 8252 7018/07877671423
davidbarryaccountants.co.uk
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