Jump to content

Don't want to see ads? Become a subscribed member.

CASH PAYMENTS-LIMITED COMPANY


Tyler.saward

Recommended Posts

Hi guys, I’m really struggling to find any good information so hopefully you guys can help. I’ve just started my own window cleaning company at 19 so bit knowledge less in accounting area 

 

So I’ve been canvassing getting work booked in to got a few to do now and most have said they’ll do cash which is fine so what’s the protocol with a limited company as we currently have an online bank(ANNA) so say I’ve done 5 jobs one day at £20 each = £100 would you at end of each day deposit that into the business account or weekly? Monthly?

also once depositing that money do I have to make an invoice on the app for each job I’ve done for that £100 to account for it?

 

anyone know the threshold for a new limited company for paying tax or do you start paying straight away? 20% if I’m right? 
 

lastly once the moneys in the bank how do I go about withdrawing this money as I understand you can’t just transfer it to a personal account if I’m right 

 

thank you for taking the time to help me appreciate it! 

Link to comment

First things first, you need to visit an accountant. Their time is usually free for the initial meeting and you will be able to get a quote for future tax returns. I would expect you're going to get differing opinions on things on here. If you look through previous similar posts you will see that some get quite flippant about it as they understand it all and find it an easy topic to understand, you (Much like myself) clearly do not. 

Second thing I would say is you don't actually need to be a limited company. You're going to end up paying corporation tax, filling in different confirmation statements and the like for companies house, etc etc. The accountant would be able to tell you more, you should be fine as a sole trader for a while. Also the accounting fees of a sole trader are substantially lower than that of a limited company. As a sole trader every bit of profit you earn is yours, you pay tax on it in Jan 22 just as you would a normal wage. The only difference is your employer isn't taking the tax out for you.

Edited by P4dstar
  • Agree 2
Link to comment

Baffled as to why you have gone Ltd straight off as it ain't all it's cracked up to be as they have changed things in recent years hopefully you haven't registered your business as Ltd already with HMRC,

Paying yourself a low wage through a Ltd company to reduce tax liability will limit your ability to get credit of any form such as van finance a mortgage in the future, this is what was basically outlined to me last year so I'll stay as a sole trader. 

Link to comment

On your first question, you can bank when ever you like. I record all my sales data on a spreadsheet which is broken up in to weeks. So I try to bank each week, but you can leave it, and do a few weeks together.

Let us know what app your using?

I am a sole trader so can't advise too much on limited companies, but I would second others recommendations to visit an accountant.

Any money in your account can be transfered into a personal account. Most business accounts have charges, so look into this. We are around £600 a year in bank charges.

As mentioned your accountants fees would be allot less if you started as a sole trader, but as far as I am aware there is very little difference from a tax point of view between Sole Trader and Ltd. It did used to be advantageous to go ltd, but they changed the rules to level the playing field a bit on this. 

 

Link to comment

Don't go Limited, if you have just stop trading as a Limited company and be a Sole Trader. 

If you stay as a Limited Company you will need to register with HMRC and register to notify them of your monthly wages. If you pay yourself over a certain amount, I believe around £160 per week but get this confirmed, your company has to pay NI to the HMRC. Then if you go over £183 you have to pay NI, then if your salary goes over £1045 per month you have to start paying tax. Now you can do all of the above or pay an Accountant to do it.

If you go as a sole trader you need to keep the same receipts and once a year pay an Accountant to do your figures. Far easier to do and you can then spend your time building your business rather then doing paperwork.

  • Like 2
Link to comment
3 hours ago, P4dstar said:

First things first, you need to visit an accountant. Their time is usually free for the initial meeting and you will be able to get a quote for future tax returns. I would expect you're going to get differing opinions on things on here. If you look through previous similar posts you will see that some get quite flippant about it as they understand it all and find it an easy topic to understand, you (Much like myself) clearly do not. 

Second thing I would say is you don't actually need to be a limited company. You're going to end up paying corporation tax, filling in different confirmation statements and the like for companies house, etc etc. The accountant would be able to tell you more, you should be fine as a sole trader for a while. Also the accounting fees of a sole trader are substantially lower than that of a limited company. As a sole trader every bit of profit you earn is yours, you pay tax on it in Jan 22 just as you would a normal wage. The only difference is your employer isn't taking the tax out for you.

Yeah I’m gonna have to look into an accountant, on the limited side of things it wasn’t actually my choice because I didn’t fully fund the setup I had to find someone that would abs that was a clause that it had to be ltd

1 hour ago, Part Timer said:

Don't go Limited, if you have just stop trading as a Limited company and be a Sole Trader. 

If you stay as a Limited Company you will need to register with HMRC and register to notify them of your monthly wages. If you pay yourself over a certain amount, I believe around £160 per week but get this confirmed, your company has to pay NI to the HMRC. Then if you go over £183 you have to pay NI, then if your salary goes over £1045 per month you have to start paying tax. Now you can do all of the above or pay an Accountant to do it.

If you go as a sole trader you need to keep the same receipts and once a year pay an Accountant to do your figures. Far easier to do and you can then spend your time building your business rather then doing paperwork.

Yeah I’m gonna have to look into an accountant, on the limited side of things it wasn’t actually my choice because I didn’t fully fund the setup I had to find someone that would abs that was a clause that it had to be ltd

thanks for those figures so much stuff online just none of it I could find that relates to my situation 

Link to comment
1 hour ago, laddergarder said:

On your first question, you can bank when ever you like. I record all my sales data on a spreadsheet which is broken up in to weeks. So I try to bank each week, but you can leave it, and do a few weeks together.

Let us know what app your using?

I am a sole trader so can't advise too much on limited companies, but I would second others recommendations to visit an accountant.

Any money in your account can be transfered into a personal account. Most business accounts have charges, so look into this. We are around £600 a year in bank charges.

As mentioned your accountants fees would be allot less if you started as a sole trader, but as far as I am aware there is very little difference from a tax point of view between Sole Trader and Ltd. It did used to be advantageous to go ltd, but they changed the rules to level the playing field a bit on this. 

 

Okay so I was thinking of doing it weekly and in current using pad and pen to write all jobs down so at end of each week I’ll just write down how much I’ve earned on each week,

 

I'm using ANNA online bank app, yeah I’m gonna have to look into an accountant 

 

thank you 

2 hours ago, Iron Giant said:

Baffled as to why you have gone Ltd straight off as it ain't all it's cracked up to be as they have changed things in recent years hopefully you haven't registered your business as Ltd already with HMRC,

Paying yourself a low wage through a Ltd company to reduce tax liability will limit your ability to get credit of any form such as van finance a mortgage in the future, this is what was basically outlined to me last year so I'll stay as a sole trader. 

It’s all registered since December 1st just hasn’t made a lot of money yet, it wasn’t actually my choice I’d of gone sole trader if it was me but I didn’t fully fund the business so they wanted it ltd for some reason 

Link to comment
3 hours ago, P4dstar said:

First things first, you need to visit an accountant. Their time is usually free for the initial meeting and you will be able to get a quote for future tax returns. I would expect you're going to get differing opinions on things on here. If you look through previous similar posts you will see that some get quite flippant about it as they understand it all and find it an easy topic to understand, you (Much like myself) clearly do not. 

Second thing I would say is you don't actually need to be a limited company. You're going to end up paying corporation tax, filling in different confirmation statements and the like for companies house, etc etc. The accountant would be able to tell you more, you should be fine as a sole trader for a while. Also the accounting fees of a sole trader are substantially lower than that of a limited company. As a sole trader every bit of profit you earn is yours, you pay tax on it in Jan 22 just as you would a normal wage. The only difference is your employer isn't taking the tax out for you.

Thanks for this, yeah I know I’d of preferred sole trader but it wasn’t my choice in the end of things so I’m just working with what I’ve got and I’ll deal with it, better than having nothing eh😂 I’m going to look into accountant 

Link to comment

You will need to invoice each job, get Quick Books or something equivalent. Either pay the cash into your bank account and then do a transfer into the business account, get customers to pay the business account direct. Or use the cash for your diesel and wages as I doubt you'll be doing enough for the first few months.

Edited by Part Timer
Link to comment
52 minutes ago, Part Timer said:

You will need to invoice each job, get Quick Books or something equivalent. Either pay the cash into your bank account and then do a transfer into the business account, get customers to pay the business account direct. Or use the cash for your diesel and wages as I doubt you'll be doing enough for the first few months.

Yeah I thought as much my banking app lets me create invoices it’s jusy a pain it makes them then wants them to pay it then makes me mark as paid abs sends me about 3 emails lol 😂

 

yu saying to not declare anything to the bank until making decent amount?

Link to comment

I am not sure what you've got into there, but alarm bells are ringing with me.

You said you didn't fully fund the business, and were not given a choice to go sole trader. Have you set with a pal, thats put some money in or something?

I manage around 600 clients. I did start with a diary, then spreadsheet of rounds, now I use an app called cleaner planner. Really great app, lets you take direct debit payments. But pen and paper will work fine to begin with.

I would still get a summary if your sales and expenses on a spreadsheet to make life easy for your accountant though.

 

Edited by laddergarder
  • Agree 2
Link to comment
2 hours ago, Tyler.saward said:

yu saying to not declare anything to the bank until making decent amount?

You don't have to tell the bank anything it's only a vehicle to save and spend money with, unless you've borrowed money from them. To save you hassle, inconvenience and probably bank charges, use your personal bank for cash payments and transfer from your account to your Business Account. Do however try and keep this to one transaction a week and log the amounts.

Link to comment

Speak to an accountant. Basically you have to fill in a tax return each year listing your income and your expenditure. Then you get a tax bill. If you are ltd then your company should be paying you on PAYE and you are employed. So again you have the PAYE rules to be followed. Again with ltd you have national insurance and pension rules to follow.

It is fairly simple but you need to follow the rules and an accountant is best placed to inform you of these rules.

Link to comment

Sounds like you've set up, to take all your payments electronically through an app provided by your bank, which isn't to working great, by what you've said.

If you want to take cash, your going to have to go with a highstreet bank account, so you can deposit sales. A current account may not be ideal for this. Really depends on how much cash your taking in.

If you want to go cashless, cleaner planner with direct debit payments through gocardless is a great option, which will work well with your online bank. This is what I do. About 1/4 of my customer pay by DD.

 

Link to comment
5 hours ago, laddergarder said:

I am not sure what you've got into there, but alarm bells are ringing with me.

Totally agree, 

Here we have a 19 year old lad who didn't understand what he was getting into and clearly doesn't understand the basics of running a business, let's hope he ain't been done up like a kipper, Whoever has put the funds up could have a hold over him for the forseeable future. 

@Tyler.saward I'd get out of this asap and go solo if I was you. 

  • Like 1
Link to comment
4 minutes ago, Iron Giant said:

Totally agree, 

Here we have a 19 year old lad who didn't understand what he was getting into and clearly doesn't understand the basics of running a business, let's hope he ain't been done up like a kipper, Whoever has put the funds up could have a hold over him for the forseeable future. 

@Tyler.saward I'd get out of this asap and go solo if I was you. 

I might be a grant or something he has taken, and been given bad advise, just sounds concerning to me how he has written that, curious to what he's got into there.

Hopefully he's not got himself into too much debt from the get go.

Link to comment
1 minute ago, laddergarder said:

I might be a grant or something he has taken, and been given bad advise, just sounds concerning to me how he has written that, curious to what he's got into there.

Hopefully he's not got himself into too much debt from the get go.

I doubt it's a Government grant he has got, when he said it was a condition of funding for him to go Ltd, something doesn't sound right at all, 

What source of funding would insist on how he is to set his business up I am guessing the kind of funding that doesn't come from a bank or a grant. 

  • Like 1
Link to comment

Taking a punt at it I would say it's a private investor that is worried about some sort of comeback on him if it goes tit's up so has told the OP to go ltd in a way for the lender to protect his personal assets? 

Link to comment
22 minutes ago, Iron Giant said:

I doubt it's a Government grant he has got, when he said it was a condition of funding for him to go Ltd, something doesn't sound right at all, 

What source of funding would insist on how he is to set his business up I am guessing the kind of funding that doesn't come from a bank or a grant. 

I was guessing they advised wrongly that he had to go ltd to get grant or loan etc. But who know. Maybe he will clarify.

Link to comment
1 hour ago, Iron Giant said:

Totally agree, 

Here we have a 19 year old lad who didn't understand what he was getting into and clearly doesn't understand the basics of running a business, let's hope he ain't been done up like a kipper, Whoever has put the funds up could have a hold over him for the forseeable future. 

@Tyler.saward I'd get out of this asap and go solo if I was you. 

I thank you for the concern but I have stuccoed business studies for 3 years at a level 3 diploma of business just not as in depth as an Uni degree which would give you to have knowledge to run a business with it without seeking support, I’m very good friends with the person who helped set it all all and he is part of the company until whenever and if it goes off and I can buy him out which we’ve agreed on in writing but until then he is part of it with shares which is why it’s LTd in case we go bust or debt ect as ltd is it own identity. I hope this clear things up

47 minutes ago, laddergarder said:

I was guessing they advised wrongly that he had to go ltd to get grant or loan etc. But who know. Maybe he will clarify.

I’ve clarified in comments above just posted 🙂

58 minutes ago, Mx19 said:

Taking a punt at it I would say it's a private investor that is worried about some sort of comeback on him if it goes tit's up so has told the OP to go ltd in a way for the lender to protect his personal assets? 

Yes basically that’s correct just to protect us both really there advantages and disadvantages I know that but I’m working with what I’ve got just need answer to those questions and I’ll be all good to go really 🙃🙂

Link to comment

Don't want to see ads? Become a subscribed member.


Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Restore formatting

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.

Ad Blocker Detected

Please disable your ad blocker

Our forum relies on ads to pay for the servers and our time maintaining and running the forum.

Sadly running a forum like this is not free, and due to our popularity, we need servers that can handle the amount of traffic and resources our forum uses.

 

If you do not wish to see ads on our site, please consider supporting the forum with a membership subscription.

 

Accept