Staring New owned Company but am employed elsewhere - Potenial Tax issues?

[BrightIdea]

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Hi All.

Quick Question, I wonder if any one has ever been in the same boat as me. Your help or advice would be greatly appreciated.

Here's the Scenario:
I Work Full time for an online operator.

Moving forward and thinking about my future career:
I Wish to, whilst working full time (as I am relatively new to this and I need my salary as a revenue stream) start my own PLC company and become an Affiliate. Problem is, does anyone know if this is something I would (Have to) declare to my current company, as potentially in the future it could/would seriously disprupt any tax brackets at the full time work place? Anything glaringly obvious I am overlooking? If so, are there ways around this?

Thanks alot

[Stuart]

Hi,

Its easy you just need to decide if you are going to be a self employed sole trader or a Ltd company (not a PLC) as that would mean being public and floating on the stock exchange...

As a self employed individual you have to declare any additional earnings over and above your day job salary, this can be done via a personal tax return.

As a Limited company, the company would pay you a salary (funds permitting) and then the company would pay the tax and NI - you need an accounant to do this and file the accounts with companies house, once a year.

I would get an accountant either way, they can advise on the best route Sole trader or Ltd company and the advantages or disadvantages of both.

Br
Stuart

[Mogga]

Your current employer may have something to say if it's in a similar field.

You should take advice from an accountant about the best way of doing things.

[BrightIdea]

Hi Huys,

Really thanks for the pointers, I will set about doing this first. As it's a new venture, I want to makesure everything is done correctly from the off set.

Cheers!

[hrbs]

Hi

As Mogga rightly said, your employer may not be happy.
Check your employment contract and employee handbook.
Some employers are OK as long as you are not competing with them and/or do not use their time or resources for your own business (including emailing/calling from work, checking stats, updating content etc). Check thoroughly as it could be a sacking offence.

For help on how to set up and run a limited company, check out my free guides at http://tips.hrbs.biz/limited-company/ before you do it. You could save yourself some time, money and stress.

You will need a company bank account which, depending upon the bank, can take several weeks to open.

Briefly on the tax front ...
The company will be taxed at 21% on its profits (assuming profits below £300k) . The company's tax bill will be payable 9 months + 1 day after it's accounting year ie different to the rules for personal tax where payments are made on account.

You will only be taxed if you take money (or benefits) from the company eg salary and dividends. As you already have fulltime employment it would probably not be worth taking a salary from your company.

Dividends can only be paid if the company has sufficient profits after tax, so you may not be able to draw a dividend for a few months or more. [Dividends are a distribution of profits to its shareholders after accounting for the company's tax bill].

For personal tax, you are treated as receiving the gross dividend ie including the 10% tax credit. So for a £9k (net) dividend paid by the company, the gross dividend is £10k.
If you are currently a higher rate tax payer, dividends will be taxed at an effective rate of 25% of the net dividend. Any dividends that you receive that are covered by your basic rate band will not be taxable.


Good luck

Keith
http://HRBS.biz

[BrightIdea]

Hi Keith,

Thanks for your reply - You've certianly helped and I will definitely seek to open my own company and start this way. All is above board with the current employer now too which has worked in my favour:tup

Ill check out your link and guides tonight.

Thanks again guys!

Have a good evening