Limited Company, Non-Resident, Taxes & Salary.

Looking to form a Limited company, Am I right about the tax requirements? What should I expect?

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Hello,

I am looking to form a Limited Company in the UK as a foreigner.
I am aware of the formation costs, and requirements.

I want to sell subscription to a Software that I made, for €2, €5, and €10 a month (I've read that I can bill in EUROs)
And the billing will be automated using the known system "WHMCS" which generates invoices automatically.

I am expectiong to make no more than €1000 a month (some sort of a side hassle), So I am not expecting to register for VAT.

I understood that under those conditions I am obliged to submit Annual Accounts, Corporation Tax Return (CT600), and Confirmation Statement only.

My questions are:

1. In terms of book-keeping, are the WHMCS invoices any good?
If no, is it okay to replicate the same invoice with the same invoice number on Xero or QuickBooks? is that a good practice?
Would appriciate to get an advice on that.

2. I've found services that can do the annual requirements for £300 to £500 a year (Annual Accounts, Corporation Tax Return (CT600)).
Is that really what I should expect to pay for an accountant assuming I am using a book-keeping software? Does it usually matter how many invoices I got?
Where I'm from we are billed per invoices, 300 invoices a month of €2, would make the business unprofitable due to accountant costs.

3. Lastly, regarding the director salary.
Can I pay myself over IBAN to a bank account not in the UK? will I owe taxes to the UK as non-resident with no physical business activity in the UK?
Assuming that I will handle the local tax requirements with a local accountant of course.

Thank you very much in advance.

Replies (16)

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By WhichTyler
21st Jun 2024 09:20

Congratulations on starting your business, but you will need to engage a UK accountant to make sure everything is covered correctly as it is too complex for a forum and needs more information than you have given

One of the questions that accountant might ask is " if you are based overseas, trading globally over the internet, and billing in €, why do you want a UK company?"

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Replying to WhichTyler:
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By seande
21st Jun 2024 11:23

WhichTyler wrote:

Congratulations on starting your business, but you will need to engage a UK accountant to make sure everything is covered correctly as it is too complex for a forum and needs more information than you have given

One of the questions that accountant might ask is " if you are based overseas, trading globally over the internet, and billing in €, why do you want a UK company?"

Thanks.
What price range should I be expecting to pay for a good accountant?
And what would be the best way to look for good accounting companies?
For a company that makes ~10K a year maximum.

The reason I am not forming one here, is because it's far more expensive and if my idea will fail I will end up losing probably 5 times more just on forming fees and accountant cost.

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By ireallyshouldknowthisbut
21st Jun 2024 11:03

."I've found services that can do the annual requirements for £300 to £500 a year (Annual Accounts, Corporation Tax Return (CT600))"

You will also find they are completely hopeless cowboy outfits who do nothing other than crunch numbers without knowing what numbers should be crunched.

Going rate is around £1k+VAT as a minimum. if you speak to a proffesional accountant now, not one of the people who churn out rubbish for low fees, you will almost certainly find the last thing you want to do is set up a UK company in the circumstances you describe.

Thanks (3)
Replying to ireallyshouldknowthisbut:
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By seande
21st Jun 2024 11:32

I understand.
You mean 1K a year? Like £130-£150 +VAT per month accountant would do?

Regarding "the last thing you want to do is set up a UK company in the circumstances you describe", is that because I mentioned a x3 lower price?
Because here an accountant would go for ~£250 per month at least, even if I make just £300 a month.
So anything cheaper would probably work for me.

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Replying to seande:
By ireallyshouldknowthisbut
21st Jun 2024 12:20

seande wrote:

I understand.
You mean 1K a year? Like £130-£150 +VAT per month accountant would do?

Regarding "the last thing you want to do is set up a UK company in the circumstances you describe", is that because I mentioned a x3 lower price?
Because here an accountant would go for ~£250 per month at least, even if I make just £300 a month.
So anything cheaper would probably work for me.

Yes the fees you should be paying an accountant are arond £1k a year for anyone of any competence to act for a limited company. Under that level and you are into people who quite fankly shouldnt be offering those services. You have a major issue about tax residency for exampe which is likely to not even register on the minds of people who do company accounts for £300 as they wont even understand the problem.

As you note it may be uneconomic to set up a UK company as your size of ventue with UK advice alone, let alone locally.

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By Tax Dragon
21st Jun 2024 11:11

Have you taken foreign advice?

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Replying to Tax Dragon:
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By seande
21st Jun 2024 11:23

Not sure what you mean by that, so I'd go with no.

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Replying to seande:
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By Tax Dragon
21st Jun 2024 11:27

Maybe you should.

Take advice where you live, I mean.

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Replying to Tax Dragon:
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By seande
21st Jun 2024 11:38

Ah, Yes, I did.
An accountant here would be ~£250 per month at least,
even if I make just £100 a month.
Incorporation cost is about £1000, and then about £500 per year.
So anything cheaper would probably work for me.

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Replying to seande:
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By Tax Dragon
21st Jun 2024 11:47

I imagine that where you live will want to tax a UK company you own. A UK accountant may not be competent to make the required tax reports. So it might not turn out to be cheaper.

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Caroline
By accountantccole
21st Jun 2024 12:04

If you are based overseas and are controlling your UK business from overseas, the chances are you have a branch wherever you are based. This would mean a proportion, if not all of your profits would be taxed where you are, you'd still need to do local reporting as well as UK reporting. The min £1k fees quoted here by others are likely to be significantly higher if you need liaison with a foreign accountant. For £10k pa income, it sounds like a hassle to structure it like this!

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Caroline
By accountantccole
21st Jun 2024 12:08

You haven't said whether your sales are B2B or B2C.
VAT may be a consideration even at low levels if the Ltd co is selling into Europe B2C.

https://www.gov.uk/guidance/the-vat-rules-if-you-supply-digital-services...

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By Paul Crowley
21st Jun 2024 14:05

'(some sort of a side hassle), So I am not expecting to register for VAT.'
This could be quite a hassle for you.
Selling internationally will cause all sorts of VAT type problems.

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DougScott
By Dougscott
21st Jun 2024 14:26

Why have a company at all? Just sell as an individual.

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VAT
By Jason Croke
21st Jun 2024 15:01

You may want to double check on the not registering for VAT thing....non resident Director = non resident company for VAT purposes, Nil VAT threshold.

As others are saying, just do this as a sole trader in your own Country, your idea to go a UK route as it is cheaper is not correct. You'll not be able to open a UK bank as UK banks very reluctant to open accounts for non residents so you'll have to use Monzo or a Wise and then get it gets complicated.

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VAT
By Jason Croke
21st Jun 2024 15:02

.

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