I would like to set up my own Ltd Company. I am an employee working already for a company. My question is if I can be just the Director and develope and commercialize my own software (which would be enterely developed for me) without receiving any salary at all at the begining. I would get profit for my Ltd Company but I only would take the profits throught dividends as a shareholder. Or Do I need to be a employee of my own company?
Can a Ltd Company issue invoices without having any employee ...??only me, the Director???
Which Would be the cheapest way to do it?
Thanks
Bri
Replies (12)
Please login or register to join the discussion.
As a director, you will be an employee for most purposes.
You're not obliged to pay yourself a wage.
You don't give enough information to say whether it's the cheapest plan. In fact, at this stage, you probably don't have that information.
Go and see an accountant. If you're developing software, there could be a lot of money at stake if you're successful.
*Edited for the sake of clarity.
Your question indicates that you're not a qualified (or unqualified) accountant. In which case how are you going to do your own bookkeeping and accounts and corporation tax etc etc? Clearly you will need to appoint an accountant to help you with these matters.
So approaching someone now, before you make what could be very costly mistakes will be a valuable investment. And by the way - is your current employer happy with this idea?
Do you mean the cheapest way to do it today, or the cheapest in the long run?
For instance, not paying yourself a salary is one of the top 10 dumb things that new startups get wrong.
Go talk it over with an accountant. An initial consultation will probably be free, and any ongoing costs will be a lot cheaper than the mistakes you are going to make otherwise.
Do you mean the cheapest way to do it today, or the cheapest in the long run?
For instance, not paying yourself a salary is one of the top 10 dumb things that new startups get wrong.
Go talk it over with an accountant. An initial consultation will probably be free, and any ongoing costs will be a lot cheaper than the mistakes you are going to make otherwise.
Maybe/maybe not, but do note the OP appears to also have an employment which it is (slightly) inferred may be continuing, so processing a salary is not a slam dunk.
Not paying a salary may or may not be the right thing to do, if a salary could create losses the company would never use it may not be a great idea. Otherwise if you would receive dividends in excess of £5k per year then a salary may be a good idea since the tax rates on the optimal salary would be lower than tax rates on dividends. However please seek bespoke advice which should take into account your other taxable income and the date on which you became a Director.
You should also get advice from a lawyer on whether the software you are intending to develop will belong to your existing employer.
RM
Hi Bri,
Quick answers:
1. As a director you are an employee, but you don't have to take a salary (although in most cases it's advisable that you do)
2. Yes you can raise invoices without the need to have anyone (yourself included) on the payroll.
As for the cheapest (best?) way to do it I would need much more information!
As an accountant of 20 years, and product manager for business software for the last 10, I may be able to help advice you on the company setup and how to monetise your application.
You can contact me on 07974 717713 or [email protected] to discuss further.
Good luck!
Andy
Sell it, offer it for free but add adverts, offering it for free but sell users' data to marketing companies, etc.