I started my own limited company in June. In late June/July, I did some work for a client and invoiced through my limited company.
I have not yet set up any payroll or registered for PAYE. I am not going to be paid until August, so do I need to register with HMRC for PAYE before then? Or should I wait until my invoices are paid, then set up PAYE and pay myself salary?
Replies (9)
Please login or register to join the discussion.
Oh dear. Did you not appoint an accountant then? Have you at least taken advice on whether you are caught by IR35? And you really do need to learn to differentiate between yourself and your company. When you say "I am not going to be paid until August" you surely mean that the company is not going to be paid until August? Why does receiving a salary depend upon when the company is paid? If you were working in June and July surely it would have been sensible for the company to have started paying you then? I assume that you are intending to pay yourself over the cumulative NI threshold (otherwise you wouldn't need a PAYE scheme would you?), so it would have been sensible to register for PAYE right away and get familiar with BPT or whatever software you are intending to use. Remember that HMRC can take weeks or months to process anything nowadays so it is never too early to register for something.
Director's Loan Account
You can set up a Director's Loan Account in your accounting software and credit your salary there. You then withdraw it when money is available.
The company needs neither cash nor a bank account to pay you, since payment is made by book entries which allows you to lend the company the money to pay your salary. The net affect is that no money changes hands but the company has reduced its future taxable profits. This is standard practice for startups, and many owners do not actually remove any cash from the company for months or even years, but the book entries are still made to keep everything above board. No harm done since the company can start paying you right away. You will only need a PAYE scheme setup once you pay yourself above the NIC limit or if you have another job.
@rebel - muggles really should not try to dabble in accounting wizardry. Making money move invisibly from one place to another is what accountants do.
Please go speak to an accountant - there is not a single practising accountant on this forum who has not had to sort out, many times, the messes that are caused when businesses try to DIY there own DLAs and accounts. Sorting it out further down the line will be very costly.
Don't you just love the idea that as it is just done online it will be a breeze.
Granny and eggs comes to mind.
UK Business Forums
This kind of a query from someone running a business is dealt with regularly on UK Business Forums. Maybe Sift could put a link referring non accountants there on the signing up page.
Scalloway has suggested, in my opinion, a very good idea for deterring non-accountants from this site and should be very easy for Sift to implement.
When non-accountants post questions and don't receive their desired response, they often become abusive. We shouldn't have to see it.