Wednesday, June 8th, 2022
Getting your children to help in your business is a useful way of getting an extra pair of hands for you and can earn them some extra pocket money. The money that you pay them will also be a tax-deductible expense in the business.
There are strict rules you must adhere to when employing your children (someone below the age of 18).
A permit is usually required from the local council’s education department before you can employ someone below the age of 16.
Age limits:
- Under 13:
- 13-year-olds:
- Can work part-time depending on local by-laws. There may be restrictions in place regarding working hours, conditions of work & type of work they can do.
- You should check first before employing your 13-year-old
- 14-year-olds:
- Can work part-time in areas considered ‘light’ (e.g office work, shelf stacking etc.)
- Can work in a café or restaurant but not in the kitchens.
- Children cannot work during school hours (except during weekends and school holidays) and can only work between 7am and 7pm
- They can work up to 2 hours per day on school days and Sundays and up to 5 hours per day on Saturdays and during school holidays
- They cannot work more than 12 hours per week during term time or 25 hours per week during school holidays.
- 15 – 17-year-olds:
- The same rules apply as above except for the following:
- They can work up to 2 hours per day on school days and Sundays and up to 8 hours per day on Saturdays and during school holidays
- They cannot work more than 12 hours per week during term time or 35 hours per week during school holidays.
How much can you pay?
- 13 – 15-year-olds:
- Not entitled to the minimum wage
- Do not pay National Insurance so they only need to be included on your payroll if their total income is over their personal allowance
- The rate paid must be commercially justifiable. It should be no more than you would pay a non-family member with the same level of skills and experience.
- 16- & 17-year-olds:
- Entitled to the national minimum wage
- If you are a registered employer, then you need to include them on your payroll.
- If you are not a registered employer but they earn above the Lower Earnings limit (currently £123 per week for 2022/23) then you will need to register as an employer and submit payroll reports to HMRC.
Employing your children can provide a financial benefit for both your business and your children. Please get in touch with us today if you would like any guidance on this subject.
Tuesday, April 12th, 2022
This information is aimed at small business owners who are both shareholders and directors of the Limited Company, whose main income is from the Limited Company.
You pay corporation tax on the profits made by your Limited Company at a current rate of 19%. Any profits made after this tax are generally available for you to take from the company.
Any money you take from the company then has tax implications on you personally.
There are three main ways to take money from your Limited Company – Salary, Dividend & Pension Contributions:
- Salary
- This involves taking the money as a wage and processing it through a payroll scheme.
- The most tax-efficient way to do this is to take a salary at the National Insurance secondary threshold – currently £9,100 per year.
- At this level of salary, there will be no Employers or Employee’s National Insurance to pay. If your personal allowance is not being used up by other income, then there will also be no PAYE to pay.
- The cost of the salary is a tax-deductible expense so you will save corporation tax of 19%.
- If your personal allowance is being used on other income, then you will pay PAYE on the salary at 20% (unless you are a higher rate taxpayer). It is still beneficial to take this salary as you will still be saving the corporation tax at 19%. Effectively you will be paying tax at 1% on your salary.
- Any salary taken over the £9,100 per year will pay Employees National Insurance @ 13.25% and Employers National Insurance @ 15.05% (but you may be entitled to employment allowance towards this cost if you have other employees). It, therefore, becomes less tax efficient to take salaries above this level.
- Dividends
- This involves paying money to yourself from the company as a dividend. This is then declared on your personal tax return as dividend income and is taxed as part of self-assessment.
- Dividend payments are not a tax-deductible expense and therefore you do not save 19% corporation tax. However, the rates of personal tax on dividend income are currently lower than on other forms of income.
- The most tax-efficient way to utilise dividends is to take a salary of £9,100 as mentioned above and then take the remaining profits as a dividend.
- There is an annual dividend allowance of £2,000 taxed at 0%. Any further dividend is taxed at 8.75% up to the basic rate band, 33.75% up to the higher rate band and 39.35% for additional rate income.
- It is important to note that dividends can only be paid if there are sufficient profits in the company. A dividend can not be taken if it would make the profit reserves of the company negative.
- Pension Contributions
- This involves the company making employer contributions into your pension.
- The payments are a tax-deductible expense and so will save 19% corporation tax.
- There is no limit as to how much a company can pay into the pension, but the amount should be justifiable as a reasonable remuneration for the work you do.
- It is also important that the pension payments are ‘wholly and exclusively for the purposes of the trade (for example, are other employees receiving comparable remuneration packages).
- We always recommend that you seek the advice of an Independent Financial Advisor regarding pension contributions.
Please get in touch with us and we will be happy to advise you on how to take your profits from your company in the most tax-efficient manner.
Tuesday, November 1st, 2016
Xero is a cloud-based approach to bookkeeping. It streamlines the most mundane parts of your book-keeping that every business loathes to do!
One of the prime features of Xero is the bank feed features. With some banks this can be done autonomously, with others it is a simple upload of the month’s transaction via a csv file. Then all that needs doing is tying up the transactions, which after a few months Xero starts learning where things have historically gone so starts to suggest items making reconciling your bank a breeze!
Another fantastic function of Xero are the sales features. You can email quotes to your customers who can approve them or discuss them online. You are notified when they have been approved so that you can convert them into sales invoices. These sales invoices can then be emailed direct to your customer, and you have the option to add a pay here button, so customers will be more inclined to pay straight away! Finally, if you have troublesome customers who do not pay, you can set Xero to forward reminder emails to ask for payment; this way clients will be continuously reminded and should start to pay you more promptly.
For those businesses who are continuously losing their purchase invoices Xero can help you. There is an option to upload files to Xero, which means you can take pictures of your invoices, upload them and then if they go missing you already have a copy in your bookkeeping! You can even go one step further and ask suppliers to email a unique email address which will automatically upload the invoices to your Xero account.
For those of you that wish to see your book-keeping on the go, there is even an App available for Android and Apple users. From this app you can send sales invoices, reconcile your bank and even upload your personal expenses for the business by taking a picture of the invoice for your cup of coffee or train ticket!
As you can see here at Cheadles, we are very excited by Xero, if you wish for a short demo we are happy to show you how it can help your business in ways, you will not have thought of tadalafil 10mg. Contact us on 01785 254550 to arrange a demo at our offices near Stafford Town Centre. Or read further information on Xero
