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Optimum Professional Services are delighted to launch the new monthly conversational series, “Optimum: LIVE!” which will provide the opportunity for you to hear from members of the Optimum team and special guests each month as they delve into a variety of subjects in light-hearted, fire-side chat style productions.
Each episode will be shot or broadcast live (yep! One take!) which means that it is not scripted or edited and has a more natural and engaging tone.
This is a https://www.visual-pr.co.uk production
Thank you.
Bye.
Greetings,
welcome to episode nine of Optimum Life.
This one's quite a beefy one, this one.
We're really going to get
into something interesting
that when the guys bought this one up,
it resonated me as the business owner,
as a solopreneur to limited company,
all of those things with so
much changing around our
country at the moment,
some of which might not
even make it into this show
because they're just
changing at the moment, as we know.
But the good news is the
guys that put the pressure
on me for this to be the
concept of the show,
they're with me as well for this one.
So I'm going to introduce
the full group that's here.
We've got Mike Blakon and Rob Stokes.
Greetings, gents.
Yeah, afternoon.
Yeah, I wasn't sure.
I was trying to remember,
is it morning or afternoon?
It's afternoon now.
Good afternoon to us.
Good afternoon.
This is the first time that
you've done it face-to-face, isn't it,
this year?
It is, yeah.
Well, the previous time was at Christmas,
yeah,
and I was in the office with my
silly hat and jumper.
Yeah, I was going to say, with a pint,
that was all right.
It was the Christmas celebration,
and you asked me yesterday,
can I have a can again?
No, Rob, no.
It's a stressful topic.
It really is.
I mean, in a synopsis, Mike,
before we get to each point
in a bit more detail,
I'm going to throw you under the bus here.
It was your idea is the fact
that there's a lot of
things are changing that
gives food for thought.
But what was your real
motivation for this subject,
the future of the limited company?
There's a lot more questions
being asked from clients saying,
should I still be a limited company?
Is it still working?
The big drive before was savings and tax.
It's not as much.
Tax rates have gone up heavily.
Anyone who's got a limited
company should have
realised by now that
they're paying a lot more in tax.
So it's more of, is it right?
Is it fit for purpose now?
Is it doing what you need it to?
Because the tax havens that
might have been the driver
before isn't now.
It kind of picks up on the
business plan before.
Is what you're doing still
right for what you set out to do?
thankfully we're going to
break that into a whole
load of different bits and
pieces as we go and for
everybody watching if
you've got questions please
if you're watching on
youtube facebook linkedin
put the questions in
because they will pop up
pop up it's easy for me to
say on my my monitor here
and I'll be able to put
them up on the screen and
we can ask the questions
and answer the questions
live hopefully is the plan
First one, I mean,
I possibly put this as too
generic a statement then.
Is LLP becoming more
attractive than limited?
First question then,
which of you should I put this to?
Explain an LLP.
Yeah, absolutely.
That was the first point I
think is let's set the
scene in terms of limited company.
Quite often it's just one individual.
And apart from the tax
advantages that Mike's talked about,
there's the limitation of liability.
So things go wrong.
It's its own legal entity.
That's primarily what's at risk.
LLP is kind of a stepping
stone from partnerships up
to a limited company.
So an LLP is at least two members,
hence the partnership element to it.
You get the limited liability wrapper.
but it's not as
all-encompassing as the limited company.
So for an LLP,
if you've not withdrawn all
of the profits,
whatever's sitting in there
is effectively the owner's earnings.
That's at risk because it's
still in the entity.
Right.
So it does offer the
limitation of liability.
It's not as encompassing as
the legal limitation in a company.
Because people like yourselves, I mean,
are you guys an LLP?
No.
No.
I was about to say quite
often that you see
solicitors and things like
that would be an LLP.
It is something.
I think the stats are around 80%,
90% of LLPs are
professional service firms.
Yeah.
And I think a lot of that is
around the fact that
historically they would
have been partnerships.
But the limitation of
liability wrapper has been gone.
Okay.
Accountants,
solicitors quite often get
sued by clients if something goes wrong,
like particularly, I don't know,
the conveyancing change,
something goes wrong and
something has been missed, they get sued.
As an ordinary partnership,
you're at risk yourselves, individuals,
whereas the LLP puts that
limitation of liability on there.
So it's kind of a no brainer
for a lot of partnerships
in professional services,
particularly to transition that way.
Please tell me to move on if needs be,
but I'm going to raise the question then,
why are you guys limited rather than NLP?
Do you not know?
Is it going back too far?
It was set up when we joined.
It was that way.
But I suspect a lot of that
was to do with simplifying shareholdings,
that kind of stuff,
making it really simple for
all of the members to go, right,
this is what our earnings
are going to be.
uh I think I think from a a
new viewpoint the the the
simplicity is easy it's
more simple than a limited
company in an lrp the
structure is just slightly
different yeah there's a
little bit more to it and
so it's just it's yeah it's
a lot more straightforward
than limited company okay
and so once you expect I
think like I said when
you've got the ones
transitioning from from before
naturally rolls into an LLP
when they come from a
traditional partnership.
But when you start from a clean break,
most people now jump into a
limited company.
That's been the way, the general move.
I had someone for the first
time say about LLP back a
couple of weeks ago,
and he was expecting
everyone had done it.
because it all seemed like
an unlimited company was
this big thing that was
very complicated and very technical.
And I explained actually
that there's a handful of
clients we've got that are
LLPs and the majority are
limited companies.
For him, it was quite high.
Oh, wow.
Okay.
I think for us as well,
bearing in mind that we're
legal and accounting and audit,
We've got a variety of regulators as well.
So we've got a group
structure and it's a lot
simpler to do the group
structure as well with a
limited company to enable
our regulators to be approving of us.
Got you.
Yeah, that makes sense.
I mean, it isn't a straightforward thing.
And what I suggest is a key
comment to make is that if
anybody is trying to decide
was about to say try setting
something up and they're
trying to decide which way
to go come and speak to you
and know that there's a
conversation there to be
had but equally if um there
is a um I guess it's a
question first of all can
you change from a limited to an llp
Yeah, you can do.
It's not a simple process,
but there is a mechanism
we've come to this house
for undertaking that exercise.
Okay.
And we're about to get
deeper into this about why
anybody would even consider it.
So that's where we start
getting meaty into this.
You made the comment that
said would need at least two partners.
So if I take an example is
that my own limited company
is we've got myself and my
wife directors of it,
then we would turn around
and be the two partners in the LLP.
yes and no because it's
effectively the members of
a partnership are the
shareholders of a limited
company yeah not
necessarily because not all
directors are shareholders
and vice versa yeah so but
if you and your wife are
both directors and
shareholders then yes you
would become the members of a NLP
and that's that's an
important bit with a
limited company is people
don't realize the
difference so as a direct
as a someone operates
through a limited company
for yourself you've got two
hats on the first time you
have on you're a director
of the company you're an
employee you're in charge
of running the business in
the best interest of the
people who own it one hat
off next one hat on you're
a shareholder you
own a business right okay
and that's your two roles
that you've got of a
limited company but people
um distinct like put the
the two kind of replace
each other in the way they
talk they don't realize
there's a there's a
difference so for example
like you have a lot
directors of the big plc
companies but they're not
necessarily all
shareholders they're in
their employees in charge
of running the business for
the thousands of owners of
the business in those plcs
and it's no different to a
limited company it's just
on a much smaller scale
both we're both people and
you don't tend to make a
big thing of this
distinguishing from
difference and that's why
for a limited company you
get a salary a small salary
because that's your
director's salary for an
employee that gets your tax
that's your tax advantage
and your stamp for state
pension which we'll come on
to later and then as a this
top up is your dividends
which is your return on so
you don't get that if it's
an llp no you just get a profit share
So when you're kind of
talking tax and earnings,
an LLP is supposed to be as
known as a tax transparent
entity because each year
there's taxable profits and
those taxable profits are
split according to the
partnership agreement and
taxable in full on each of the partners.
Right.
According to your split.
So for example, you and your wife,
if it was 60-40,
in favor of your wife,
she would have the 60% tax
charge would be her personally,
and you would end up with the 40%.
And that's whether you spend
it or take it out of business or not,
you get charged.
So as a partnership, you get taxed.
Same as a sole trader,
you get taxed on how much
money you make that year,
whether you spent it or not.
So this is where with a sole
trader partnerships, so an LLP,
your income can be going like this.
If you have one good year, one bad,
rather with a limited company,
whilst you pay a straight
tax on the corporation tax,
what you take out,
we can smooth it out through dividends.
And that's what our job is to do,
is to make sure that your
personal tax has been controlled.
You can't do that so much in
an LLP because you just get
taxed regardless of what you made.
So whether one year you have
100 grand earnings and next
year you have 10,
you've paid higher rate in
one year and lower rate in the next year,
but we haven't smoothed it out.
I think one of the key
things I'm going to jump in
with now is that we've
trying to not we need to
make sure we don't take
this into a full lesson on
because we're going to go
down a million rabbit holes
there aren't we
And I guess what is a key
thing in these short videos,
or too short for this kind of depth,
I guess,
is know that there's a
conversation there to be had.
I know we're going to go into it deeper,
but is there a simple thing
that would be a trigger to
someone that says,
if this is the case or if this happens,
come to us and have that conversation?
So there tends to be with a
limited company if they're
looking at which one.
So if they're...
If you're going to take all
the money out of the business,
like all the time, if you make £100,000,
you're going to take £100,000.
If you take £10,000,
you're going to take £10,000.
That tends to go towards a
partnership because you're
just getting taxed on full
because you got the two
taxes with a company and personal tax.
a limited company you're
going to make more than you
take the limited companies
benefit but also if you've
got the future that you're
thinking of selling it it's
easier to sell limited
company shirts than you are
to sell your stake in a
partnership right and so it
tends to be that's why the
flexibility is a little bit
easier with a limited
company even though people
think it's big complex
situation actually it's
it's not yeah it's a train
on tracks basically yeah
yeah and because we it's
our bread and butter stuff we and that
technical bit that if you
google it what's limited
company you get scared
scared of everything that's
on there that's what we
deal with we deal with that
stress and understanding of
it making sure you're in
the right direction okay
okay for me it is about
that long-term thinking
what are you aiming to
achieve by setting up your business
is it something that you're
just going to keep running
it's effectively your
lifestyle business and it's
just there to provide you
with an income up to your
time that you want to hang
up the tools so to speak or
are you actually intending
building something that you
want to then transition onto somebody
Okay, okay.
And an LLP,
this is going to be a really
stupid question,
but you know I'm good at these,
is an LLP as well as
departments still has employees as well?
Yep.
Everything else will be the same.
BAT rules are the same.
Employee rules are all the same.
Everything's exactly the same.
Okay.
I'm going to just pause for
one second because we did have a,
not that you'd have known other than Tom,
the amazing Tom,
who you will meet on one of my shows soon,
that's my video and editor,
video editor and producer, sorry,
him running over.
Did that stop again, Tom?
Did the camera stop?
No.
No, that's all right then.
You had me worried.
You had me worried because
if that was the case,
we should have put the mic on that one,
but that's fine.
I'm not going to do it.
If you see me scoot off,
we should prove it is live, right?
It's live, it's fine.
Yeah, edit this out, edit this out.
What's interesting in all of
this is Chris is more
nervous than we are.
Yeah,
only because I saw him move and I'm like,
don't, because that's your audio.
So that's the other thing.
If we lose it,
that audio's got to go on there.
Right, sorted.
Okay, so...
We've blown our minds with
the llp and limited and we
probably still have an
answer that in full or okay
we've got a question here
keV barker thanks care for
for tripping in what about
pension contributions.
between LLP and limited?
So as a limited company,
they go out... Hi Kev, by the way.
It's one of my clients.
So with pension contribution,
limited company goes out as
an expense as a company.
So if you've got your profit,
pension contribution comes
off and then you charge
that by your corporation tax.
But as an LLP,
they go more as a personal contribution.
Okay, so they go in after your profits.
So you get your profits, you get taxed on,
but you make your
contribution up to your pension fund.
They claim the extra tax
relief from the government that way.
So instead of in the company,
you save the tax as an expense,
so your profit comes down.
This one, it goes in and HMRC top it up.
And then if you're a higher rate taxpayer,
then you've got, at the moment,
the rules are you've got
the adjustment on your tax
term that you can increase
your basic rate band.
okay so they end you can get
them to end up with a very
very similar result but
they do go two different
ways whether you get tax
saved at source in the
company or whether you get
the tax added in your
pension fund from the
government so there's no
disadvantage or advantage
from one way no with that
so the advantage the
disadvantage would be that
if your profits dropped
there's a cap of how much
you can put in as your
pension through as a
personal contribution
whereas as a company
contribution it's not you
as an individual making the
contribution it's the company making
it on your behalf yeah and
so therefore there isn't
the same sort of caps on
that so if you suddenly
drop to uh like no no
earnings one year and you
you're there's a limit of
how much pension money you
can put got it okay and
that's basically speak to
you in principle mike's
right yeah they they both
end up as a similar amount
going in it's just a
different mechanism for the
tax saving and recovery
That's a very valid point on
the pension side of things.
Yes.
We are not advising each other.
They are not advising.
The letter of the law is being kept here.
Okay.
So we've sort of touched on
and blown our minds on that
there is a difference between the two.
um is there a route where a
direction you wanted to
take this now or do we
follow this well one that's
you know this better than
yeah so there's one that
puts the favor back in an
llp okay okay which is one
that's quite interesting
that would be more on rob's
side of things of thinking
is that it's depending on
what car you drive
So limited company, if you put your diesel,
your nice fun cars through, right,
you're going to pay a lot
of tax and not save very much, okay,
under the benefit and kind rule.
That's why the electric cars
are a big drive.
We spoke about it before.
Electric cars and limited
company work wonders, right,
because it saves a load of
tax and everything like that.
But it's different for an LLP, okay,
because you don't get the
benefit in kind because
you're not an employee, okay?
So you put through the
percentage of your car
that you use for business.
So if you put a car through
and it costs you 20 grand
of running costs,
you use it 80% for the business,
80% of the cost goes through, right?
Okay, regardless what that car is.
oh right okay so if you've
got people who want to
drive now yeah yeah but if
you want someone who wants
to put their ferrari
through then actually
there's a good chance that
running it through an lp
might be more tax efficient
in the big picture so it's
another one of those
variables that you've got
to take into consideration
um of what but again it has
to be two people so a
husband wife two business
partners something like
that to have it in the lp
That's something that the needle,
when you're trying to work
out which way it goes,
if you've got a car that
you want to run through and
it's not electric or hybrid,
the LLP will have a tick in the box.
Okay.
You weren't expecting that one.
I was not.
I have no notes on that one.
That's an amazing car.
Okay.
Duly noted.
And I mean,
is that sort of more the case
more recently?
Because, of course,
the company car thing has
become less favourable more recently.
Yeah, absolutely.
Again,
I think that's another reason that a
lot of professional firms
went straight away to NLPs
because as a partnership,
they always used to run their cars.
So it was effectively paid.
by the all the expenses paid
by the partnership or the
nlp and then just as mike
said the appropriate
business percentage was
allowed in the comp so it's
it's just an easy way of
doing it okay and to avoid
the benefit and kind charge
because yeah obviously for
a number of years now it's
been horrific without
meaning to get too granular
on a particular subject
here is that that the
company pays that or that
you claim it back if it's
in the llp entirely up to
how you want to run your partnerships
So where I've been involved before,
it's just kind of,
I had a partnership credit
card and all of my motor
expenses just went on there.
It was totaled up and I just
kept track of my mileage.
And at the end of the year, I went, oh,
this year it's 22.5% of my
mileage is business use.
And that's the allowable part of it.
And you then owe money to the company?
No, ours, it was just kind of,
we took it as run of the mill.
We will roughly spend about
the same on our cars every year.
Therefore it all went through.
Okay.
But that's where the nuances come in,
particularly with an LLP or
a partnership.
Your partnership agreement
is you sit around the table
and thrash out what's
acceptable to you all.
Okay.
That sounds like trouble ahead for me.
Yes and no.
I think it depends on if
you're going into business with people,
you generally get on with
them and know them and you're not...
bigger things to sort out
than whether you're all
going to run your motor
expenses for sure yeah so
it's kind of it's some some
years it might be that
actually you know what I've
done 50 of my mileage has
been business therefore
it's actually more
acceptable for all of mine
to go through because I've
had a bigger proportion as work related
It's one of those swings and
roundabouts things.
Okay, you win some, you lose some.
Yeah, yeah, yeah.
And I think if you've all
got a common goal of growing,
in most businesses,
you're making more money
than you're taking.
That little bit of excess
floating around at the top
doesn't matter too much.
Okay, fair enough.
On that subject,
is that just the partners that have that,
so staff don't have that benefit?
Yeah, staff generally is.
If they've got a company car,
they'd be back to benefiting kind?
Yes, because they are then employees.
Because when you're a limited company,
you're the employee as a director,
whereas as a partnership,
you're a partner, so it cuts you out,
but the employees are still employees.
What?
And you can't deploy yourself for an LLC,
actually,
if you're going down that route.
Well, I was going to sort of go,
and I'm probably going off
on a weird tangent here, but
I know that as the business
owner of Visual PR,
I can occasionally have
issues when I'm trying to
go through finance
applications of some
description where I've got
this self-employed,
actually not rather than direct,
or has connotations to it
from the finance companies.
What are you in an ILP?
Self-employed.
It is still self-employed.
So a lot of people call
themselves self-employed
when they've got a limited
company because they work
for themselves because
they're working for their
own business and bits like that.
And it just comes down to
what people call that phrase.
So technically you're an
investor and an employee,
but that doesn't tick the right box.
No, exactly.
So it's just making sure
that what they ask the
question when they say self-employed,
which self-employed do you mean?
Oh, really?
Sometimes it is.
But if it's an online form,
it's computer says no.
So it's complicated.
So there's a lot more than a ticket.
I'll send you a limited,
are you a director of your own company?
And then it's tick that box
and then it opens up the next few doors.
So again,
I'm just doing a mortgage
application and it used to
be self-employed or employee and stuff.
There's now,
they're just more
understanding of the
director of your own business.
Goes to show how long it is
since I've applied for something.
That's a different subject
for a different day.
Just one more little quirk
on LLP versus limited
company is if you're in a
business that's going to do
research and development
that you want to use the tax credits,
you can claim research and
development through a limited company,
but you can't through an LLP.
So it's just if you're in
certain industries that
or sectors that you are R&D intensive,
then again,
that's a tick in the box for a
limited company.
I mean, there opens a whole other episode.
Absolutely.
We're hearing more.
There's like companies that
go out and help you to get
your R&D credit or whatever.
And then suddenly the
government are coming after them going,
actually,
you shouldn't have had that and
you've got to pay them back that money.
So it's a woolly area.
It's becoming a bit of a
minefield because we did go
through a spell of
everybody was chucking them
in and the government have
now decided actually, you know what,
we've spent out far more
than we're expecting to.
And we've not really seen
any productivity gains from
all of this work.
So we're now thoroughly in
checking or more thoroughly
checking the claims.
I know I had someone come to
me sort of going, no, no, no,
it doesn't have to be an
invention or something like that.
It could be that you've got
a new idea as a service.
And it was like, really,
the boundaries were coming down.
I'm like, I don't like the sound of that.
And they'd be successful.
They'd get it for you.
But then you get found out
further down the line and
you've got to pay that money back.
when you don't have it.
Not a comfortable place to be in.
Okay, so I mean,
it's really is quite
interesting in a number of ways.
We start getting a bit more
specific now and apologies
if I took this in the wrong direction.
But one of the other ones is
that paying in dividends.
Now,
As an owner with a limited company,
the whole dividend tax
efficient way of paying was
historically a really good way to go.
but it's not quite,
I think you were sort of suggesting to me,
it's not quite always as
clean cut as the best way to go.
So it depends as well what
your salary package is.
You could do a graph and at
different points,
the needle moves whether
you should be taking it all as a salary.
So as a limited company,
you've got your salary as a
director or you've got dividends.
So dividends are paid as post-tax profits.
So you get your profit,
take your corporation tax off.
That's the amount that can
be paid as dividends, okay?
Yes.
So if you haven't got any profit,
you can't take any dividend.
But you could take a salary
because a salary is a
pre-tax cost and you put it through.
If you've got the cash,
you can put it through.
But
the the thing that's
changing is so when you
take that money out across
the line into your personal
bank account it's a salary
or dividends you don't have
personal tax so what's
happened is you've got
corporation tax for a lot
of businesses now are
edging toward is edging
towards 25 and it was 19.
so there's a lot more even
though the way the press
was that it would be a few
the big companies were
earning above but a lot of
companies are now paying 25
And then you've got your
personal tax on dividends.
If it's in the basic rate band, it's 8.75.
It used to be 7.5.
But you also used to get 5,000 for free.
Now you get 500 quid for free.
So there's a little movement there.
And then over the basic rate band,
so when you burn more than 50 quid,
it's 33.75%.
So third goes,
but after paying 25% tax in the company,
so all of a sudden, if you're earning,
and what used to be 50k
used to be a good salary ever,
if you if you heard back five years ago,
someone in 50k, you go,
they're on really good money, well done,
right?
Whereas now there's a lot of places,
people I'm seeing that earn
50K that can't even afford
to pay for all the kids' stuff,
all the families and all
the things going on with
everything going on.
So now you're going into the
above that and they're
paying that high rate tax.
More people, everyday people.
I know there's certain
politicians being slated
for saying these salaries
and different bits.
But from what we see with a
lot of clients and stuff,
it is just covering costs
and that and they're paying
higher rate time so it gets
really expensive so it's
just understanding what is
the best way of doing it so
the other way is going
right actually I'm not
going to take any dividends
I'm going to put it through
as a salary and put myself
as a 50 or 60k salary
through the business yeah
and it's trying to come
like we do calculations all
the time working out what
that salary package
difference is because in a
company on a salary
The company pays national insurance.
And if you're the only director,
you don't get the thing
called employment allowance,
which is the first £5,000
of national insurance is free.
So you need to have...
two or more directors or one
employee earning over the
threshold to get that.
I don't remember Liz telling
me all these things.
And then you also,
as an individual receiving that salary,
pays national insurance.
So although you might not
have any corporation tax
because your profits is low,
because your salary reduces
your profit down because
you've got high expenses,
you've got all this
national insurance charge.
So quite often the needle
moves one way or another of
how much you've got in your back pocket.
So we run calculators,
like calculations that do
that back pocket check.
If you took it as a salary and dividends,
if you took it as just a salary,
what the difference is,
we also do it if you were a sole trader,
what the tax would be then just to see if,
if the tax is a driver,
which one puts a needle is
the cheapest tax.
Yeah.
Okay.
And just to make something clear,
although we've moved on
from the LLP Limited,
because that was just one
subject about the future of
the limited company,
is it different if you're an LLP?
You did touch on it.
Yeah,
because the LLP has a taxable profit
each year and then the
profits allocated to each
individual as per the
partnership agreement.
So to make it clear,
too late is that we have so
that was first the llp the
limited now we're looking
at the whole dividend tax
now I i can relate to this
because uh when I first set
up it was like right great
you know pay that that much
in terms of dividends and
then I got uh made a
mistake over time where I
thought it was about cash in the bank
It's not.
It's not about whether I can
afford it physically in cash.
It's actually got to be the
right level of profits.
And otherwise it becomes a
director's loan account
starting to go up.
That means that you owe money.
And that's the biggest trap
with a limited company is
because you don't pay,
for most businesses,
you don't pay your tax
until nine months after the year ends.
So the point when you pay your tax,
you've got 21 months.
Don't look at me.
I don't care.
21 months of profits in the bank.
But naturally,
when you see money in the bank,
you're like, ooh, I'll have some of that.
So if you're earning 50K,
you've got 10K tax bill or 12K tax bill.
That money's sat in the bank
at the end of the year.
But naturally, you see them go,
I've earned that.
I'll pocket that.
But that's the risk.
So that's what we talked about before,
your dividend being your
profit after tax.
That's where you need to be aware of it.
And so a lot of people end up taking, oh,
I've got 10K, 12K in the bank.
I'm going to take that out and spend it.
And then we come along if we
haven't done the pre year end checks,
which is what we're very like,
we'd like to do is that
look at it nine months
through to make sure no
one's falling into this trap.
The last thing you want is
us coming over eight months going, oh,
you've now got this,
another way of saying it, naughty tax,
S45I tax,
because you're taking too much money.
Because it gets expensive.
Which is not, I mean,
it sounds bad to say the
naughty boy tax that we've
had a joke about.
It's like going,
I wasn't doing anything under what.
It was like going,
I was just paying money and
it was being put in that
column because it was
allegedly the right way to
go and the money was there.
It was not an issue.
But it's like, no, actually, you've now,
and understanding that the
limited company is its own
separate legal entity.
So the money generated
belongs to the company.
So we have lots of trades,
particularly who've gone
from being surveys to
having a limited company.
But their mindset is still,
it's my money because it's me.
I'm doing everything.
Therefore, it's my money.
Well, actually, the reality is I'm afraid,
no, it's the company money.
And that's the priority is
remembering that it's company money.
You can't just, life gets in the way.
So the wife, for example,
wants a new kitchen.
There's money in the bank account.
So it disappears.
Don't get any ideas, love.
But it's just general things
that happen in life that you suddenly go,
I need a chunk of money.
My business has produced a load of cash.
It's just sat there.
So you go, okay,
I'll have it without
remembering the link between,
as Mike said, the profit,
the tax element that the
company has to pay,
and you can have what's left.
You can still have the money,
but it goes in a different
pot that's taxed.
i.e.
salary.
Yeah, that's it.
So a lot of people fell into
a trap and locked down.
Their income disappeared.
They took a bounce back loan
to survive on.
So they took the money out
of the business to live,
but not realising they
didn't have the income for the profits.
A lot of businesses during
that time had this
overdrawn loan account.
But then the other way to do
it is this is where sort of
one of the points we've got
here is for the startups.
Yeah.
Do you do you have a salary to start with?
So a lot a lot of businesses.
So there's a high percentage
of businesses who start up
in the first three years
don't actually make it.
They run out of money.
The business isn't successful.
So then it generally has to
if you've got debts,
it goes to an insolvency
practitioner and they close it down.
right which is fine that's
what their job is they
closed that but the problem
but what's happened is if
you have if you've been
taking out two grand a
month a thousand of that is
a salary and a thousand was
your dividends but you
haven't made any profit
after tax you're building
up this loan account and
then if it gets to the
point where you go bust you
have to liquidate there's a
pot that shows that you owe
the company this money so
the liquidator has come in
to settle up all the debts
with all the people
And they could look at the director and go,
you owe the company 24 grand.
I want that money back.
And you go, I paid the mortgage with that.
I put food on the table for
the family for that.
And this is where,
so this is why it's really,
we're really passionate
about working with startups.
When we're doing it,
you have to talk with us.
We have to keep an arm profits.
Cause if you're gonna go down the,
I'm not gonna,
I'm gonna pay less tax
through the dividend route.
You gotta make sure you make the profits.
Cause if you don't,
you could be walking into a
trap where you haven't made enough money.
And therefore, if you go bust,
you have to put your hand
back in your pocket to
better the business that
you've worked so blooming
hard for that has just failed.
What should have happened in
that situation that somehow
you try to survive on being
paid less or it gets
redirected as a salary for two grand?
Use your figure.
It's actually a two grand salary,
not one and one.
So the thing to do is
salary's got to be submitted every month.
So it's being aware of where you are.
And it comes back to last
month's episode of the business plan.
What are you aiming to do?
Where's your little bit of
finance plan to see how
much you're going to make?
so that we can see in time, oh,
we'll put you onto a salary.
Because we can't go, oh, actually,
we're going to go back and
we're going to change the last 12 months.
Three months later,
we're going to change it to a salary.
Because you're going to go
back and redo all your
submissions and change your salary.
When you said it was 1,000, now it's 2,000,
because I realize I'm in a
bit of trouble.
That doesn't go down very
well if you then walk into
the next meeting and say,
I need my business shutting down.
So the biggest thing out of
all of it is you've got to be looking up.
So for so many years,
probably before I started in the council,
the big thing was looking backwards,
looking what you've done.
That's what we've done.
Ah, lovely, great.
I think nowadays the biggest thing,
you've got to look forward
with your business.
Look up and look forward.
That's why you've got cloud
account software.
It makes it easy to look forward.
You do a little bit of a plan.
You understand where you're
going so that we can work
out whether it's a salary or dividend.
You think of the ones that start,
they know they're going to lose money.
Okay, but you need to live on it.
You're going to lose money.
You've taken the loan.
This is the investment.
It's the plan.
Three years and you're out.
Right.
Salary.
Go on a salary at the start
because you're not going to
make any money to start with.
You can't take any profit out.
You haven't got any profit.
more than good absolutely
and it also applies to
businesses that are
potentially cyclical
because if they go for a
run if they've got a couple
of years they're making
profits and then they know
they're gonna then they for
example projects come to an
end or something and
they're gonna have a couple
of years without any
profits salary is the best
way to do because all right
it's going to create a loss
for those fallow years but
it's a tax loss that you
can carry forward to offset
against when you do start
making profits yes whereas
if you're going for a dividend route
and you've got no income coming in,
so you're not generating profits,
you have got no earnings in that period.
For people that might be watching,
and I probably do still
include myself in this,
I know that we've had this
conversation numerous times,
but we're busy.
I'm trying to run the business.
I'm trying to do a million
and one things within it.
For me to sort of understand, okay,
I can't forecast to run a game
although I think Visual PI
is probably slightly
different beast because
it's retainer business.
But, you know,
I can't necessarily turn around and go,
I know I'm going to be
earning this from it and
I'm going to keep my
expenses down to this, et cetera,
et cetera, with extreme accuracy,
at least anyway.
And I'm sure I'm not unusual on that.
So for me to kind of weigh up,
should I be salary?
Should I be dividends?
Is that a conversation that
us business owners can have
with you guys?
Absolutely.
But for me,
it's always that starting point
is what do you need to live on?
What do you need to withdraw
from your business?
working back up effectively
at the P&L going, right, okay,
then what are your gonna be
your overheads for running your business?
Then what are your direct costs?
Okay,
you need to generate this kind of income.
Is that gonna work for you?
And if it is, then yes, we can go, right,
okay, right.
We suggest you do this down this route.
And then, okay, a year later,
the business is growing,
then you can change your approach.
Because again, we'll sit there and go,
right, okay, you're doing nicely.
Do what you need to spend on
a monthly basis.
Has that gone up?
Yeah.
Okay.
Right.
So we then re-forecast and go, right.
Okay.
The turnover you're needing
now is going to be at least this.
Do you look as though you're
growing to that level?
Yes.
Great.
Fine.
We can carry on with this plan.
If not, then yeah,
we'll just do an adjustment for you.
Okay.
Yeah, I mean,
it's... I think as a business owner,
you tend to have the mentality of,
you know that you're the
one who's putting food on the table,
so you're not an employee
just knowing that you're
getting a wage check at the
end of the month or the end of the week.
So you know what you need to earn.
So that's what Rob said.
You start, what is it,
the minimum amount you need to earn?
That equates to two or three
grand a month as turnover in the business,
right?
yes you might not know where
it's all coming from but if
you know that you have to
earn it you go and earn it
yeah it could be all on the
first job that you do or it
might be spread across you
might go and get 10 jobs to
be able to make it work but
as a self-employed person
you know that that's what
the responsibility is to do
so I i think that's the the
big thing is that yes you
might not know where it's
coming from but once you
you know you know that you
could sell so many
different packages for
yourself or like we could
it's going to come from we
know what we have to do and
if there's a shortfall then
we know you've got to go
out and sell some more sure
because you can't just sit
there going oh no one's
coming through you have to
go and do it we've all gone
through cycles where we go
oh hang on a minute no we
have to go and push a
little bit harder so you
get out there you see it
with any business they go
oh yeah no let's go and
sell I'll go do this it's
very few that it just keeps
coming through the door
it's and it's if you're
sitting there going right
okay I'm working back up
it's that right this is the
monetary value of what I
need to bring into my
business so you've got your
target that you know what
you would do and the next
stage is then just breaking
it down into whatever you
do so do I need three
retainers a month does that
equate then to it or is it
I've got to sell 70 000
points this month because
that's what needs I need to
get through to generate
more which actually is you
know it probably is a lot
better that way I mean I've always done
not always done but as in in
my mind if I'm being too
sidetracked by actually
working in the business
rather than on it is that
it will be a cash flow
equation that goes right
what do I need to do to pay
for everything and whereas
actually goes deeper than
that is we need to do it
but it's not as complicated
as the brain starts
panicking with is literally
by doing the backwards equation
And he's okay to answer, yes,
I need this to live off of.
Right, what does that mean I need to do?
And then you've got these targets that go,
right,
I need to get another X retainers
or sell X number a month or
whatever it is.
And like you say,
we roll our sleeves up and
off we go and we get on with it.
There's an episode we've
done near the start,
I think it was me and Hannah,
where we did this work in
the scenario where we
worked from the bottom upwards.
Go right, what's the personal earnings?
That's the corporation tax.
What's your overheads?
That's pretty fixed.
Therefore, that's your sales target.
And what happens if you want
to do this and do that?
Do you remember that one?
I do.
And, in fact,
even going to last month's
episode again is about not
just the business plan but
revisiting the business
plan regularly is that it
suddenly switches me to that that goes,
that needs to be revisited.
In fact,
that could be the catalyst for
what today's business plan is.
And your theme of that is
always going over with the
personal circumstance.
What is it you want?
What's changed?
What does it need to do?
Which is external forces as well.
We know that the cost of
living and all that sort of stuff.
yeah we get it it makes
sense and it's about that
that top line figure don't
be intimidated by it
because you'll potentially
you come out and you go
right oh no I've got to a
quarter a million this year
Break it then down into what you do.
Break it down into small chunks.
Don't find yourself with a big figure.
It's about going, right, okay,
it means I need to get five
retainers a month and a
couple of projects.
And then you know everything
over that is happy days.
It's the cream.
What would we do?
Now I'm getting excited
about that over that figure.
Does that become more
dividends that can be paid
or does it stay invested in the company?
Whatever you want,
whatever is in your
business plan for your growth.
It might be that you go, ah,
the business doesn't need any more stuff.
So actually I'm either going to put it,
I'm going to put the
surplus as a pension
contribution because that would be nice,
save tax for the future.
Or it might be, no,
it's about time I add a
little bit more because I
want some more holidays.
Or the wife wants that kid.
Or it could be a growth of premises.
It could be more people get employed.
Every business can be
different depending on what it is.
It might be that you've had
a few fallow years and you
want to earn a bit more
because the last few years
have been quiet.
You've invested yourself
into the business by not
taking the money and now
you've earned it.
You want to take it back
what you didn't take in the years before.
It makes sense.
Again, it comes to your longer term plan.
What are you doing with your business?
Again,
is it I really want to invest it and
grow it,
in which case you potentially
leave a lot more behind in
the business for that investment.
It might be there's nothing
immediately springing to mind,
but my long-term plan is
three years' time,
I want to invest in another three staff,
or actually I want to
acquire a competitor.
So I need a bit of cash sat
in my business in order to
be able to do that.
Or not even a competitor,
is that you want to absorb
something that helps you
diversify or bring some of
the services in-house.
Yeah, absolutely.
I get all of those things.
And I mean, crikey, I think we've got,
we came up with another episode,
whether you realise it or not, yesterday,
when you touched it to six
and things like that.
And I was like, oh, wow,
I hadn't thought about that stuff,
but we'll come on to that another time.
Quickly added, you mentioned Hannah,
and I think this is really
obviously she's within,
but she's going to be put
in a question that she has posed to her.
And she said,
do dividends provide more flexibility?
And how would my year end
have an impact on this
versus a sole trader or an LLP?
well we maybe have covered
that already in the
comments so like a sole
trader you're doing your
tax for the 5th of april
yeah personal tax which you
still do as a director of a
limited company but if your
limited company year end is
say 30th of april 31st of
may it allows within that
set of financial statements
to a bit of flexibility as
to when you declare
dividends when when when's
best to put them on your
personal tax return
So again,
you've got the planning
opportunities to do so we can work.
So that if you go one year,
I want to take out 150
grand to buy the next house.
If you did it all in one year,
then it'd be expensive.
But if we do the planning for you,
we might be able to spread
that across a few years.
So you keep the rate.
So again,
I had someone who was making good money,
taking very little out of the business.
But I was like,
I'm going to keep topping
you up because at some
point you're going to go,
I want the money out of the business.
And three years later, they went,
we're doing the extension
on the back of the house.
I need 200 grand.
I said, well, if you take it,
if we hadn't done this planning,
that would cost you 80 grand in tax.
I said, but because we've been doing it,
you've been paying five
grand a year in tax.
and that's it, and save it,
and it was for them, it was a,
I understand now what you're doing.
As much as we tried, they didn't,
they just,
they trusted that we were doing
the right thing for them,
and that's what's worked, so yeah.
The fact that it was for them, I mean,
and we've had conversations
about people that might be
a property goal,
I think we had a retirement-based goal,
that, you know,
all these different things
that some of your different
clients have had the experience,
and it means we get to do that,
and Hannah's just said she
was hoping I was going to stay anonymous,
sorry, Hannah.
I don't know.
We understand why you've done it.
We're trying to trick the guys out,
but we get it.
Kev Barker's put another one.
What is the tipping point
for tax changes to switch to an LLP?
it's going to be dependent
on quite a few different,
I'm going to sit on the fence,
it will depend on a lot of things.
Whether it's, again,
how much they want personally out,
how much they're putting the car through,
how much pensions,
and we just run
calculations per scenario.
There's no, there used to be the old,
we used to have an old
unwritten rule that if you
weren't over 30k,
you'd go into a limited company.
i actually know there's so
many other factors that are
driving it that that figure
if you went on the tax one
could be a bit higher
but it might not be.
And so we just run each scenario.
It's also one of those that
you don't want the tax tail
to wag the dog.
Yes.
Because actually, I don't know,
if we go on to associated companies,
et cetera, the reality is, all right,
it might be a tax impact
for doing it a certain way,
but actually the other
benefits around operating
in that kind of vehicle
means that actually, overall,
you just suck up that extra
little bit of tax because
the other benefits that you've got.
So again,
like if your longer term plan is
you want to build a business and sell it,
even though you may pay a
bit more tax personally
with through operating the
limited company, it allows you to
much stronger opportunity to
sell your business at the
end of it than if you're
operating through an LLP.
So tax is only one kind of
spoke on the wheel that
you've got to sit there and go, right,
okay, in the middle is my entity.
What's it going to be?
And there are lots of spokes
of different parts of your life
The tax is one of them.
So it shouldn't necessarily
be the whole main driver.
Company cars is a prime example.
So we'll say electric cars
are great for limited
company because they're great for tax.
But if you need to drive 400
miles in a day, tax-wise, it's great.
Practicality, it's not.
So again, it's looking at the big picture.
um kev's follow-up comment
was changes to dividend tax
so I'm not sure whether
that took it in a different
direction uh so it again
it's going to depends
whether the the new
parliament are going to
change it at the moment
it's still it still works
it's still right I think I
did a calculation if you
were if you were taking
about 140 grand out that
actually a salary was
worked out quite nicely at
that point rather than there but it's
Again,
it's where you want the liability of
tax and stuff because if
you're earning big money
and you could have the
liability being paid by the
company and you just take
your money out as a salary,
you have to think no more about it,
great.
Whereas if dividends,
you know you're building up
a tax bill personally and
if you don't remember about that,
you personally could run
into the tax cost rather
than it being in the company.
about your whole overall package.
So you need to remember that
you don't necessarily need
to take all of the profits
out as dividends or a salary,
because as we discussed earlier,
there's company pension
contributions and all sorts.
So it's about actually,
what are my personal longer term plans?
Do I need it all out as cash?
Or actually, can we do things with it?
Yeah, agreed.
Kev also said if they fall
in line with income tax.
Dividends do.
So they're on income tax
profits or a profit share
that come into income tax.
Got you.
Okay.
Thanks, Kev.
Keep them coming.
I do want to move on to a
point that you did touch on.
not sure how much we haven't
got time to go into great
detail of it but I came
unstuck on this one
associated companies now
let me make this clear with
a key an example that's
frustrated the heck out of
me last march I have a
company called open doors
training where I do public
speaking training I'm a
motorsports commentator
voiceover artist all those
things and that goes through that
I then created Visual PR Limited,
but left it dormant.
This was last March,
left it dormant with the
intention to put it all
through because there's no
point having all these
extra fees for two
companies when it was
trying to get off the ground.
I could trade it through
open doors as a trading
name with the intention
that as soon as I got enough contracts,
it would flick over to Visual PR Limited.
I was all ready to do that
until end of last calendar year.
And you just suddenly went, don't.
Because in April,
they bought out this
associated companies thing
that would have suddenly
split the corporation tax
threshold before the higher rate.
Instead of 50 grand,
it would have been 25 grand on both.
Why?
It's essentially to stop people doing that,
but as a as a tax motive
rather than a commercial impact.
I mean, that's a negative impact.
And there's a lot of people
that were interested on
this subject in particular
because they weren't aware of this,
as I wasn't when.
Well,
it didn't exist when I first did the
dormant ready to go to
protect the name ready to go.
It's impacting entrepreneurs.
That was a new idea.
It was a new company that
was legitimately going to
be its own entity that was
going to be going off in a
different direction to the other stuff.
I've then gone no no because
of these people that are
doing this like especially
in the property game for
example and button up to
the morning starting a new
one because of them I now
get hit because despite me
having a good idea and this
this time around where
you've got the split tax
rate between 19 25 there's
a lot more rules and bregs
than there was in when it
was previously in
um with this marginal rate
so essentially the the the
short answer of this is if
you've got more than one
business you're gonna pay
you're gonna pay 25 tax a
lot quicker than you were
yeah um even if they're not
one's not making any money
so it's just done it's
straight on that and with
associated companies it's
it's just making you pay
that higher rate of tax a
lot quicker and I don't
think a lot of people
realize quite what and what
comes under the associated
rules is spouses business
or they're connected with
the reason I hear on the
spouses because I said so
my wife is a physio by by
trade and she works at the nhs
and she then decides she's
going to go and have a
private physio practice and
I'm nothing to do with it
it's hers she wouldn't
suddenly have the hit on
the blurb and that would
she this bit it's more
straightforward yeah it's
kind of because that just
doesn't seem fair it's the
minimum controlling
combination is kind of the
wording that they use so it
on saka as a director it's
not the director though
it's because it's the
shareholder remove your shares then
Yeah, it's more than that definition,
because I think, as Mike said,
it's kind of to try and
stop people just keep
popping up businesses.
But also it's putting them
in names of people that
probably weren't doing it.
So they like family members,
they chuck it in their owners.
And it's a form of removing
their tax liability.
So that's why they're trying
to tie it up to try and bring it back in.
But again, it doesn't feel quite right.
It doesn't sit with me that
I came up with another idea
and I suddenly get hit.
No, absolutely.
It does have a downside.
And I think the thresholds
are quite low that they hadn't.
really taken into account,
bearing in mind that
something like 95% of the
registered companies are small,
so are going to be down that bottom end.
The whole idea was to try
and penalize profitable
companies that aren't paying tax
Absolutely.
And it's kind of, unfortunately,
the bands have probably sat too low.
Actually,
the quarter of a million was
probably actually the right
level to hit it at.
So you're targeting properly
profitable companies that are doing it.
So it's...
it's not pleasant and it's
something to be aware of.
And if you do have a
multitude of companies,
it's one of those sit down
and have a conversation
about who controls what.
Because there's also things
like about commercial interdependence.
So for example,
if you've got a company
that's owned by different people,
but it relies on this
company for finance and
that kind of stuff
potentially it will be
caught so some things that
you might not think are at
all associated by these
expanded rules probably will right
But it's also don't let it again, as I say,
don't let the tax tail wag the dog,
because actually, for what you do,
it might be right that you
have a number of companies,
and you just have to accept
for the time being,
it's going to be one of
those costs to you of
structuring your business
environment in the way
that's going to suit your long term plan.
For example,
property construction
companies quite often would
have a construction company
then potentially some spvs
where they do special
projects through but also
then maybe an investment
company that they hold
property that they've for
example you build a site of
10 houses you might keep
one and use that as a
passive source of income
for the group that means
you've got three companies
that are going to get
challenged into this new
structure but actually
structuring it like that is
absolutely right for your
business intentions yeah
And I guess, am I right in assuming,
because what was it?
So if I've got one company,
I've got £50,000 worth of
profit before I go up to
the next level of
corporation tax percentage.
If both of my companies,
so I've now got two, and by the way,
that 50 grand gets shared between two,
three, four,
depending on how many you've got.
So it suddenly gets lower and lower.
But if both of my companies
are above 50 grand profit each anyway,
It doesn't matter to me.
It makes no difference.
It's only if both of them happen to be,
let's say, sat down at 20 grand profit.
No, I'm trying to work at 30 grand profit.
But suddenly I'm going to
get a much bigger
corporation tax because
that's now actually 60 grand.
So I'm up into the high rate.
Because you're above the 25.
If you've got two earning 50
and you've got two companies,
Instead of it, your rate going up at 50,
essentially, to be the high rate,
your rate's going up at 25.
So you're having half of it is.
So it still affects you.
It still catches you out.
I guess we should be used to
it because in school it
always used to be the
majority suffer because of the minority.
I think the thing is
remembering now in business,
you've got two of you,
you've got a third party,
third stakeholder in the business.
You don't own all of it.
You've got HMRC that have
got a stake in it as well.
They take theirs out first
before you get your dividends.
It's just like having an ex-partner there.
On that note, too quick, because, I mean,
that was really useful.
I mean, in essence, what we're saying,
just to sort of wrap up
that associated companies bit,
is to be aware of it,
is that if you've got more
than one company,
is that the threshold gets
split between them,
speak to you guys or whoever,
their financial advisors
happen to be or whatever,
that there's a
consideration that needs to be.
Does that automatically get applied?
So, you know,
I might have inadvertently gone, no, no,
no, it's fine.
I've known about that associated companies,
but suddenly automatically
HMRC would work.
No, because it's self-assessment tax,
corporation tax, self-assessment.
So we have to do it.
So then if you get it wrong
and then HMRC spot that it's been wrong,
then you've got to collect
the underpaid tax and
potentially a penalty of carelessness.
carelessness on the attached term.
Right, okay, fine.
So that's important.
So you can't play naive.
No, don't do that.
Just hold up, yeah.
So it's one of those areas now,
it's kind of something that
past people have had,
if they've had a multitude of companies,
quite often the batch would be one,
the advisor batch would be with another.
It's now actually
clients need to be
completely open with the
advisor because we need to
sit down and be able to
assess it in full.
So anyway,
you can give the full advice and
the true advice.
Absolutely.
Yeah.
And it's, you know,
it's one of those awkward
ones is that we know the
situation for me is that
what it then meant because
visual PR is just over a
year old and is growing
rapidly and is going to be the, you know,
the bigger organization.
The other stuff is my media
work and is a lot of fun
and is lifestyle business more
that lifestyle business, if you will.
Still going, but personally,
it's a bit more reactive than proactive.
It is what it is,
and it's still going nicely.
But I felt that visual PR
was more important.
But whilst fine,
I couldn't get that one out
without taking this hit on
the corporation,
is that we did a name change.
And the bank were confused to hell.
with why I was doing that,
whereas actually it's like, no,
it's legitimate.
The irony is,
as I even explained to the bank,
this is the reason why the
Associated Companies Act, and they went,
no, what?
They had no idea.
And so they just suddenly
were checking that I wasn't
doing something questionable.
And so that had to be
managed in a patient manner as well.
So interesting stuff.
Right.
Payments on account, including reducing.
That's the only note I have.
I'm going to say I've got for time.
That's a blog that we just
put up on our website that
explains what payment counts are,
when they're due, why they're due.
And no,
you're not paying tax in advance of
earning it,
which what everyone seems to say.
You got your six month plan.
Why am I paying it ahead?
You're still behind,
but you're just not behind
as far as you were before.
But there is a blog on that
one that spells out quite nicely.
I think we did touch on it
in one of the other
episodes to some extent as well.
Possibly the very first one
when you came to my office.
Yeah, it could have been.
That was one of those.
Something like that.
Because we were talking
about the fat threshold and
when it works out and all
that sort of stuff.
It's just obviously sick best to dry.
is so no yes of course that
first of july yes it's it
is important um getting a
full state pension full
state pension is important
very important but so to
get it if you depending on
how you are so if you're
self-employed llp
partnership sole trader you
register as self-employed
and you play the you were
paying the class two
national insurance which
worked out about 160 pound a year
that is it been scrapped in
it going to be scratched
talking about being
scrapped yeah so it's
better it will depend on
how much you're earning now
to whether you get your
stamp when you're a limited
company you get your stamp
through um your salary
that's why you you hear
people with a small salary
big dividends because the
salary is goes on the
payroll gets submitted to
hmrc and if it's more than
six six six and a half grand a year
then that is what gets charged.
That's what gets you a
registered stamp of state pension.
But the most important thing
is everybody can log on to
that and set up a personal
tax account with HMRC.
You log on,
you set it up and you can see
your state pension record.
You should go and do it, Chris.
Because the sooner you... Sorry, go on.
I was just going to say,
it gives you that full
record and it'll tell you
for missing years and it
There are certain timescales
that allow you to do a top up.
Okay.
Because you need 35 years to
get your full state pension.
And whilst that may not be
worth a huge amount,
if you're working for 35 plus years,
make sure you've got that.
So what do I need to do to see these?
If you go to HMRC and put
personal tax account in,
you register with that,
you need your passport.
Well, I already have one of those then.
But not always, no.
If you've set yourself up
for a government gateway.
Yes.
I think I have.
But as an individual, not a company.
Well, this is where I've got trouble,
is that I don't remember that login.
My web browser defaults to
the company login, and I'm like, okay.
So if you haven't used it
for a couple of years,
they automatically cut the access,
so you set up a new one anyway.
But if you go through and set it up,
it will go, you've got another account,
or it will just allow you
to set up a new one with
your passport and stuff.
then you go in there and
there's a few national
insurance record and in
there it's got your whether
you've got gaps and the
important thing is there's
a lot of people where we've
picked up businesses over
the years they thought they
were getting their stamp
state pension through their
limited company and they
didn't but what happened is
we've we spotted them put
them on a salary got that
all registered but they've
got gaps for quite a few
years but if you're looking at it
you're you're aware of it
and it's a lot sooner to
fix when you're 35 40 to
make sure that you're
getting the right stats
rather than is that you're
64 just working out how
much of a state pension
you've got and you realize
you've only got 10 years
because you've got too many
gaps all the way through
because you didn't realize
and so the sooner you do it
just to check it just saves
a lot aggro and if you're
working with your financial
advisor it's the first
thing one of the first
things they do on their
their checks is to go get
that print out so they can
check that it's working
because that's part of that
plan for your hmrc personal
tax account and then view
national insurance records
yep yep fine I'm gonna go
and do that that's got an
asterisk there I'm gonna go
and do that I keep we've
it's come up in
conversation before and
I've still not gone and
done it uh good old care's
got another comment well
done mate appreciate all
your questions it's
brilliant could you make
your limited company a
partner of your llp and is
there a use case for doing
that you can again it's
something that's not
overly popular with hmrc so
you you can but it's about
making sure you manage it
correctly because it's
about yeah not necessarily
avoiding paying tax on
profits by shifting them in
the wrong way it's got to
be a general genuine
commercial reason as to why
why that's if you've done
something and you you get
quiz from the outside why
do you do it and if it's
tough attacks yeah it's
wrong yeah it tends to be
that it's not the right thing to do
yeah because I mean I was
even trying to work out
with the associated
companies thing is like
going yeah okay but could I
have a second company but
the owner of that is not me
or my wife but it's
actually the other this
other company and it's like
no because you're still
linked into that deal but
the thread's still there
yeah the phrase they use is
beneficial owners so you
kind of keep looking
through the layers yeah it
makes sense it makes sense
anything else that you want
to cover in all of this
There is, there is.
I mean, it's been absolutely brilliant.
I hope that that was not too
heavy for you all.
I mean, it was necessary to go into this.
It's really enlightening.
Some parts that confuse me
and know that there's a
conversation to be had.
Some parts that have made a
sense and made me kind of go,
I need to go and look at
that even for myself.
In essence,
the great reassurance is there
are people like you guys
that are able to be there for us.
We're running businesses.
We're busy.
We're trying to do everything else.
And we could miss something
we don't understand.
And we think that this means
that when actually it's a
bit more than that.
We touched on LLP or limited services.
What's your final comment on that?
If someone is thinking
something to come and speak
to you about that LLP or Limited,
what could they be thinking?
They should just be having
conversations with us.
They're thinking of changing
the business or they're
changing where they're going,
whether that's the old business plan,
changing direction or
something like that.
just have a conversation
with us because it's better
to get in front of a tax
change or tax problem than it is going.
We've already done it.
How, what do I, what happens now?
Well, you've got a tax bill.
And we had the title of the
future of the limited company.
These,
this has been addressed now in this
conversational piece because, you know,
changes that have happened
and may yet be even more
happening are making this
an even more interesting
conversation that it's not
as black and white or as
obvious as it was before.
No, absolutely.
It's, it,
and it's about
thing that's happening is
getting people to think
more and more about what
they wanted in the future
it's that taking the steps
going three five end of my
working life what am I
thinking I want to do yeah
it's trying to set yourself
some targets along the way
and it's a lot easier for
us to go right okay that's
what your aim and goal is
right okay now what's the
tax implications doing each
way are they enough to
override the principles
everything else that sits
on that wheel that we talked about yeah
or not it's kind of it's
you're able to see the
picture and go actually do
you know what this lends
itself more to llp than
limited or vice versa or
whatever um and there'll be
no no client that's got the
same same characteristics
because that the personal
life that drives a business
that drives the rest of it
is all different so that
the needle moves every time
I think that's the big thing
that's jumped out at me for
this is that the future of
the limited company is still there.
100% it's still there.
However, things have changed.
Things have got closer.
Things have merged.
Things have whatever that means.
Actually, do you know what?
There could be a deeper
conversation that's worth
having with the likes of
Optimum to sort of have a
look at it again and
don't... One thing for me
as an owner that I keep
reminding myself to take
confidence from is that
Despite being involved in
this conversation with you guys,
I don't need to sit here
and be that expert.
That's why you are there.
But I now know that there's
a conversation that I maybe
wouldn't have considered
having that might be worth
just investigating.
Yep.
Simple as that.
Yeah, 100%.
Simple as that.
Easy as that.
Listen, thank you so much for watching,
everybody.
I hope that you found that useful.
I hope you found it enjoyable.
We'll be back next month.
We do have a date for next month's show.
7th of August, which is another Wednesday.
And I think you're on that one as well.
As long as we stick to the same topic,
there's a possibility we
might change it to an election,
post-election one, if we feel this way.
If they were doing a budget,
I think they were going on
their summer holidays soon.
So that would be delayed.
Because in essence,
it wasn't worth doing an
election one just because
elections happened.
We would need to be
addressing the budget and
things that are changing,
things to be aware of.
And we now know it is a changed government,
so we need to let it evolve, don't we,
before we discuss it.
So, as we believe,
7th of August with yourself
and Ian as well.
And one of your clients
that's been with you for 15 years?
Around that now, yeah.
I'm looking forward to that one.
So get yourself strapped in for that one.
It's going to be really good.
And from Cheltenham as well.
From Cheltenham, yeah.
We'll be in the Cheltenham
office for that one.
But keep your eyes peeled.
7th of August.
If you've got any ideas that
you would like for show content,
things that would be
beneficial for us to
discuss like this in more content,
and maybe it involves you
involved in the show,
please drop us a line, let us know,
because, you know,
these are monthly episodes that, you know,
are there to sort of like
really hopefully give you advice.
Sorry, not advice.
I'm not supposed to use that word, am I?
Give you knowledge,
give you information to
make informed decisions.
You know,
you can take the mickey out of me
because I grow every episode.
You've got to do that.
it's really really useful
but gents thank you so much
for joining us it's been an
absolute pleasure and thank
you to all of you we'll see
you on episode 10 we'll be
up into double figures cheers