Want to set up my own company

[bez]

I want to set up my own company but I'm confused about my salary. Do I have to set it at a realistic level? I want to pay as much in dividends to myself as possible (for obvious reasons)

Thanks!

[O.S.C.R.U.F.T.]

For what reason do you want to set up your own limited company? I dabbled with the idea a few years ago, but a friend of mine talked me out of it and persuaded me to use an umbrella company (I wont say which one as I don't believe in blatant endorsements). I've been doing that for almost two years now and haven't looked back.

I know running your own business sounds very glamorous, but make sure you are doing it for the right reasons!

[bez]

Originally Posted by U.S.C.R.O.F.T.

but make sure you are doing it for the right reasons!

Such as?

[The SMG]

Originally Posted by bez

I want to set up my own company but I'm confused about my salary. Do I have to set it at a realistic level? I want to pay as much in dividends to myself as possible (for obvious reasons)

Thanks!

You need to decide upon an 'appropriate' mix of salary, expenses and dividends. Some contractors pay themselves a salary of National Minimum Wage x the number of hours they have worked. Others use a crude £6035 (annual personal allowance) / 12 month or 52 weeks. What you eventually decide to pay yourself as a salary depends in many ways on your attitude to HMRC and whether you think £200 a week (for example) is in line with the market rate. Personally I don’t think it is.

All this is irrelevant of course if your contract is caught by IR35 in which case you must use the IR35 deemed employment payment calculator (http://www.hmrc.gov.uk/leaflets/calc_deempyt.htm) to derive your minimum salary. You’ve clearly got a bit of reading to do. I’d probably start with your employment status (http://www.hmrc.gov.uk/calcs/esi.htm) and then (and only then) you can make decision about remuneration.

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