Employer or employee?

Question

I have set up a Limited company and want to pay myself a salary through it.

There are only two people in the company at the moment and we're both directors.

Will we both have to be registered as employers? even if we won't be employing anyone for at least a year?

Couldn't one of us act as an employer to another?

Answer 1

why can you not just pay your self a wage as a director, there is no reason why you have to become an employee

Answer 2

The limited company is the employer, which means that directors are treated like employees of the company.

If you receive a salary from the company, you deduct tax and NIC similar to you would an employee.  At the end of the tax year, you (and the other director, or an accountant if you want) will need to complete a P35 'Employer's Annual Return'.  (If you send it on-line (instead of on paper), next year, the government will give your company a tax free payment of £50 because they are trying to encourage people to use the internet.)

You need to let Revenue and Customs know that you need a 'PAYE scheme' record setting up (if you haven't already).  Call the 'New Employer's Helpline' on 0845 60 70 143.  See  http://www.hmrc.gov.uk/employers/new-emp...

You could chose to pay yourself dividends from the company, instead or as well as a salary, but it would be best to discuss this with your accountant if you have one.

As directors, you will also need to complete a Self Assessment tax return each.

Answer 3

Your Limited company is the employer. Both of you are directors and employee of the company. Your Limited company is a separate legal entity.

Answer 4

you don`t have to register as employees but it is best because then you will pay tax and insurance at the normal rate, you can also take a dividend each week because you are a director, your accountant will tell you the best way to go about it. I am a director of our company and we do it this way

Answer 5

Your company is the employer ,you are a shareholder and have the option of being an employee as well

Answer 6

If you have a limited company and there are 2 directors,

i dont see why you cant be employees and earn a salary from the the company.

in any case speak to business link who will advise free of charge and maybe an accountant..

Answer 7

If you have a limited co then one way of doing it is to each pay yourselves a small salary each month which keeps you below the tax threshold - £6.5 k i think. Then draw dividends throughout the year as shareholders - you can save a fortune that way.

I would recommend you get yourselves a good accountant. They are not cheap but the good ones save you shed loads.

Good luck.