PAYE worker, staring business with partner

[paddi22]

I am currently a PAYE worker. I live with my partner and we plan to start a business combining our design and programming skills. We have an office we can work from at home and already have the equipment we need. I also have capital saved up for cash flow to get us going.

We will be equal partners in the business and my partner would run it full time and i'd help out in evenings and weekend. The aim is that eventually i'd move full time into it. I have read the government 'toil and trouble' handbook but it doesnt have info about starting a company while also working. The question i have is whether i would be better off not drawing a wage from the company till its up on its feet? We will have very low overheads but would I be better ploughing back any money I would have taken into the company? Also will my PAYE taxes be filed as usualy by the company i work for? Do I just file my home company taxes separetly? Or do the two need to be combined in a different form?

Any help is appreciated. I am going to ring the tax office for more info but I'd love to have some understanding about it before I do. Also if anyone had any info or tips on the best way to combine being PAYE and starting a new business?

 

[ang1170]

First of all, congrats on making the leap and best of luck.

Your best bet for tax planning and so on is to talk to an accountant, as there are just so many variables and personal circumstances that come into play, it's impossible to give a specific recommendation.

Having said that, my own recommendation on whther or not to take a wage would be to try and avoid taking anything out of the new company, at least until you're established enough to get some feeling for what the company's sales will be over (say) a six month horizon.

If you want to build the company, by far the best and cheapest cash you'll ever get is from sales: use them to build reserves. These are important both to cover lean periods, but also to cover extra spending you may have to do to chase opportunities to grow the business (e.g. you get a big job and have to hire someone in to help doing it: without the company's own reserves, you might have to turn it down).

No harm too in checking out for general information.

Best of luck.

 

[paddi22]

Thanks for your help, that site is very handy! I think you are right about the accountant, he should probably be my first port of call!