Forum

• # 119027
• Sun 06 Sep 2020 03:55 PM

I am bookkeping for a small limited company.  First year of trading.  The director is the sole employee.

For the first 6 months the company traded at a loss.  They are a craft manufacturing company.

They then started to break even, recoup some of their losses, with the end of year accounts showing a small 3 figure profit.

Throughout this period, the director didnt pay themselves a wage.  Now that I have finisshed the companies accounts to trial balance stage, they are keen to pay themselves a small wage, effectively the amount of profit they have made.

Can they do this, now that the company is effectively in their second year?  Can the director retrospectively pay themselves a wage for the past year, with it being entered into the accounts as an accrued wage, bringing the annual profit down to zero?

Thanks

Steve

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• # 119044
• Fri 11 Sep 2020 03:47 PM

Hi Steve

Have the company set up a PAYE scheme so they can be on the payroll? If they have and they've been submitting nil returns, they can start paying themselves now but it could only be for the current tax year, they shouldn't reallygo back to the last tax year without good cause, and HMRC could impose penalties for late filing if they did.

If they haven't got a PAYE scheme in place and their Ltd. Co. is their only source of income then they should get one set up.

You say you are dealing with the bookkeeping, so I assume that they are using an accountant for the accounts and tax returns? If that is the case, I would recommend liaising with their accountant on this as they will be best placed to advise them.

Victoria

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