Budgeting for setting up a limited company in the UK

Here are some key points to consider:

Income management

• Separate finances: Treat all income received in the company bank account with caution. This money belongs to your company, not you personally.
• Pre-tax revenue: Remember that your company's profit is pre-tax. Set aside funds for Corporation Tax, Income Tax, VAT, and National Insurance Contributions (NICs).

Payroll and taxes

• Payroll setup: If you are paying yourself a salary, set up a payroll system to make monthly deductions for income tax and NICs via PAYE (Pay As You Earn).
• Budgeting assistance: Consult with your accountant to create budgets and management accounts. Use accounting software to track your spending.

Operational expenses

• Operational costs: Budget for the cost of goods, services, supplies, employees, rent, utilities, rates, communications, IT, marketing, travel, subsistence, and other expenses.

Personal provisions

• Holiday and sick pay: Make provisions for your own holiday and sick pay, as this will vary between individuals.
• Pension contributions: Without an employer contributing to a workplace pension, it's advisable to contribute to your own pension scheme. There are usually significant tax savings when making pension contributions.

Professional fees

• Accountancy and consultancy fees: Allocate part of your budget to professional fees, including accountancy, consultancy, contract reviews, and legal advice. These costs may seem high initially, but they provide long-term financial security.

Insurance

• Business and protection insurance: Ensure you have a range of insurance policies to protect your business and earnings in case of disputes or mishaps.

By carefully budgeting for these aspects, you can set your limited company on the path to success. Financial planning is essential, and seeking professional advice can help you navigate the complexities of running a limited company.

If you're considering setting up a limited company, amongst other things, we cover budgeting in our helpful comprehensive guide 'Running a Limited Company: A Practical Guide for Business Owners'. You can download your copy here.

If you require further guidance or have any questions, please do get in touch.