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Tax benefits of s limited company?

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  • 30-09-2015 9:00am
    #1
    goz83
    Registered Users Posts: 8,034 ✭✭✭


    Can anyone fill in some blanks on this? I just set up a Ltd company, as I expect significant growth and I am a sole trader in another area. My understanding was that a Ltd company could provide a few perks for the owner. For example; I was thinking about replacing my car in a few months for maybe a 2010-2012 MB E200. My thoughts were to let the company buy this, instead of paying myself, then paying paye and usc before buying in my name. My accountant says I woukd end up paying the same tax on a car and that it really only makes sense if buying a van or commercial vehicle. He mentioned Benefit In Kind. I should mention that my spouse has all my tax credits.

    I then thought that the company would provide health insurance for its secretary (me). Again, the logic being that I am not paying myself and paying employee taxes before buying health insurance. He said again that it would work out the same as BIK.

    OK, so I asked if the company provided gym membership to keep staff happy and healthy.....yep, it would work out the same.

    So what is the story with the perks and benefits? What can my company pay for that won't end up costing the same as if I paid myself?


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    #2
    pedroeibar1
    Closed Accounts Posts: 5,108 ✭✭✭pedroeibar1


    If you do not trust your accountant - change. Otherwise listen to and accept his/her advice instead of trying to second guess here..


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    #3
    goz83
    Registered Users Posts: 8,034 ✭✭✭goz83


    pedroeibar1 wrote: »
    If you do not trust your accountant - change. Otherwise listen to and accept his/her advice instead of trying to second guess here..

    Where did I suggest that I do not trust my accountant? How could my accountant possibly benefit from giving me the answers stated above?

    I plan to sit down and hash all this stuff out, but I figured there would be plenty of people here with experience and information on what can and cannot be run through the company. Obviously I am not suggesting I get my house redecorated and have it run through the company, but anything that the company could legitimately offer as a benefit tax wise, before paying myself and then getting heavily taxed when I wouldn't need to.


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    #4
    jimmii
    Registered Users Posts: 14,810 ✭✭✭✭jimmii


    goz83 wrote: »
    Where did I suggest that I do not trust my accountant? How could my accountant possibly benefit from giving me the answers stated above?

    I plan to sit down and hash all this stuff out, but I figured there would be plenty of people here with experience and information on what can and cannot be run through the company. Obviously I am not suggesting I get my house redecorated and have it run through the company, but anything that the company could legitimately offer as a benefit tax wise, before paying myself and then getting heavily taxed when I wouldn't need to.

    Your whole post is questioning everything your accountant has told you which suggests that you don't trust what they have said and is why you have come here to ask instead of just taking their word for it.


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    #5
    elastico
    Closed Accounts Posts: 4,592 ✭✭✭elastico


    goz83 wrote: »
    Can anyone fill in some blanks on this? I just set up a Ltd company, as I expect significant growth and I am a sole trader in another area. My understanding was that a Ltd company could provide a few perks for the owner. For example; I was thinking about replacing my car in a few months for maybe a 2010-2012 MB E200. My thoughts were to let the company buy this, instead of paying myself, then paying paye and usc before buying in my name. My accountant says I woukd end up paying the same tax on a car and that it really only makes sense if buying a van or commercial vehicle. He mentioned Benefit In Kind. I should mention that my spouse has all my tax credits.

    I then thought that the company would provide health insurance for its secretary (me). Again, the logic being that I am not paying myself and paying employee taxes before buying health insurance. He said again that it would work out the same as BIK.

    OK, so I asked if the company provided gym membership to keep staff happy and healthy.....yep, it would work out the same.

    So what is the story with the perks and benefits? What can my company pay for that won't end up costing the same as if I paid myself?

    Surely you should have discussed all this with your accountant before going to the expense of setting up a limited company?


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    #6
    delahuntv
    Closed Accounts Posts: 1,532 ✭✭✭delahuntv


    accountant is right inmost of what he says.

    BIK negates any advantage of most items unless you are doing extensive business related mileage on a car.



    From reading your post you are simply looking for a way of avoiding tax and that is the totallly wrong way of approaching the question.


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    #7
    dbran
    Registered Users Posts: 2,094 ✭✭✭dbran


    delahuntv wrote: »
    accountant is right inmost of what he says.

    BIK negates any advantage of most items unless you are doing extensive business related mileage on a car.

    He is wrong on the gym - that won't have BIK applied as per budget announcement a few years ago.

    From reading your post you are simply looking for a way of avoiding tax and that is the totallly wrong way of approaching the question.

    What budget announcement?


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    #8
    delahuntv
    Closed Accounts Posts: 1,532 ✭✭✭delahuntv


    dbran wrote: »
    What budget announcement?

    whoops - at my age, a few years is longer than I think!!

    It was taken away in 2003 :(


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    #9
    JohnFalstaff
    Registered Users Posts: 875 ✭✭✭JohnFalstaff


    Forget about buying a car etc - your accountant is correct.

    If your Ltd company is making a profit above a certain threshold, look at taking a reduced salary and having the remaining profit taxed at a corporate rate and ploughing the money back into the company. You can read this: http://www.revenue.ie/en/tax/ct/
    But your accountant will probably give you the same advice!


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    #10
    goz83
    Registered Users Posts: 8,034 ✭✭✭goz83


    jimmii wrote: »
    Your whole post is questioning everything your accountant has told you which suggests that you don't trust what they have said and is why you have come here to ask instead of just taking their word for it.

    Look at the post again. I was not questioning my accountant anywhere, or suggesting he was wrong on anything. I trusted what he said was correct. It was a quick phone conversation, so no details were discussed. I asked here to see what I could legally put through the business that I might be spending through my own "salary". For example; I would regularly buy lunch for myself and staff. If on the road, or in the office, can these be expensed? I used to be able to expense lunch when I worked as a sales rep with Eircom a few years ago. So, I was wondering if maybe i'm missing some of the benefits abailabke as a company owner.

    The main purpose of the limited company was for liability and vat purposes. I still act as a sole trader in another industry, so the limited company was necessary for my new venture.


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