Employing wife

[Blue Fox]

Hello all,

At the moment I'm a sole trader after starting up in January. I obviously do all the work, pricing etc and do most of the paper work but my wife answers the landline when I'm not there and occasionally does a bit of paper work for me or picks bits up from the wholesalers occasionally. I don't pay her a wage for doing this. At the moment she isn't working after we had a baby 10 months ago so I was thinking can I pay her a wage for this as then I could pay her up to her tax free limit and save us paying tax on about

 

[The Godfather]

You would be her employer as such and therefor responsible for so much more, like NI for example.

The Godfather

 

[batty]

Do you not have an accountant. I do my accountant sorts that side of the business out. If you have a simple business without VAT you probably would only pay around

 

[Blue Fox]

No don't have an accountant - was trying to save on my costs as only just starting up and at moment only working at this evenings, fridays(been laid of fby regular job) and weekends until I can build up a reputation and get enough work in to go full time. Would you say an accountant was a worth while investment?

 

[batty]

No don't have an accountant - was trying to save on my costs as only just starting up and at moment only working at this evenings, fridays(been laid of fby regular job) and weekends until I can build up a reputation and get enough work in to go full time. Would you say an accountant was a worth while investment?

I think if you have an accountant you are less likely to be visited by tax and Vat man if you get registered and it saves you working out what you owe but if you are happy doing it yourself I say good luck to you.

Batty

 

[NozSpark]

I "employ" my wife just like you would like to, I was in fact advised to by an accountant..

So long as what you are paying her is below any tax/NI threshold then all you need is a "contract" from her saying that what you are "paying" her is her only income and that it is below the tax/NI threshold and that she is responsible for any tax/NI due..

You will also need to have "pay slips" if you ever get pulled by HMRC

 

[spinlondon]

I think the threshold for NIC is about

 

[avinalarf]

Blue Fox

Understand you wanting to keep costs down, but as Batty said, it's worth having an accountant. As well as my electrical business, I run another business and (due to children) my income isn't much. I keep basic accounts in a spreadsheet and he just does my TR every year. He's definitely worth it - he'll let you know exactly what you can get away with and takes the hassle out of having to complete forms etc.

Note that for the sake of the state pension (for what it's worth!) your wife should still try and pay her NICs.

HTH

Nat

 

[Doug]

I don't see why you can't employ your wife and pay her as much as you like. You would need to phone HMRC to register as an employer and then use PAYE. If you only pay her a very small amount then you may be able to do what NozSpark suggested, but I am not familiar with the rules for that.

An alternative would be to change from a sole proprietor to a partnership and split the profits, perhaps 80/20. HMRC may not accept a 50/50 split if you are obviously doing the majority of the work. This would mean a tax return each and a partnership return each year, all based on the same set of figures. Also, as your wife would be self employed, she would pay NI by direct debit like you presumably do.

 

[Evans Electric]

I remember my accountant saying it was not worth the hassle as a sole trader, for him and me. Different ,I think , if she was running an office full time.