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saz
Posted: 15 April 2021 10:32:40(UTC)
#1

Joined: 25/03/2021(UTC)
Posts: 39
Hi

I have started to make quite good money blogging and it's making me feel rather 🤪

I have been blogging for years but it's just been a hobby. I declared tax for the last two tax years as I did make money. It became considerably more last tax year and I will be earning over 85k this year so will need to pay VAT!!!

I have always been employed! Blogging is my first stint of self-employment. I am scared to death making so much cash, to be honest! I have spoken to an accountant who has suggested becoming a limited company which makes me even more nervous!!!!!!

I have no real expenses. I had a simple plan. Anything over 50k put in a sipp so I don't pay 40% tax. Now I could earn more than 100k and will need to pay VAT I am getting very nervous. I was a housewife before blogging with zero income as i finished work to have kids. So the money is just extra cash. Would being a limited company be better for me as I can put more into a pension and it is an expense with no tax on it?

Any words of wisdom would be fab.
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DIY Investing
Posted: 15 April 2021 11:00:41(UTC)
#2

Joined: 29/09/2018(UTC)
Posts: 3,828

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saz;165082 wrote:
Hi

I have started to make quite good money blogging and it's making me feel rather 🤪

I have been blogging for years but it's just been a hobby. I declared tax for the last two tax years as I did make money. It became considerably more last tax year and I will be earning over 85k this year so will need to pay VAT!!!

I have always been employed! Blogging is my first stint of self-employment. I am scared to death making so much cash, to be honest! I have spoken to an accountant who has suggested becoming a limited company which makes me even more nervous!!!!!!

I have no real expenses. I had a simple plan. Anything over 50k put in a sipp so I don't pay 40% tax. Now I could earn more than 100k and will need to pay VAT I am getting very nervous. I was a housewife before blogging with zero income as i finished work to have kids. So the money is just extra cash. Would being a limited company be better for me as I can put more into a pension and it is an expense with no tax on it?

Any words of wisdom would be fab.


Your accountant will know more about this specific area than me, but it sounds like good advice to me.

You can still pay yourself a salary from your company. I’ve heard from self employed people that around a £40,000 salary is about optimal, and you can pay into your pension and get the tax relief up to £40k if you want to. After that then it might be more tax efficient to take the rest as dividend, or reinvest in the ltd company if needed. As you would still be a basic rate taxpayer you would only pay 7.5% on those dividends (and none for the first £2k I believe). However, I have heard that some keep the money within a limited company and buy investments within that rather than take the tax hit on the dividends even....

Your accountant is probably the best person to advise as long as he is a good one!
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3 users thanked DIY Investing for this post.
Tim D on 15/04/2021(UTC), saz on 15/04/2021(UTC), Sheerman on 15/04/2021(UTC)
saz
Posted: 15 April 2021 11:34:57(UTC)
#7

Joined: 25/03/2021(UTC)
Posts: 39
Thank you!! It isn't a bad dilemma I know but I had just got my head around doing a self assessment tax return and now to move to Ltd makes me very nervous, Can you tell i don't do like change lol
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countrymum
Posted: 15 April 2021 11:37:32(UTC)
#8

Joined: 05/08/2019(UTC)
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Firstly huge congratulations on the success of your blogging, that is fantastic that your blog is doing so phenomenally well at present.

I think you've definitely done the right thing speaking to an accountant. If you trust them implicitly, then I would delegate the financials to them - you say it scares you, and so I'm guessing there may a danger that your emotions around earning might start to impact on your enjoyment of your blogging? I assume that a crucial element of your blog is that you enjoy it, as then your enthusiasm will still come through to your followers (again I'm guessing here)? What I'm trying to say is, it seems important to not let the financials start to affect your "hobby" that you enjoy doing as "just extra cash", and so your accountant taking on the financial burden may help you in managing this.

Re limited company, I would take the advise of your trusted accountant. The one question I would ask them though is longevity - you don't mention if the blog's financial success is likely to continue for years to come, or if it could be a one-year wonder (from a financial income point of view - clearly you would continue to enjoy as a hobby for years to come). Does financial longevity impact upon the legalities / paperwork etc of becoming a limited company? I have no idea, hence the question.

Finally, you seem to be worried about VAT / Tax. If the money is "just extra cash" then I personally would just accept the money as a very welcome bonus, and pay whatever is due, without letting it dictate / steer me into a path (limited company) that wasn't the original intention, and also without letting it overwhelm you with worry. That's just me though - I'm sure others will advise differently.
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2 users thanked countrymum for this post.
Sheerman on 15/04/2021(UTC), Ad B on 17/03/2022(UTC)
saz
Posted: 15 April 2021 11:59:50(UTC)
#9

Joined: 25/03/2021(UTC)
Posts: 39
That's it exactly country mum!! I though in year 1 it would last a few months and then the same in year 2 and now in year 3...BUT it isn't something I cant see going on and on!! I suppose that's why i don't like the idea of a limited company and the fact its limited too. it was for fun really and the ltd idea makes it feel like a business that sits oddly with me,
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1 user thanked saz for this post.
countrymum on 15/04/2021(UTC)
saz
Posted: 15 April 2021 12:01:22(UTC)
#10

Joined: 25/03/2021(UTC)
Posts: 39
I may look at drop shipping as I have a knack with stuff it seems BUT I would get that being a ltd company it's just this. Sits weirdly with me.
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Sheerman
Posted: 15 April 2021 12:18:56(UTC)
#11

Joined: 01/07/2019(UTC)
Posts: 182
It's nothing to be worried about, but an informative, trustworthy and 'law abiding' accountant I find is important to deal with your end of year accounts and questions. It may not last for ever so make the best of it now.

As others mentioned it's more tax efficient to take a small regular salary and extra money as dividends (top up your ISAs) and pay into a SIPP as a company contribution up to 40Kpa. The benefits more than cover any set up and accountancy costs.
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saz
Posted: 15 April 2021 12:33:51(UTC)
#12

Joined: 25/03/2021(UTC)
Posts: 39
Yes, it’s just the unknown! I found an accountant online who’s sent me a forecast of how much it would cost. Their reviews look good but any recommendations would be great!
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Sheerman
Posted: 15 April 2021 13:31:22(UTC)
#13

Joined: 01/07/2019(UTC)
Posts: 182
Reviews might be useful, personal recommendations better. Personally I would want someone local I could meet in person, at least in the future.
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1 user thanked Sheerman for this post.
saz on 15/04/2021(UTC)
bédé
Posted: 15 April 2021 14:03:37(UTC)
#14

Joined: 26/09/2018(UTC)
Posts: 7,895

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Accountants make more money from Limited Companies than they do from Partnerships or simple Freelance. Their advice might be self-serving. Caution.

A limited company would come in handy only if you were likely to be sued for bad advice. It would, as it says on the tin, limit your liability.
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3 users thanked bédé for this post.
saz on 15/04/2021(UTC), Tim D on 15/04/2021(UTC), Laura Sommer on 16/04/2021(UTC)
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