It took me longer to set up than I expected, mainly because I was out of the country earning money for the company, but I finally paid myself a salary for the first time. There’s no use in having a lot of money on the company’s account if your personal account is empty.
The way to do this in the UK is to set up a PAYE (Pay As You Earn) scheme for the company and then have a good accountant who can do all the calculations and send you a couple of payslips: one for you, one for the Inland Revenue that includes income tax and National Insurance contributions. Then it’s just a matter of doing a couple of bank transfers, making sure you have the correct reference on the one for IR. It’s all reasonnably straightforward.
It was good to be able to finally transfer money to my personal account as its balance was starting to get uncomfortably low after 3 months without income. The good side of this was that, for this one payment, I had very little taxes to pay because of this 3 month lack in salary. In practice, I could have done that quicker if I had really needed to but it is definitely something to take into account when starting a business: make sure you have some cash saved in case you can’t pay yourself immediately.
In the process, I discovered that HSBC, in all their wisdom, automatically open a savings account for your company alongside its business current account. There seems to be no snag in using it: you can take the money out when you need it and it gathers interest in the meantime. So I made sure I transferred some funds in there as well, to build up a cash cushion for when the times get rough or invest in growing the company when I feel like it.
Next on my list are to sort out BUPA and private pension. Oh and finding another customer to keep the company’s accounts healthy.
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