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hav_2_get_hsmp wrote:Gross profit = Sales/income - Expenses
Net profit = Gross profit - (any) taxes
Net profit is what you can pay yourself as dividends. This money could either be in your company accounts or in your personal accounts. All you have to do is provide proofs (company returns, dividend vouchers, accountant letter) for net profit wherever it is.
It depends on how you run your company. E.g. If you are taking dividends out of the company...then you be assessed based on dividends+salary(min) you are taking out from your companay.Spirea28 wrote:Hi all,
I understand that as a contractor, the earnings that will be assessed are the profits I earn before tax. I was wondering by profits does that mean income minus expenses?
Many thanks for your advice!
It depends on how you run your company. E.g. If you are taking dividends out of the company...then you be assessed based on dividends+salary(min) you are taking out from your companay.chetanojha wrote:
You will also need to provide invoices to prove your earnings for the same.Spirea28 wrote:Thanks chetanojha for the information...Spirea28 wrote:It depends on how you run your company. E.g. If you are taking dividends out of the company...then you be assessed based on dividends+salary(min) you are taking out from your companay.chetanojha wrote:
If you are keeping all your earning in company only i.e. not taking any dividends etc. then you have to submit lot of documents vix. invoices/bank statement(company) etc etc.
Straight forward way is to take dividends from company..and submit dividend vouchers,letter from accountants,personal bank statement for earnings.
I do not operate thru a company - basically am a designer working on a contract by contract basis. So everytime I finish a job, I invoice the company and then I either get a cheque or direct transfer of funds to my bank account. Hence, all my earnings are clearly shown on my bank statements. If I provide these statements + a letter from my accountant confirming my gross profit - would that be enough?
Many thanks!
Thanks again chetanojha - I have all the invoices on file...I was wondering if one only needs to submit 2 pieces of evidence from different sources to prove previous earnings claimed? In my case, do you think bank statements + accountants letter is suffice? Or you think providing invoices would make things clearer to the case worker?chetanojha wrote:Spirea28 wrote:You will also need to provide invoices to prove your earnings for the same.Spirea28 wrote:chetanojha wrote:
Yes you are right. You can submit accountant letter+bank statement. But money in your bank account you should be proved? Invoices will fill the gap. You have to submit the corroborative evidence.Spirea28 wrote:chetanojha wrote:Thanks again chetanojha - I have all the invoices on file...I was wondering if one only needs to submit 2 pieces of evidence from different sources to prove previous earnings claimed? In my case, do you think bank statements + accountants letter is suffice? Or you think providing invoices would make things clearer to the case worker?Spirea28 wrote:You will also need to provide invoices to prove your earnings for the same.Spirea28 wrote:
Sorry if I am a bit pendantic here....sometimes am confused if I shall submit more but worried I would confused the case worker.
Yes you are right. You can submit accountant letter+bank statement. But money in your bank account you should be proved? Invoices will fill the gap. You have to submit the corroborative evidence.[/quote][/quote]
depends on the expenseSpirea28 wrote:Hi all,
I understand that as a contractor, the earnings that will be assessed are the profits I earn before tax. I was wondering by profits does that mean income minus expenses?
Many thanks for your advice!
Hi republique,republique wrote:depends on the expenseSpirea28 wrote:Hi all,
I understand that as a contractor, the earnings that will be assessed are the profits I earn before tax. I was wondering by profits does that mean income minus expenses?
Many thanks for your advice!
you mean profit, true profit meaning sales minus expensese the company incurrs.
If you pay yourself your full profits then that is your gross income but you have to pay yourself to declare it. Not say I made this much from the company or it isn't income. tadah
It doesnt matter you are not a limited company, you incurred expenses as part of your business, thus your invoice amount is not your income and you still have to pay yourself in a clear manner if you had, you would know what is your income.Spirea28 wrote:Hi republique,republique wrote:depends on the expenseSpirea28 wrote:Hi all,
I understand that as a contractor, the earnings that will be assessed are the profits I earn before tax. I was wondering by profits does that mean income minus expenses?
Many thanks for your advice!
you mean profit, true profit meaning sales minus expensese the company incurrs.
If you pay yourself your full profits then that is your gross income but you have to pay yourself to declare it. Not say I made this much from the company or it isn't income. tadah
Thanks for the clarification. I am slightly confused however and would appreciate any further advice. Basically I do no operate thru a company/ltd. I am a self employed contractor - so for example, I earned x amount from my contracted work (as exactly shown on my 12 months bank statements). Expenses for a self employed contractor includes utilities bills/travel expenses/stationary, etc, not covered by my employers. My question is - shall I claimed my gross earnings or earnings minus expenses? Or the home office basically would not take into consideration of expenses, in which case, only my gross earnings are relevant?
Am quite confused - would really appreciate your and anyone from this forum's advice.
Many thanks!
Hi republique,republique wrote:It doesnt matter you are not a limited company, you incurred expenses as part of your business, thus your invoice amount is not your income and you still have to pay yourself in a clear manner if you had, you would know what is your income.Spirea28 wrote:Hi republique,republique wrote:depends on the expenseSpirea28 wrote:Hi all,
I understand that as a contractor, the earnings that will be assessed are the profits I earn before tax. I was wondering by profits does that mean income minus expenses?
Many thanks for your advice!
you mean profit, true profit meaning sales minus expensese the company incurrs.
If you pay yourself your full profits then that is your gross income but you have to pay yourself to declare it. Not say I made this much from the company or it isn't income. tadah
Thanks for the clarification. I am slightly confused however and would appreciate any further advice. Basically I do no operate thru a company/ltd. I am a self employed contractor - so for example, I earned x amount from my contracted work (as exactly shown on my 12 months bank statements). Expenses for a self employed contractor includes utilities bills/travel expenses/stationary, etc, not covered by my employers. My question is - shall I claimed my gross earnings or earnings minus expenses? Or the home office basically would not take into consideration of expenses, in which case, only my gross earnings are relevant?
Am quite confused - would really appreciate your and anyone from this forum's advice.
Many thanks!