when to start, warchest

README.md

@@ -18,17 +18,27 @@ The post contains some affiliate links, they are denoted with `(aff.)`. I am not
 There is no easy way to tell when is the best time to do it. 
 However, there are some preconditions and concerns that may impact your decision.
 
+In an ideal scenario, you should finish your previous work on Friday and start on a Monday.
+If you don't have a signed contract in hand and wish to quit work before applying for a contract, you need to build up savings before hand - please refer to the warchest section for more details on that.
+
+In an ideal scenario, you should get your first contract from a personal connection, perhaps a past employee and not rely too much on the broaded job market.
+
 
 ### Financial stability
 
-You should have savings to cover at least 4 months of your usual expenses. 
+You should have savings to cover at least 6 months of your usual expenses. 
 You will spend some money establishing a company. 
 It may take several weeks to find your first contract. 
 Even if you're lucky enough to sign a contract immediately, you may need to wait a month to invoice your client and another month to get it paid. 
 In short, most likely you'll not be able to withdraw any money from your business account until 2-3 months after you start looking for a contract position.
 
 Also, you may have unexpected expenses, because life.
 
+As you start receiving the payment, you need to understand that this is you Ltd company money, not your private account.
+You need to set aside money for Corporation Tax, VAT and expense and you can only withdraw from the rest and this will be taxable on both ends - as company profix (so subject to CT) and your profit - subject to 'normal' income taxation.
+
+Finally, as you carry on doing contract work you need to maintain the same level of savings set aside, referred to as a 'warchest'.
+The most tax efficient way of doing this is by keeping the money in the company account. You can then choose what do with the money at a later date - typically this means you can keep paying yourself between contracts.
 
 ### Am I ready?
 
@@ -168,6 +178,14 @@ Do it as soon as you incorporate your company.
 During the appointment they will scan some documents, ask a few generic questions and try to sell you extra services you most likely don't need. 
 It took 2 days after the appointment to open my account.
 
+### Paying yourself
+
+The most tax efficient (and absolutely legal) way of paying yourself in the UK (assuming no other sources of income) is as follows:
+1. A base salary up to approximately 10000GBP (this amount is adjusted every year by HMRC) which is basically tax free.
+2. Pay the rest in dividends.
+3. Computer equipment, software, travel accommodation, can all be treated as expenses so while technically not income, you not have to use 1 and 2 for the things you need for work.
+Your accountant can and should also advise you on that.
+
 
 ### Expenses