THINGS TO CONSIDER WHEN STARTING A BUSINESS, HAVE I WRITTEN A BUSINESS PLAN?
Bells Accountants can provide you with a template document, or come in and see us for some guidance if you have more specific requirements.
THINGS TO CONSIDER WHEN STARTING A BUSINESS, DO I NEED FINANCE?
Bells Accountants can put you in touch with specialists who can help you access finance or grants from many sources. We can also help put together the applications for the various bodies.
THINGS TO CONSIDER WHEN STARTING A BUSINESS, SHOULD I HAVE A SEPARATE BUSINESS BANK ACCOUNT?
Yes. For limited companies it is a legal requirement to have a business bank account, for sole traders it is optional but we would always recommend separating your business and personal expenditure.
THINGS TO CONSIDER WHEN STARTING A BUSINESS, WHAT BUSINESS STRUCTURE SHOULD I USE?
There are various options including Sole Trader, Partnership, Limited Company, Community Interest Company or Limited Liability Partnership. Bells will look at your individual circumstances and advise on the pros and cons of each option for you.
WHAT DOES IT MEAN TO BE SELF-EMPLOYED?
When you are self-employed it effectively means that you are receiving income from a business or trade that is not taxed at source by an employer or agency. This money therefore needs to be declared to HMRC as part of a self-assessment tax return. Bells can help you to register for self-employment, provide guidance as to what expenses you can claim tax deductions for and complete your tax return for you each year.
BEING SELF-EMPLOYED, HOW DOES THE “TAX YEAR” WORK?
The tax year runs from the 6th April to 5th April each year.
WHAT ARE THE DEADLINES FOR ME IF I’M SELF-EMPLOYED?
Your tax return is due by 31st January following the end of each tax year.
BEING SELF-EMPLOYED, WHAT CAN I CLAIM FOR?
The expenses you can claim for are very specific to each trade, for example, a consultant cannot claim for all the same things a plumber can claim for although there will be some things that can be claimed for by both such as travel and telephone bills. Bells Accountants can provide some general guidance in the form of a leaflet or a bespoke list. Fill out our contact us form for more information.
BEING SELF-EMPLOYED, HOW DO I PAY MY NATIONAL INSURANCE CONTRIBUTIONS?
The best way to pay this is via monthly direct debit straight from your bank account, Bells can provide you with a form to complete to get this arrangement set up.
WHY BECOME A LIMITED COMPANY?
The main advantage to trading as a limited company is that companies pay a fixed rate of 20% in corporation tax on annual profits up to £300,000. As a sole trader you are subjected to the normal income tax rates which includes the 40% bracket for taxable income over £32,001 and class 4 national insurance of 9%!
ARE THERE ANY DISADVANTAGES TO BEING A LIMITED COMPANY?
Accountancy fees are higher for limited companies as there is a lot more administration required but if we make a recommendation that you should incorporate (go limited!) we will always demonstrate to you exactly how much tax you will save and go through the pros and cons in full so that you can make an informed decision.
WHAT ARE THE DEADLINES FOR LIMITED COMPANIES?
Companies have their own financial year end given by companies house, this is usually twelve months after they initially set up. They then have 9 months from their financial year end to file their abbreviated accounts with companies house and 12 months to file their corporation tax return and accounts with HMRC.
WHAT CAN I CLAIM FOR AS A LIMITED COMPANY?
The expenses you can claim for are very specific to each trade, for example, a consultant cannot claim for all the same things a plumber can claim for although there will be some things that can be claimed for by both such as travel and telephone bills. Bells can provide some general guidance in the form of a leaflet or a bespoke list. Fill out our contact us form for more information.
HOW DOES VAT WORK?
Standard VAT works by adding up all the VAT you have charged on your sales (20% on top of your net fees), deducting all the VAT you have paid out to your suppliers and handing over the difference to HMRC. This information is usually reported to HMRC on a quarterly basis via completing a VAT return. There are different schemes available such as the flat rate scheme which can help to save you money but speak to us about the different options and we will help you decide what’s best for your business.
DO I HAVE TO REGISTER FOR VAT?
The current compulsory threshold for VAT registration is £85,000.00 which means if your turnover in the last 12 months is over this figure or it is likely to go over in the next twelve months you will need to think about registering your business for VAT. We can advise you on the whole process and help you to decide which VAT scheme to go on to save you the most money. It may even be worth you registering for VAT voluntarily as for some businesses this means they can claim back considerable amounts of VAT they have paid out or even make additional profits from charging VAT to their customers and paying it over at a lower rate.
ARE THERE ANY VAT EXEMPTIONS?
There are some exemptions available for some trades but you need to be very careful not to misunderstand the guidance available from HMRC as there are hefty penalties for those who get it wrong despite this area being a minefield of information:
DO I HAVE TO HAVE A PAYROLL SCHEME?
If you are paying any individuals to assist you with your business and they meet HMRC’s guidance for what is deemed “employment” rather than “self-employment” then you will need to administer a payroll scheme to ensure they are being taxed appropriately. If you fail to do this you can be held responsible for the tax and national insurance that you should have deducted from them and passed over to HMRC. We can advise you on whether you require a payroll scheme and also run it for you in full right through to providing payslips for your staff and even physically making the BACS payments into their accounts on pay day. If you are a one man band limited company you may still benefit from setting up a payroll scheme to take advantage of the tax free personal allowance you can pay yourself. We can look at your individual circumstances and advise you on the best course of action.
IF I NEED SOMEONE TO WORK FOR ME ARE THERE ANY ALTERNATIVE WAYS TO PAY THEM OTHER THAN PAYE?
You may be eligible to pay some of your team on a self-employed basis which means they will be responsible for their own tax and NI. We can help you decide if any of your team meet the criteria and ensure that you meet your responsibilities as a business owner.
WHERE IS THERE INFORMATION AVAILABLE TO HELP ME?
There is a lot of information available to help you on HMRC’s website:
We will always be very happy to help you translate any of the technical jargon you find or direct you towards the right section.
DO I NEED AN ACCOUNTANT OR A BOOKKEEPER?
It is not a legal requirement for an accountant or bookkeeper to file any of your statutory documents but when considering doing it yourself we would ask you to consider the following:
- Recognise your strengths and focus on what makes you money
- Understand that the limitations to your knowledge will cost you money in both the lost value of your time and in actual tax paid
- Remember that accountancy fees are tax deductible
HOW CAN I MAKE THE MOST OF MY ACCOUNTANT
If you are not happy with your current accountant it is very easy to switch to us here at Bells Accountants but whether you use us or another accountant please bear in mind the following:
- Utilise free consultations – most accountants will provide at least one free consultation to find out about your requirements – make the most of this and ask away!!
- Get a second opinion – if you are not 100% confident about any advice you have been given check it out with another professional.
- Find an accountant that you can talk to – approachability and free communication is the key to a good working relationship
- Prepare for meetings – ideally write an agenda but if you don’t have time for that at least note down the questions you would like answered so you don’t forget anything.
- Organise your paperwork – make sure all the documentation you need to give your accountant is in one place – even if it’s in a shoe box! It speeds everything up considerably when it comes to your year end and saves you time searching for important documents later.
- Brief properly on questions and ask for further explanation if necessary – when asking us a question make sure you include as much information as possible on your circumstances so that we are fully informed and can advise you as best we can. If you don’t understand the response – ask again for clarification! There is no shame in wanting to fully understand an answer you have given – after all we would struggle to do your job so we don’t expect you to know how to do ours, that’s what you pay us for!
- Never be afraid to ask and keep talking to us – Keep us posted as much as you can about your dreams and aspirations for your business and involve us in as many business decisions as you can. We can only properly advice you if we are aware of what is going on with your business and what direction you are going in. Particularly if you are looking at investing in a major new asset or taking on a new member of staff, there is absolutely better and worse times to do this so let us help you decide if now is the right time!