limited company - essential guide on how to keep your accounts

8/12/2019 Limited Company - Essential Guide on How to Keep Your Accounts

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Limited Company

Essential Guide - How to Keep Your Accounts

Made Simple!


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3This Guide aims to give general guidance. It should go without saying that it is NOT a substitute for professional advice. Thingschange, not everyones circumstances are the same. No responsibility at all can be accepted by the author for any lossincurred by a reader of this guide.Copyright CheapAccounting.co.uk, Email:[email protected], Telephone 0844 884 2399

Business bank account - Record Income and Costs

Expenses claim

Pay a salary

Pay PAYE and NIC

Pay dividends

Reconcile Bank

What is profit?

Budget for Corporation Tax

Budget for Personal tax

The Bookkeeping - Quarterly Events

Prepare VAT Return

Pay Vat

The Bookkeeping - Annual Events

An Annual Return

Year End or Accounting Reference Period

Annual Accounts

CT 600 Corporation Tax Return

Paying Corporation Tax

Annual Self Assessment

Annual Employer Returns

Late filing

Dormant Accounts

Sundry

Directors salary and National Minimum Wage

Directors salary and Tax Investigations

Directors salary and State Pension

Use of home as office

Prepare an invoice

VAT

When To register

Overview of VAT

Invoicing whilst you wait for VAT registration confirmation

Claiming for vat on items purchased prior to registration

Reclaiming VAT on goods you bought before registration


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Vat Schemes

Do I need an accountant?

Can I complete all my filing duties on time?

Can you afford not to have an accountant?

Getting the most from your Accountant


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The Rules! - Essential Background Reading to Getting Started

Lets start with a few basic rules for your limited company.

Business bank accountIf you operate as a limited company then you must keep a separate business bank account

for the company, because it is a separate legal entity.

So make sure that you have set one up or do it now.

Business and private keep it separateDon't mix private and business expenditure. Your bookkeeping will be quicker and easier if

you only put business transactions through your business account.

In fact, paying private costs out of the business can create serious tax problems and should

be avoided.

Don't be tempted to pay for non-business things out of the business just because that is

where the money is and it is convenient.

Business expenses paid for privatelyIf you pay business expenses personally you are, of course, entitled to reclaim them back

from the business. Try to avoid this as much as possible by using a debit card on yourbusiness account.

Where it is unavoidable take the same approach as if you were claiming expenses from an

employer.

Detail the claim on a sheet of paper; don't forget to attach supporting receipts (and the

mileage log if relevant); and file it.

Finally, try to do it at least once every month so you don't forget any costs or lose receiptsand so miss out on claiming a legitimate expense against tax.

Personal credit card used for business expensesIf you are using a credit card for business expenses, use it exclusively for the business (don't

put private expenditure on it) and pay it off in full at the end of every month.

You will need to analyse the amounts spent on the credit card across the business expense

items (see below), because credit card transactions will often fall into different categories.

Claim the costs back in the same way as you have for expenses paid privately.


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Paying Yourself - Salary v Dividends

One of the many reasons for setting up a Limited Company is to benefit from the tax

advantages of paying yourself a mixture of a salary and dividends.

Dividends attract no National Insurance payments. So these are seen as a tax efficient

method of the distribution of the profit from your limited company.

However unless you have income from other sources, then it could be advantageous to pay

yourself a salary that utilises your personal allowance - the amount you can earn before you

pay tax.

To pay yourself a salary you may need to ensure that the company is registered as an

employer.

We suggest that you agree your final payment structure with your accountant before you

implement it and the following should be used for guidance only.

Salary

The amount you pay in a salary will depend on your circumstances. In the majority of cases

this will be set at a level equivalent to the amount you can earn before you pay tax ornational insurance.

The most appropriate salary for you to pay is something you should discuss with your

accountant.

There are three options which should be considered:

A salary below the lower earnings limit (LEL).

The LEL is the amount you can earn before you pay national insurance. If a salary

is set at this level the company does not need to register as an employer, does not

need to run a payroll and does not need to complete the employer annual returns.

However this does mean that you do not receive national insurance credits towards

a state pension, some benefits etc

A salary equivalent to the 'earnings limit' (EL).


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This is the amount you can earn before paying national insurance. At this level no

tax or national insurance is due and you do receive national insurance credits

towards your state pension and some other benefits.

However at this level the company does need to register as an employer, run a

payroll and complete the employer end of year returns.

To ensure that you do not receive demands from HMRC for underpaid PAYE when

no amounts would be due, you must file a nil return.

This is a really easy thing to do (2 second job).

Around the 10 th of each month follow this link and enter your Accounts Office

Reference Number in the box at the bottom of the screen:

http://www.hmrc.gov.uk/payinghmrc/paye-nil.htm

The Accounts Office Reference Number can be found on your paper work from

HMRC when you registered as an employer.

Above the earnings limit.

At this level tax and national insurance will be due. Again the company does need

to register as an employer, run a payroll and complete the employer end of year

returns.

The salary paid can be recorded as a cost and can reduce your profit. This in turn will

decrease your corporation tax. In many cases this will obviously not be enough to live off.

Dividends

You can declare a dividend that, together with the salary will be your income from the limited

company.

Dividends can be declared when you want. Generally it is suggested that they are paid on a

quarterly or half yearly basis but there is no law to prevent you paying them monthly.


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Certain rules must be followed when a dividend is paid so as not to make the payment an

'illegal distribution' of profit.

Follow these and you won't go far wrong.

How to work out your dividend

Start by establishing the Company's profits.

From the profit take off:

any dividends already paid in this financial year

an estimate of the corporation tax due on the profit

Then add the profit or loss brought forward from last year you will find this in your

accounts. The total is the amount you have available to pay as a dividend - known as

'declaring a dividend'.

A dividend is the distribution of 'after tax profits' so it is essential that the company has made

a profit and has made sufficient provision to cover its corporation tax bill.

If this rule is not followed then the dividend could be viewed as an unlawful distribution of the

company's funds.

Note if this is a negative figure then there are no profits available to declare a dividend. To

take money from the company would be a loan and there are serious tax implications of

loans to directors.

You should discuss this with your accountant before you loan yourself money from thecompany.

As corporation tax is not payable until 9 months after the year end, cash should build up in

the company.

On the day that the corporation tax is payable you should have in reserve not just the money

to pay the tax due but also 9 months worth of the tax that wont be payable for another year.


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Dividends - The Paperwork

At the time of declaring the dividend, a Board Minute and Dividend Voucher should also be

prepared.

When the dividend is paid by the company to its shareholders it is given an associated tax

credit of 10% - see below to see how this is calculated.

This tax credit is a notional amount only. Nothing is due to HMRC and no further tax needs

to be paid on this dividend unless you are a higher rate tax payer - see below.

It is essential that whenever your company pays a dividend to you as a shareholder, it must

be formally declared at a director's meeting.

HMRC can ask for proof of the declaration of dividends and it is recommended that these

documents are kept up to date.


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A worked example of a dividend payment

Company Name: XYZ Limited

Company Address: 1 Any Street, Anytown, Postcode

Company Year End: 31 December

John Smith is the sole director and Jane Smith is the secretary

The company has ten shares of 1 each, all owned by John

Pay a dividend of 100 per share - 1000 in total

Companies pay you dividends out of profits on which they have already paid (or are due to

pay) corporation tax.

The tax credit takes account of this and is available to the shareholder to offset against any

Income Tax that may be due on their 'dividend income'.

The tax credit on a dividend is calculated as follows:

Dividend paid = 90% Tax credit = dividend paid / 90 *10 The total of these two is the 'dividend income' which is entered onto your self

assessment

In the above example

Dividend paid = 1000 Tax credit = 1000 / 90 *10 = 111.11 Dividend Income = 1111.11


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Example of a board minute and a dividend voucher

Board Minute

Minutes of a meeting of directors of XYZ Limited Held at 1 Any Street, Anytown, Postcode

On 1 August 2007

Present: John Smith Director

It was resolved that the company pay a dividend of 100 per 1 ordinary share on 1 August

2007 to the shareholders registered on 1 August 2007.

..........................................

J Smith Director

--------------------------------------------


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Dividend Voucher Example

XYZ Limited

1 Any Street

Anytown

Postcode

1 August 2007

To

Mr J Smith

1 Any Street

Anytown

Postcode

Interim Dividend of 100.00 paid per 1 share for the year ended 30 June 2008 to

shareholders registered on 1 August 2007

J Smith - Director

Number of Shares Dividend Payment Tax Credit

10 1000.00 111.11


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Income Tax on the dividends you receive as a shareholder

Dividends that you receive as a shareholder are subject to income tax.

However if you are a basic rate tax payer you will pay no further income tax as the dividendpaid has an associated tax credit (see example dividend voucher).

If you are a higher rate tax payer you will pay a total of 32.5% tax on dividend income that

falls above the basic rate Income Tax limit but because the first 10 per cent of the tax due on

your dividend income is already covered by the tax credit, in practice you owe only 22.5%.


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What Costs can you Claim?To be allowable, costs must be incurred for the sole purpose of the business.

You cannot claim for personal expenses (eg suits or general clothing).

The following gives some hints on what costs you can include in your accounts.

You may not have costs for all the headings - don't worry about that.

Just use this as a checklist for items that you can record as costs for your business.

Cost of Sales

The cost of the goods you have acquired to make your sales. For example

Subcontractors in the construction industry should include here the cost of any

materials supplied Taxi drivers, minicab drivers etc. and those in the road haulage industry should enter

fuel costs in this box rather than elsewhere unless they are claiming mileage rate Hairdressers should enter shampoo and hair product costs here

At the end of the year you will need to make an adjustment for the stock you have left

So the value for cost of sales will be:

Value of opening stock brought forward from last year Plus Purchases made during the year Less value of closing stock at the end of the year

Other Direct Costs

Discounts Commissions payable Carriage Research Costs

Employee costs

For permanent, temporary and casual employees include

Salaries


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Wages Bonuses Pensions Benefits Employer's NICs

Canteen expenses Recruitment agency fees Subcontract labour costs

Premises

Rent

Business rates Water rates Heat, light & power Property insurance Security Use of home as office

Repairs

Repairs and renewals

General maintenance of business premises General maintenance of machinery

General administrative

Telephone Broadband / Network

Postage Stationery Printing costs Courier services General office expenses

Professional journals and subscriptions Insurance e.g. public liability etc

Travel & Subsistence


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Mobile Phone

If you use a mobile phone it is recommended that you put the bill in the name of the

company.

Then you can claim all of the costs in your accounts (rental, business and personal calls).

Otherwise you will just be able to claim for the business calls made from the phone.

Each employee can have the total cost for one mobile phone met by the company as long as

the bill is in the company name.

Motor Expenses - limited company

Directors and employees can claim 45p per mile for business miles travelled in their own

vehicles for the first 10,000 per tax year (6 April to 5 April). Thereafter they can claim 25p per

mile.

If the car is owned by the company, the director or employee will be taxed on the benefit in

kind for the car and the fuel.

In most cases the tax suffered makes this unattractive.

Fixed Assets

Fixed assets are items which have a useful life or more than one year e.g. a computer, a

machine, van etc.

The asset is recorded in the accounts in the balance sheet item and the cost of the assets is

written off against profit by making a depreciation charge in the profit and loss account.

There are two types of fixed assets:

Tangible e.g. machinery, vans, computers, land and buildings Intangible e.g. goodwill, patents, trade marks

For tax purposes the depreciation charge is not an allowable item but you can claim capital

allowances .

This is a complicated area and often the services of an accountant are needed to work outthe tax and accounting treatment of fixed assets.


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You should post your assets during the year to REPAIRS and then give your accountant a

list of the items which you think should be FIXED ASSETS as the year end.


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The Bookkeeping - Weekly / Monthly Events

Business bank account - Record Income and Costs

The basis of your accounting records will be your income and your costs paid through yourbusiness bank account.

As you raise a sales invoice or have sales receipts, these should be recorded in to your

accounting system.

As you incur allowable business costs, these should also be recorded into your accounting

system, see the chapter on what costs you can claim.

Expenses claimIn addition to items paid from your business bank account you are likely to have paid for

items from your own funds e.g. your cash, your private bank account or credit cards.

You may also have some items that are partly related to your business and partly private

costs e.g. broadband.

To account for these in your records, you should complete an expenses claim form.

Your accountant should be able to provide an example of such a form to complete.

The receipts for the items or your calculations for working out the business related part of

your expenses should be attached to each expenses claim form.

The claim should be entered into your accounting system and the total of the claim should

be reimbursed to you from your business bank account.

Important Note your dividend payments, salary payments and expenses should be paid as

individual amounts and NOT made together in one amount.

Pay a salary As you pay it, enter the amount of your salary into your accounting system.

This will be a straight forward single entry if you are paying yourself a salary at or below the

earnings limit.

If you are paying more than the earnings limit, see section on salary, then you will have

deductions such as tax and national insurance to account for.

The amount of these deductions will be determined from running your payroll.


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Your accountant should advise on getting this set up, along with how to enter the payroll

amounts into the your accounting system.

Important Note your dividends payment, salary payments and expenses should be paid as


Pay PAYE and NICIf you are paying a salary that is equivalent to the earning limit, see chapter on salary v

dividends, then there will be no PAYE or NIC to record in your accounts.

Most small limited companies will be in this position.

However if you are paying above this limit or have other staff then you will need to record the

salaries paid and the PAYE and NIC deductions on the salaries.

As you pay the PAYE and NIC to HMRC on a monthly or quarterly basis then you will need

to record the amount paid from your bank account in your accounting system.

Pay dividends As a director and shareholder of a limited company you will pay yourself by way of a salary

and dividends. See the chapter on how to work out the funds available to take as a dividend.

The amounts paid as dividends from the business bank account need to be recorded in the

accounts as they are taken.

Important Note your dividend payments, salary payments and expenses should be paid as


Reconcile BankHaving recorded all of your income and expenditure transactions in your accounts you need

to check that you have got it right.

This is where bank reconciliation helps.

A bank reconciliation is just a posh name for you making sure that the balance on the bank

statement is the same as the balance in your accounting system, assuming that you are

using accounting software.

Most likely it isnt.

So what do you do?


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You need to check that each item on the bank statement appears on your accounting

system and each item on the accounting system appears on the bank statement tick them

off!

If there are items on the statement that are not on the system then investigate them and addthem if they should be there.

Equally if there are items on your accounting system but not on the statement this could be:

An entry error on your part so you will need to correct it in your accounting system

The item has not yet appeared on your bank statement in which case this is

referred to as an outstanding item and will be carried forward to the next statement

Having checked that the entries on the bank statement are the same as the entries in your

accounting system it should be possible to agree the two balances the bank reconciliation.

An example of this would be laid out as follows:

Balance at bank per accounting system x

Balance per bank per statement x

Difference x

Explained by:

Items not yet on the bank statements x

Note any other differences should have been investigated and corrected.

What is profit?Profit = Income less allowable costs

Is your business making a profit? Do you know what it is? Now at this point in time?

If not why not?

Surely you dont have to wait until the year end for your accountant to work their magic and

produce your accounts? That can take several weeks if not months after the year end. By

which time the information is out of date.

How do you effectively manage your business if you do not know how much profit you are

making or even if you are making a profit?


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If the total of all income received exceeds the higher rate threshold

The higher rate threshold changes each year and you should check with your accountant for

the up to date rates.

Remember that the amount of dividends paid from the company is the net amount.

For income tax purposes this needs to be grossed up take the dividend figure from the

limited company divide by 90 and multiple by 100 for the gross figure.


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The Bookkeeping - Annual Events

An Annual Return

This is a snap shot of information about the Company at a point in time eg. who are theshareholders, directors etc. This if often confused with the accounts but is very different.

This must be filed at Companies House along with a fee of 14 if electronic or 30 if paper.

Year End or Accounting Reference Period

Your accounting date is also known as your accounting reference date or year end date

It is the date up to which your accounts are prepared and is generally the end of a calendar

month. For example 31 December or 31 March.

The year end of the limited company will have been allocated on set up of the company by

Companies House.

The year end will be the end of the month in which the company was set up. For example if

the company was set up on 5 March 2009 then the year end will be 31 March and the first

accounts will be due at 31 March 2010.

HMRC will not know this date as Companies House and HMRC do not work together!

So you also have to inform HMRC of the year end date. This is done on a form called a

CT41 G which will be automatically sent from HMRC to the registered office address of the

limited company shortly after it has been set up.

The year end date can be changed but this has to be communicated to Companies House

on a special form and also to HMRC.

You will find that it is likely that the company has a different year end to the tax year end

which is 5 April. This is fine but there are deadlines for both the company year end and the

tax year end.

As regards filing your accounts then the following are important:

File the accounts at Companies House within 9 months from the end of the

accounting reference period


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Corporation tax has to be paid within 9 months and one day from the end of the


The corporation tax return has to be filed within 12 months from the end of the


Annual Accounts Although Companies House only require an abbreviated set of accounts to be filed, which

look easy to prepare, HMRC do require a full set of accounts including a detailed profit and

loss account and directors report.

Companies House and HMRC are very different government departments and do not work

together. So do not assume that just because you have filed some with one of them, the

other gets it as well.

From 1 April 2011 the accounts filed at HMRC need to be in iXBRL format.

iXBRL stands for inline extensible Business Reporting Language fancy speak for a special

kind of text file which enables data to be read both by humans and computers.

What it means for those currently filing CT600 returns is essentially as follows:

Your CT600 return(s) can no longer be filed on paper but will have to be submittedonline.

If you have been filing online and are used to attaching final accounts in Word or

Excel as a PDF document you will need to be able to convert those same final

accounts into iXBRL or (better still) create them as an iXBRL document using a

suitable final accounts product.

If you have been used to filing online using the HMRC Gateway you may well need to

consider switching to third party software

There are a number of tagging and conversion solutions currently being offered but be

careful.

HMRC advise that you will remain responsible for the accuracy of any return you submit.

So if (for example) you pay to get your final accounts converted from Word to iXBRL, you will

need to be confident that this is going to be done with total accuracy.

CT 600 Corporation Tax Return Along with the full set of accounts, HMRC will require a CT 600 to be completed.


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This is not a straight forward form and, unless you have experience, it is best left to

professionals to complete.

Paying Corporation Tax

Your corporation tax needs to be paid within 9 months of the end of your accounting period.

Dont forget to enter the amount paid in to your accounting system.

Annual Self AssessmentRegardless of how much they earn, each director of the Company may have to complete a

self assessment which should show all of their income from every source, not just from the

company.

Annual Employer Returns Any business which employs staff has a number of reporting requirements eg. P35, P14,

P11D etc.

Employing a member of staff includes yourself as a director if you pay over the Lower

Earnings Limit.

Late filingLate filing of any of the above returns will result in a fine, penalties and interest. In the case

of your accounts you can be fined by both Companies House and HMRC. The fines start at

100 and increase from there up to the possibility of a criminal conviction for significant late

filing of documents.

Dormant AccountsIt doesn't end there of course. Even when you have stopped trading you have to file dormant

accounts each year or if you decide to close the company down there is even a long winded

process to follow for that.


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Sundry

Directors salary and National Minimum Wage

As things currently stand, a director of a limited company does not have to be paid the NMW

provided that he or she does not have a formal contract of employment with the limited

company

The following link to the Direct.gov website contains relevant information.

http://www.direct.gov.uk/en/Employment/Employees/TheNationalMinimumWage

Directors salary and Tax Investigations

It is a common contention that a company director being paid below the NMW is risking

unnecessary attention from HM Revenue & Customs which could provoke a tax

investigation. It is not really practical to comment on the accuracy or otherwise of this

contention: what can be said, however, is that many factors (including straight random

selection) can trigger a tax investigation. But if a companys affairs are in order, then there is

little to fear from such an investigation. And, as an additional comfort, the annual tax and

National Insurance savings by paying a salary based on the Lower Earnings Limit would

more than cover a good tax investigation insurance policy.

Directors salary and State Pension

There can be more complex issues relating to the second tier earnings related state

pension. The following link provides useful information:

http://www.moneymadeclear.fsa.gov.uk/pdfs/contracting_out.pdf

If this is of concern, advice should be taken from a competent Independent Financial Adviser

(IFA). Additionally, a forecast pension entitlement can be obtained from the State Pension

Forecasting Team at the following link:

http://www.direct.gov.uk/en/Pensionsandretirementplanning/StatePension/StatePensionforec

ast


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Use of home as officeDo you work at home? - Rent a room to your company!

If you operate a limited company and work at home, why not rent a room to your business?

Then you can offset the rental against your business profits and reduce your overall tax bill.

So how does this work?

Well there are just a couple of things you need to do to put this in place.

Rental Agreement

You would need to put a rental agreement in place between you, the home owner and yourlimited company.

Your accountant should have a standard agreement available for you to use. So this will not

be an onerous task.

Calculate the rent

The rent that you charge should be equal to the amount that the room in the house costs

you.

That means that the income received is equal to the costs and there is no personal profit on

the rent. So you do not have to pay any income tax on the rent received, although the

income and costs will need to be shown on your self assessment tax return - just a couple

more boxes to complete.

Let's take an example to show how this works.

Sam runs her business from home. She works in one of the bedrooms. The bedroom is used

exclusively for business during the week but serves as a guest room at the weekends.

Her house has a total of 6 rooms, all of equal size.

Sam has added up her mortgage interest, council tax, utilities, insurance and broadband

costs and they amount to 12,000 for the year.

She calculates the rental charge as follows:

Cost per room = 12,000 divided by 6 rooms = 2,000.


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VAT

When To register Any business, not just companies, whose turnover exceeds the VAT threshold in the

previous 12 months has to register and account for VAT.

The most common mistake made here is assuming that the need to register relates to the

accounting year rather than the previous 12 months from the current date.

You must also register for VAT if:

you think your turnover may go over the threshold in the next 30 days you take over a VAT registered business as a going concern you are selling goods into the UK from another country in the EU and exceed the

'distance selling threshold' you acquire goods from other countries in the EU totalling more than the vat

threshold in a year

Registering for VAT means the completion of a quarterly VAT return. This is due at the end

of the month following the quarter end date. So it is essential that the accounts are kept up

to date so that this can be completed on time.

Overview of VATVAT is a tax charged on most transactions in the UK.

When your business reaches a certain threshold then it will have to register for VAT.

This means from the date of registration you:

must charge vat on all your relevant sales

you can reclaim vat where you have been charged it on your purchases

Basically you become an unpaid tax collector for HMRC as you pay to HMRC the VAT that

you have charged on your goods or services less the VAT you have paid on your purchases.

The issue at the point of registration is can you pass the VAT onto your customers?

If your customers are vat registered then this is simply a matter of informing them that you

are now vat registered, adding the vat to their sales and of course showing this on their

invoice. Your customer will be able to claim the vat back so the net effect of this is nil.


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If your customers are not vat registered then they will not be able to claim the vat back and

the vat has to be absorbed either by them through a price increase or by you through a

reduction in your profit.

The vat will also need to be shown on the invoice but as they cannot claim it back effectivelythey have to pay the increased price.

This could mean that your price is no longer competitive in the market and you may have to

absorb some / all of the VAT into your profit margin.

Invoicing whilst you wait for VAT registration confirmation

The HMRC guidance on how to do this is here:

http://www.hmrc.gov.uk/vat/start/register/waiting.htm#4

Guide on Invoicing

This must be adhered to otherwise the vat could end up coming from your sales value.

Claiming for vat on items purchased prior to registration

When you register you can look back over your purchases and in some circumstances you

can reclaim vat:

for goods: you can reclaim VAT up to four years before you registered for VAT for services: you can reclaim VAT up to six months before you registered for VAT

There are certain conditions which need to be met to be able to do this your accountant

will advise on these.

Note these conditions in particular:

Reclaiming VAT on goods you bought before registration

You can reclaim VAT on goods you bought or imported no more than four years before you

were registered for VAT if the goods:

were bought by you as the 'person' who is now registered for VAT are for your VATable business purposes, eg they do not relate to any exempt items

that you sell are still held by you or they have been used to make other goods you still hold


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You can't reclaim VAT on goods that you've completely used up before you registered for

VAT such as petrol, electricity or gas.

So for items already sold onto customers you cannot claim the vat.

Vat Schemes

Vat is a complicated tax and to make it even worse there are a number of special schemes

in operation which you can use if you are vat registered.

Briefly some the schemes are as follows:

Annual Accounting

Cash Accounting Flat Rate VAT retail VAT margin schemes

It is suggested that you seek expert advice in the vat scheme to ensure that it is right for

your business.


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Do I need an accountant?This is a frequently asked question for any new business.

The question really should be:

Can I complete all my filing duties on time?

Now if your reply to that is that you do not know what your filing duties are, do not

understand the forms etc then you have answered the question:

You do need an accountant.

There is a lot to running a business and your time could be better spent securing new

customers and sales, negotiating with suppliers, managing staff etc.

Expert help in this area can save time and money.

For example

making sure that you claim all allowable expenses ensuring all the forms and accounts are filed on time - late filing can result in huge

penalties and fines

ensuring that correct accounting records are kept which is a statutory duty

Often we hear that new businesses cannot afford an accountant.

Again we ask:

Can you afford not to have an accountant?

With fines starting at 100 and up to 1500 it could be money well spent.

Our advice would be that as a sole trader you could do your accounts and tax returns

yourself - if you have the time and experience. If you don't then get an accountant.

However for a limited company we think an accountant is essential.


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Having unusual, undocumented, unexplained and significant cash deposits and

withdrawals

Advice

If you need advice on a complex area, make sure your accountant is aware of all the

circumstances and consider asking for such advice in writing. It will reduce the risks of

misunderstanding, but expect to pay a fee for it.

How much should I pay?

It is not possible to generalise about how much you should pay your accountant. It depends

on your own circumstances.

As a guide, a small sole trader with good bookkeeping should be able to find online

Qualified Accountants from 19.99 a month or for a limited company from 29.99 a month.

limited company - essential guide on how to keep your accounts

Documents