- We are completely bias but without hesitation on this account. You usually get a free consultation with an accountant – a try before you buy deal. This gives you a fantastic resource to talk with an expert about what you need to get your business started and what they know from their years of experience about businesses like yours. Grab a cup of tea/coffee and talk to an accountant about what they could do for you and what they would advise you to do for yourself. Yes you can come to us for a free consultation and a chat if you like: abc-accounting-services.co.uk
- One of my favourite resources is The Start Up Donut because it is such an accessible and content rich site that covers every element of starting a business in depth: http://www.startupdonut.co.uk
- Do not let the Sage sponsorship put you off there is some very useful tools on Startups with some industry specific content to boot. Take a look at: http://startups.co.uk
- For a blog rich site take a look at smallbusiness.co.uk. They have in-depth articles about all sort of subjects from ‘how to run a business around your family’ to ‘making a connection’ which is a guide on communication technology: http://www.smallbusiness.co.uk
- NBV Enterprise Solutions offers free start-up seminars and there is tons of useful information on their site to get you going. Just go to: http://www.nbv.co.uk/?gclid=CjwKEAjw68ufBRDt0Zmrn4W_8AwSJADcjp1cxntSras9p19SnaoGw__xvBkgMaBxmypMK252JqgcGxoCup_w_wcB#/i-am-starting-a-business/4574476849
- No list of start-up resources would be complete without Gov.uk. A comprehensive and trusted resource on all business matters: https://www.gov.uk/starting-up-a-business/start-with-an-idea
- Unfortunately, no list would be complete without HM Revenue and Custom’s (HMRC) site either. However, handle this one with care. HMRC have a habit of confusing simple subjects and presenting their information in the driest, yawn inducing format known to man/woman! Enter at your own risk but do consult for deadlines and for trusted lists of employers/employees responsibilities: http://www.hmrc.gov.uk/
- For inspiration alone visit the BBC’s page on start-up stories. This will also help you recover from HMRC’s sombre tone: http://www.bbc.co.uk/news/business-11629784
- Start Up Britain is a great site created this year with fresh and in some cases live content being added as the Start Up Tour navigates the country: http://www.startupbritain.co/inspiration
- To finish off this modest list of resources let’s throw in a bit of Richard Branson. When it comes to business there is always room for Branson and his engaging insights. This piece is called ‘ 8 tips to evolve a start-up into a successful business’: http://www.virgin.com/richard-branson/8-tips-to-evolve-a-start-up-into-a-successful-company
One of Richard Branson’s favourite bits of advice is:
“Screw it, let’s do it!”
So, shall we?
If that isn’t enough to satisfy your hunger for information then we also have our own book out, written by our marketing manager with sections of insight from ABC Accounting Service’s director Belinda Darley.
This book has the perfect blend of tried and tested formula with a straight talking delivery so you will have a great grasp of the basics and own a resource that you can keep dipping into. To purchase a copy go to: Starting Up Your Own Business: An Accountant’s Perspective
You can also visit our downloads page for more free resources: www.abc-accounting-services.co.uk/downloads.php
Or arrange a free consultation at our offices in Gainsborough, Lincolnshire: email@example.com
There are a range of questions accountancy firms get asked on a regular basis from serious stuff like ‘my turnover exceeded £81,000 one month but this was a freak occurrence – what do I do?’ to ‘can I call my business Froggy Feet Footwear or do you think that has been taken already?’
ABC Accounting Services is more than happy to answer any questions you may have whether you are a client or not. To start addressing some of the more common accountancy questions we are going to provide a Q&A blog once a month. Any questions you send in will be addressed in these blogs because usually if one person has a query then there are tons of other people wondering the same thing.
Here are six common questions to get the ball rolling, do not be afraid to speak up, we really have heard everything!
- When should I register for VAT?
If you are doing business in the UK as an individual, a partnership, a company, an association, a charity, a local authority or any other organisation/group of people acting under a chosen name, then you could need to register for VAT.
If your annual turnover is more than £81,000 (this figure can change on an annual basis) then VAT registration is compulsory. This also applies if you are anticipating your turnover to be higher than that amount in the next 30 days. If you turnover exceeds that amount temporarily then you must apply for an exception from registration.
If you have received goods from other countries in the EU, registration for VAT is compulsory if the total value of the goods acquired has gone over £81,000 in the current year since 1 January.
For more on VAT:
- How do I close my business?
First of all make sure you plan it carefully and have gone through your reasons with our accountant. There may be solutions to problems you have not thought of. The first stage is to inform HMRC of your intent. They will settle matters related tax and National Insurance owing. You should also negotiate with HMRC, or have an accountant do it for you, as sometimes it is possible to extend deadlines for payments or perhaps claim back some tax or National Insurance depending on your circumstances.
The self-employed and business partners will just need to fill out a simple online form. It is more complicated for shareholders who may still have to file Company Tax Returns, pay Corporations Tax while closing the business and account for any capital gains made during the closing process. Employers have to submit a final Full Payment Submission (FPS) with the final payroll, making sure than any due PAYE tax and National Insurance deductions are paid.
Any VAT registered businesses will have to de-register.
- What is CIS and how do I know if it is relevant to my business?
CIS stands for the Construction Industry Scheme. It regulates the procedures of making payments to subcontractors by contractors in the construction industry. A business that involves construction work and spends much of their funds on construction will also fall under CIS.
CIS encompasses all businesses which are active in the construction industry in the United Kingdom in the form of a partnership, a company, a limited liability partnership (LLP) as well as self-employed sole traders.
As a benchmark, if you spend over £1 million a year on average on constructions within three years, HMRC may consider you a ‘deemed contractor’ and you will have to register with CIS. CIS is also applicable to businesses that are not based in the UK but operate in the UK or UK territorial waters.
- What is capital gains tax?
Capital Gains Tax is a tax that you pay when you make a profit by way of selling assets (shares or property). Your Capital Gains Tax may be reduced by a tax-free allowance and some additional reliefs. To calculate your Capital Gains Tax work out the gain or loss separately for each asset. Then add everything together to get the overall gain or loss for that tax year.
- What are the advantages to being a sole trader?
The biggest advantage is that there are no formation costs. They are not legally required by law to have annual accounts or to file accounts for inspection BUT annual accounts are required for tax returns.
Sole Traders are not limited in the amount and purpose of borrowings and losses generated can be set against other income of the year and even carried back to prior years. Tax can be paid in instalments on January 31st in the tax year and July 31st following the tax year.
The down side to being a Sole Trader is that you are personally liable for any debts related to the business so any assets are savings are vulnerable to a claim made against you.
- What are the advantages of becoming a Limited company?
The biggest advantage is that you literally place a limit on your liability. That limit is the value of the company, including any money you may have invested in, loaned to or are owing to the company. This means that the company has a separate legal identity away from your personal affairs so you are not liable for any claim that exceeds the companies limit as outlined above.
There are a number of advantages to limited companies including:
- You can give a share of the business to others eg family
- They tend to attract investments easier than Sole Trader businesses
- Easier to obtain bank loans
- No higher rate tax bands
- Easier to sell the business
- The business generally has more clout – social standing
- It can assist in the protection of a name
- Builds confidence in your business as people can check up on your company on the public records at Companies House
The main disadvantages of becoming a limited company are the extra costs of preparing of annual accounts, formation costs, and the loss of some financial privacy.
What is it? Or rather: what is it other than a phrase that terrifies many, stresses out
more, and bores or baffles everybody else?
It is mainly for the self-employed so whether on your own or in a partnership. It also
affects directors of limited companies, some pensioners, subcontractors, people who
have rental properties, and those people who are employed but fortunate enough to be
paying high rate tax.
How do I even begin to approach Self-Assessment?
If you are in business make sure you keep accurate and up-to-date business records,
an accountant can help you in this respect by telling you exactly what you need to keep
hold of. The receipt for the sandwich you ate with a bag of crisps and a can of Fanta will
need to be stored away safely just like the invoice for the new desktop you just bought.
See the section of Accounting and Bookkeeping for more details.
If you are employed, keep details of all tax statements (P60, P45, P11D), details of
interest, and all other income received, as well as details of any expense you incur
whilst employed. Don’t write it down on a number of sticky post-its because they will fall
off your desk, get stuck to your shoe and wind up down a supermarket aisle. A
notebook will suffice.
You have to complete your tax return, submit to HMRC, preferably on time, and pay the
correct amount of tax, again within the time limits.
Find a marker pen that will not wash off or get smudged over time. Walk over to your
wall calendar and put these dates in:
31st January: PAY TAX
31st July: PAY TAX
Self-Assessment in a little more detail
Self-Assessment basically means that you take into account all of your resources of
income, such as property income, savings, dividends, PAYE etc. You would then deduct
a personal allowance (for 2014-15 this is £10,000) and then your income tax and class 4
national insurance liability is calculated. If your liability is over £1000 then payments on
account are required.
To go into a little more detail, the lower limit for class 4 national insurance is £7,956
and the upper limit is £41,865. Subcontractors will need to take into account the
Construction Industry Scheme (CIS) tax suffered.
An increasingly popular way of running your business because of the tax breaks it can
afford. If you are currently self-employed, we can quickly assess whether this would be
a viable option for you. Directors become an employee of the company which also has
shareholders that may or may not hold different classes of shares. So, one shareholder
might have 40% share of the company while the others each hold ten. Or, there could
be 5 shareholders that each possess 20% of the shares. Always remember that a 50%
shareholder will have half the say in a company and a 51% shareholder can take control of said company.
Limited companies pay corporation tax and profits up to 300k are taxed at 19%. Ouch!
Profits more than 300k are taxed at a marginal rate. So try not to make 301k profits! The
company must submit a CT600 12 months after the year end, although the tax must be
paid 9 months and a day after the year end.
Penalties and Interest
For late submission of tax returns and tax payments, penalties and interest will be
charged by HMRC.
If late submission is an issue because you are struggling with your accounts or
bookkeeping then consider outsourcing this work to an accountant.
Is there anything I can get back?
It all depends on your year-end figures. If you qualify then you could be eligible for
capital allowances and so could claim:
Annual Investment Allowance (AIA)
First Year Allowance (FYA)
Writing Down Allowance (WDA)
There is a special 10% tax pool for low emissions cars.
Finally, international athletes are granted an income tax exemption for the Glasgow Grand Prix and the Commonwealth Games. The exemption only covers the two international events for this year but this has surely got to be the first steps towards a permanent strategy by HMRC.
Usain Bolt represents the highest profile name of the athletic world to have spoken out against the UK tax system. It seems that even he has neither the speed or the inclination to out run HMRC.
Until now, HMRC have imposed a levy on visiting athletes’ sponsorship, endorsement earnings and appearance fees. Some athletes actually pay more in UK tax than they earn in the country! Bolt has been very public about his decision to run less on UK soil in order to avoid the tax levy.
Their income was protected during the 2012 Olympics but athletes from all areas of sport opt out of UK appearances in favour of more lucrative ventures elsewhere. The tennis star Rafa Nadal pulled out of 2012’s Aegon Championship at Queen’s Club due to the UK’s tax demands. This is an on-going problem HMRC have been slow to address.
Bolt won gold medals in the 100m, 200m and 4x100m relay at the London Games. This calibre of athlete can transform the economic opportunity of any UK track event. He attracts bigger audiences that results in bigger sales. If the rest of the world are not penalising athletes then why is the UK levying a 50% higher earnings rate at their global sponsorship and endorsement earnings.
Yes, they earn a lot of money. Yes, the tax margins alone could give us a comfortable annual wage. But, this is about consistency with our international neighbours as well as business sense. Why drive international athletes away from our shores when the Olympics has just demonstrated to us how much money the sporting elite can generate for our economy.
Let’s hope HMRC keeps these levies under wraps so the UK is an attractive place for the sporting worlds finest to come and showcase their talents.
The main areas for tax relief are known to many but if you are just starting out or you do your own accounts then you could easily miss out. Here are six areas where you should be claiming tax relief if you qualify – some of these can amount to huge savings for individuals.
1) Business mileage or fuel
MILEAGE: You could get tax relief when you use your own vehicle for business, or on fuel you buy when using a company car. You can also trace this back several years to claim relief if a self-assessment has not been completed previously.
A point that always needs clarification is what counts as business mileage. Business mileage is the distance travelled doing your job and can include travel to a temporary work place. It DOES NOT INCLUDE normal travel between home and your permanent place of work or private travel.
To work out tax relief for business mileage in your own vehicle follow this calculation for ‘mileage allowance relief’-
Add up your business miles travelled in the tax year and times them by the approved mileage rate.
Then add up any mileage allowance payments received from your employer. Compare your payments received with the approved amount.
If the approved amount is more then you are entitled to Mileage Allowance Relief on the difference. You are also entitled to this relief if your employer pays you no mileage allowance or less than the approved amount.
To qualify for this relief you must keep records of dates, mileage and details of all work journeys.
FUEL: Fuel used for business travel is eligible for tax relief. Again, this is less any payments repaid by your employer. Records of business mileage done need to be kept so the right relief can be calculated.
2) Professional fees and subscriptions
There are certain fees incurred for having your name placed on professional registers or taking out a yearly membership to an organisation. If these registration fees or membership subscriptions are necessary for your work you could be eligible for tax relief. There are two conditions. The first is that you have to be able to prove that they are necessary to your work and the second is that the organisation is on the list of HMRC approved organisations.
For a list of those organisations go to: http://www.hmrc.gov.uk/list3/index.htm
You are not entitled to this relief on life membership subscriptions or any professional fees and subscriptions that you have not paid for yourself.
3) Specialist tools or clothing
If you personally spend money on any tools or specialist clothing in order for you to do your job you may be eligible for tax relief. You can also go back several years to claim this relief if a Self- Assessment return has not been previously completed.
There are exceptions that include overalls, gloves, boots and helmets that have to be worn so are considered part of the job for certain industries. However, if you must pay for the cost of repairing, cleaning or replacing this type of specialist clothing yourself and your employer doesn’t reimburse you, then you are entitled to tax relief.
You are also entitled to tax relief if you have to buy – out of your own money – the tools you need to be able to do your work. The tax relief also applies to the cost of maintaining and replacing the tools.
You will either be entitled to:
- tax relief for the actual amounts you spend
- a ‘flat rate deduction’
Flat rate deductions are amounts that HM Revenue & Customs (HMRC) has agreed nationally – or sometimes locally if conditions are very different – with trade unions or other bodies. See the full list of flat rate deductions here Flat rate expense deductions.
If your industry is not listed on the table, you can still claim a standard amount of £60 for the laundry costs of uniforms or protective clothing.
4) Capital expenditure
You may be able to reduce your tax bill by deducting capital allowances on equipment or assets that you must use in doing your job, but which your employer does not provide. You can go back several years to claim this relief that was brought in to cover the loss of value to equipment/assets due to wear and tear or general depreciation. Exceptions include cars, vans, motorcycles and bikes.
How you claim for capital allowances is a little complex so I defer you to HMRC’s comprehensive list on the different ways you can make your claim:
- 100 per cent first year allowances – for investments in green technologies.
- Annual Investment Allowance (AIA) -you can claim AIA on any purchase of equipment (but not motor vehicles) made on or after 6 April 2010 up to an annual amount of £25,000. If the total expenditure is £25,000 or less, you can claim 100 per cent of that whole amount as your AIA.
- Writing down allowances – you claim these on the cost of assets you’ve bought during the year for which you haven’t claimed first year allowances. Add to this the value you’ve carried forward from last year of assets that you have claimed first year allowances on. This total amount is called a ‘pool’ – you can claim 20 per cent of this amount for 2011 to 12 and 18 per cent from 2012 to 13. The pool’s value is reduced by the appropriate percentage rate – but you can add the value of new assets you buy. Find out more about writing down allowances and rates by following the writing down allowance link below.
- Small pools allowance – you can write off the whole balance in a pool where the pool’s value is not more than £1,000.
You can use either first year allowances or writing down allowances – or both.
5) Household expenses when working from home
If you are employed to specifically work from home and have no alternative options then you may be eligible for tax relief on some of your household expenses. Again, you can go back several years for this if a Self-Assessment hasn’t been previously submitted.
Extra expenses typically include the cost of gas and electricity bills for heat and light used during hours of work. The standard expenses of running a home like mortgage, council tax, line rental, and broadband are not included because they are not specific to business use and would be paid as part of the cost of living anyway.
From 6 April 2012, for payments up to £4 per week (or £18 per month if you’re paid monthly) you don’t need to provide any records of the household expenses you’re claiming relief for. For amounts above £4 (or £18 per month if you’re paid monthly) you will need supporting evidence to show that the amount you are claiming is no more than the additional household expenses you have actually incurred.
6) Travel and subsistence
If your job requires you to travel on business you may be able to get tax relief on your travel expenses. You can go back several years to get the relief. If you’ve got to make journeys for business purposes you can deduct the relating travelling expenses and any subsistence costs you’ve paid from your taxable income.
A work journey includes when:
- you have to travel from one workplace to another – this includes travelling between your main ‘permanent workplace’ and a ‘temporary workplace’
- you’ve got to travel to or from a certain workplace because your job requires you to
They do not include:
- ordinary commuting – when you travel between your home (or anywhere that is not a workplace) and a place which counts as a permanent workplace
- private journeys – which have nothing to do with your job
Travel and subsistence expenses include:
- public transport fares
- hotel accommodation where you have had to stay overnight as a part of a business journey that qualifies for tax relief
- meals you have had to purchase whilst travelling or staying overnight
- congestion charges
- parking fees
- business phone calls, fax or photocopying costs
- business mileage
So make sure you are claiming tax relief on everything you are eligible for it. Don’t forget to go back as many years as you are entitled to if you have forgotten to claim it in the past!
What do some people get up to when their boss goes on holiday? Let’s just be clear – no-one at ABC has ever dreamt of participating in the following common side effects to boss absences:
1. Extra long lunch
2. A little surfing on google, Facebook, eBay, Amazon…
3. Sit in the bosses chair and take a moment to wonder…a moment to just imagine
4. You leave a little earlier from work
5. You chat about your boss to your colleagues at normal volume instead of in whispers
6. You are a little more relaxed than usual
7. There is a bit more chatter around the office that isn’t work related
8. You change your bosses screen saver for when they get back and tell them you did it in your lunch break
9. You send the newbie for MacDonald’s breakfasts for the entire office
10. You do an impersonation of your boss in front of trusted colleagues and before you know it everyone is demanding repeat performances!
Apparently, employees will do at least three of the list above. Take a look around you and see if you can guess what your colleagues might be guilty of. A lot of the time we are very discreet with our deviances from the norm because we are:
1. Scared someone will dob us in
2. Actually very loyal to our employer’s values and respectful of their position
It can entirely shift the dynamic of a team when the boss is absent. This is most notable when there is not an adequate management team to fill in or if a vacuum is left by a particularly intimidating, even bullying boss. A team only demonstrates what it is capable of and what kind of values make it up when the boss steps out of the office. They either shine or self-destruct.
An interesting article on Forbes sheds more light on the matter: ‘In an ideal culture, the boss’s absence should have a minimal impact on the day to day ability of a team to perform at its peak, Kerr adds. “The role of a great boss is to give employees the proper tools, training and expectations so that they can perform their work in absence of the boss. Indeed a bad leader is one who holds onto the reins of power and information so tightly that nothing can happen. A lot of it is tied to trust and empowerment. In a culture where high levels of trust have been established, with similarly high levels of empowerment, then there should be no issue around work not getting achieved.”’
See the whole article here
Ultimately, in a healthy working environment the absence of the boss should not lead to a significant dip in performance. Those who do indulge in some controlled frivolity make up for it when they do get their heads down. Those who respect their boss will not allow any shortcomings in performance to occur and a guilt driven work catch up tends to take hold of even the rowdiest team member before the bosses return.
So, when the cat is away, absolutely the mice will play, but not so as the boss will notice on their return! What happens in the office stays in the office and equilibrium is happily maintained.
For tips on how to make use of the office whiteboard when the boss steps out for a little light-hearted entertainment, go to this link