The structure you choose can have an impact on almost every aspect of your business, including how much tax you will pay, what earnings you can make, and even what happens should your company get into difficulty. It is vital that you weigh up the pros and cons of both and make an informed decision. By booking a free consultation with one of our Directors, we can talk through your individual needs and help you to make the right decision for you. Click here to book your free consultation.
Setting up as a sole trader is the easiest and cheapest way to get going with your business. Another benefit is that your accounts are totally private whereas with a limited company accounts and information about the company are listed in the public domain. With a sole trade business you get taxed on all of your profits rather than what you take out of the business which some people prefer as it means you are paying all your tax as you go.
There are three ways in which money can be taken out of a limited company, via dividends, Director’s salary or a Directors loan account. You can also make contributions to a pension fund which is a great way to reduce your profits subject to tax and plan for the future. However, there are certain limitations on some of these methods.
If you use the above methods in combination, this can be a tax efficient way to minimise personal tax liabilities and run a business.
It is essential that you determine your employment status so you know that you are paying the right amount of tax and can rest assured you will not run into issues with HMRC. When determining your employment status there are a number of questions you can ask yourself, if you answer yes to most or all of them it’s likely you are self employed;
Do you have control of your business? Do you have the final say in how your business is run?
Can you choose whether to do the work yourself or can you send someone else to do it?
Are you responsible for hiring other people and setting their terms of employment if you need help?
Does the employer offer work to you only if and when it’s available?
Are you responsible for meeting the losses of your employment as well as taking the profits?
If you answer no to these questions then chances are you are an employee and should be taxed via the PAYE system.
If your business makes more than £85,000 of taxable turnover at any point during ANY consecutive 12-month period, you need to register for VAT by the end of the following month. If you are VAT registered you must also be MTD (making tax digital) compliant, please talk to us about how we can get you registered for VAT and make sure you are MTD compliant. Click here for more info on our bookkeeping service.
We understand that charities can be a little more complex in their needs. We have a long history dealing with many different types of charities and not-for-profit organisations. Visit our not for profit page to find out more.
If you want your business to work smarter and faster, cloud accounting software is a wise investment. Working in the cloud will give you a better overview of your finances and speed up your business. Also, by using Cloud software you are MTD complaint which is now a requirement for all businesses over the VAT threshold. If you are not very tech savvy we can offer fully outsourced services using the best cloud accounting software on the market.
You need to pay Capital Gains Tax when you sell an asset although there are a few exceptions including your private residence. If your total taxable gains are above your annual Capital Gains Tax allowance then you will pay Capital Gains Tax at either higher or lower rate depending on our income level.
Switching accountants is an easy process, you just need to let your current Accountant know to start the process. If you switch to us, we will fully manage the transition and ensure that the handover is seamless. Visit our page here for more information.
Our fees are fixed and tailored specifically to each individual’s needs. We offer a free consultation with one of our Directors to every client so we can ascertain what we can do for you or your business. After this initial consultation we will provide you with a quote for the services you require. Please contact us to find out more.
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