Small Business Accounting Guide

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When do I need to pay my self assessment tax bill?

Payments for your Self Assessment tax bill are due on:

  • 31st January: You'll need to pay tax that you owe for the previous tax year, as well as your first payment on account. For the 2020/21 tax year, the first payment on account is due by 31 January 2021, while the balancing payment is due on 31 January 2022.
  • 31st July (following the end of the tax year): You'll need to pay your second payment on account. For the 2020/21 tax year, the second payment on account will be due on 31 July 2021.
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Can I claim VAT back on my mileage?

You can reclaim VAT on the fuel portion of your mileage expenses if you don't pay a fixed rate under the Flat Rate Scheme.

You can reclaim all the VAT on fuel if you use your vehicle exclusively for business.

If your vehicle is driven for both business and personal use, you may handle VAT in the following ways:

  • Reclaim all the VAT and pay the fuel scale charge for your vehicle
  • Reclaim the VAT on fuel you use for business trips
  • Don't reclaim any VAT. This may be the better option if you use your vehicle for business purposes on rare occasions, such that the fuel scale charge exceeds the VAT you can reclaim.
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How do I calculate flat rate VAT?

The tax you pay is calculated by multiplying your VAT flat rate with your VAT-inclusive turnover. The flat rate you use will depend on the sector your business falls under.

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Registering a Limited Company Guide

  • What is a Limited Company
  • 10 step process for setting up a Limited Company
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What are the disadvantages of a Limited Company?

The drawbacks to setting up a limited company include:

  • There are additional filing and reporting requirements to adhere to.
  • Reduced privacy
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The flat rate VAT scheme explained

At first glance, VAT can seem like one more aspect of your business that adds to your administrative tedium. Yet, as a small business owner, you want to run your business in the most tax efficient way possible-and VAT is a common area where business owners are losing out.

Even if you've hired an accountant, you need to have a good grasp of the essentials.

Below, we'll dive into an aspect of VAT that business owners often raise questions about the flat rate VAT scheme. We'll run through the basics, touch on recent regulatory changes and share our answers to frequently asked questions about the scheme.

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How do I claim back VAT?

You can reclaim VAT by submitting a VAT return.

You need to have valid VAT invoices, keep records as proof for your claim and show how you calculated the business proportion of a purchase.

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How do I find a my tax status?

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How do I register my business?

To register a business as a sole trader, you need to:

Once you've registered, you need to fulfil your responsibilities as a sole trader. These include:

  • Keeping records of your sales and expenses
  • Submitting a Self Assessment tax return each year
  • Paying income tax and National Insurance Contributions

To set up a limited company, you need to:

  • Decide what type of limited company you need
  • Choose a business name
  • Choose how to set up your limited company
  • Complete the company formation process
  • Open a business bank account
  • Inform your stakeholders
  • Get your VAT registration or transfer sorted out
  • Set up your payroll
  • Update your company details
  • Get your books sorted out

To set up a business partnership, you need to:

  • Choose a business name
  • Choose a ‚Äònominated partner'
  • Register with HMRC
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When do I need a Limited company as a contractor?

There is no clear cut time as to when you should start working through your own limited company. With other routes available-such as operating as a sole trader, or working through an umbrella company-it is always worth weighing up what is best for you and your circumstances.

With that being said, if you plan to work as an independent contractor for the foreseeable future, opening your own limited company at the early stages can maximise your opportunities for reaping the benefits of having your own company straight away.

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How does tax change as a contractor?

The biggest change when working as a contractor compared with say working as an employee is that you will become a lot more aware of the taxes you are paying. This because contractors have a lot more control over their finances and taxes with the added responsibility of making sure this is paid correctly and on time.

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How do I pay VAT?

There are various ways to pay your VAT bill.

Online or telephone banking (Faster Payments) and CHAPS payments are processed on the same day or the next working day.

Direct Debit, Bacs payments, standing order (only for businesses using the Annual Accounting Scheme or Payments on Account), online payments (by debit or corporate credit card) or payments made at your bank or building society are processed on a three day cycle.

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When do I need a Limited Company?

There is no clear cut time as to when you should start working through your own limited company. With other routes available-such as operating as a sole trader, or working through an umbrella company-it is always worth weighing up what is best for you and your circumstances.

With that being said, if you plan to work as an independent contractor for the foreseeable future, opening your own limited company at the early stages can maximise your opportunities for reaping the benefits of having your own company straight away.

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How do I restart a dormant business?

To restart a dormant business, you need to take the following steps:

  1. Tell HMRC that your business has restarted trading by registering for Corporation Tax again.
  2. Send accounts to Companies House within 9 months of your company's year end.
  3. Pay any Corporation Tax due within 9 months and 1 day of your company's year end.
  4. Send a Company Tax Return - including full statutory accounts - to HMRC within 12 months of your company's year end.
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What is a SIC code?

The SIC code is a five-digit Standard Industrial Classification code. These codes are used by government bodies and agencies to systematically identify and categorise the principal business activities of companies operating in the UK.

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What is a Limited Company?

A limited company is a type of business structure where the company has its own legal identity. The assets and liabilities of the company are separate from the personal finances of its owner.

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How do I find an accountant?

In today's times, you can find an accountant pretty much anywhere you go whether that's walking down the high street or browsing the internet. Take a look at our guide on choosing an accountant to get some tips on what to look out for when choosing an accountant.

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What do I need to do as a Company Director?

Your responsibilities as a limited company director include:

  • Your company must be registered at Companies House
  • Your company's annual accounts must be filed at Companies House
  • A Confirmation Statement must be submitted annually. This can be done online or via post. This is a filing requirement introduced in 2016 to replace the Annual Return (Form AR01).
  • Submit an annual Corporation Tax to HMRC. Any outstanding tax must be paid within nine months and one day of your company's year-end accounting.
  • Register for Self Assessment with HMRC, and submit your personal tax return each year.
  • If you have employees and are running the company payroll, you need to report your employees' payments and deductions to HMRC on or before your employees' payday. You need to pay what you owe to HMRC each month.
  • If your VAT taxable turnover exceeds the VAT threshold, you'll need to register for VAT and complete your VAT returns online at the end of every financial quarter.
  • Maintain proper company records
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Do I need to register for VAT?

You need to register for VAT if:

  • your VAT taxable turnover exceeds the current threshold of £85,000 (for a 12-month period ending in 2020/21). The VAT taxable turnover refers to the total value of everything that you sell that isn't exempt from VAT.
  • you expect your VAT taxable turnover to exceed £85,000 in the next 30-day period
  • your business had a taxable turnover exceeding £85,000 over the last 12 months

You need to register for VAT within 30 days of fulfilling any of these conditions.

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What is a Self Assessment tax form SA100?

The SA100 is the main document you need to fill when completing your Self Assessment tax return. There are two ways to complete your Self Assessment tax return: you can make an online submission, or download the form SA100 and make a paper submission.

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