Small business accounting

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Small business, contractor and self employed accounting resources

We want to try and make small business accounting as accessible as possible so whether you're Self Employed, a Contractor or a Limited Company - you have a good understanding of your requirements.

iPhone calendar to keep track of tax returns deadlines

Company Filing & Deadlines: Self Assessment, VAT, Accounts, Tax & more

Our ultimate guide to all the deadlines and penalties you need to be aware of as the director of a Limited Company.

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Woman holding up coins

Small Business Guide to Debits and Credits

Here's a quick explainer on debits and credits with an example.

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Bookkeepers desk of accounting books

Bookkeeping vs Accounting Differences

We cover the key differences between bookkeepers and accountants so that you understand what service you need and what you can do yourself.

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Small business owner looking at accounting terms

31 Accounting Terms & Concepts You Need to Know

We cover 31 key accounting terms and concepts you need to understand for your small business accounting needs.

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A small business owner and accountant shaking hands

When Should I Hire a Small Business Accountant?

Wing it on your own, or hire? We outline key cases where you need to hire an accountant for your small business.

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Small business owner reviewing their bookkeeping

Beginner's Guide to Bookkeeping for Small Business

In our guide, we'll walk you through the basics of bookkeeping.

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Two business owners reviewing their accounting

5 Common Small Business Accounting Mistakes & How to Fix Them

We run through the most common accounting mistakes that small business owners make, and how you can fix them.

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Woman usinc cloud accounting software

Moving to the Cloud: Excel to Accounting Software

We run through our top tips for making a smooth transitions from spreadsheets to accounting software.

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A self employed woman reviewing accounting software benefits

5 Key Benefits of Accounting Software when Self Employed

We dive into the key benefits of small business accounting software.

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Male entrepreneur looking relieved to have sold shares

Entrepreneurs relief: selling shares

Our guide provides a quick overview of the essentials surrounding Entrepreneurs' Relief, including how it works, whether you're eligible for a claim and how you can make a claim.

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Male employee working overtime during his holidays for extra pay

How to calculate holiday pay for overtime and commission payments

"What are the rules around holiday pay?" is a common question often asked by employers

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Small business owner looking for ways to reduce expenses in order to increase cash flow

7 ways to improve your monthly cash flow

A guide to understanding what cash flow is, why it's so important for small businesses, and how to increase your company's monthly cash flow.

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Notepad containing relevant data used to complete a self assessment return on a laptop

What are Self Assessment payments on account?

Our guide covers what a payment on account is, how it works, late payment penalties and other key information you need to know

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Table showing expense payment and benefit in kind (BIK) calculations for P11D form

What is a P11D form?

If you're just getting started on figuring out what a P11D form is, this article is for you.

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Calculator on mobile used to calculate the tax on a benefit in kind (BIK)

What are benefits in kind?

The rules surrounding benefits in kind explained concisely

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Various number of stacked coins representing the variability in Director's loans

What is a directors loan account?

Our guide covers the essentials that you need to know about director's loan accounts, including FAQs, guidelines and tax implications.

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Self employed woman scribbling in calendar for her company year end accounts

Your company year end accounts explained

Quick guide for limited companies giving you all the information you need to prepare for your company year-end

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Calculator and documents used to finalise the balance sheet and P&L for a company

Your Balance Sheet and Profit & Loss Explained

The basics of a balance sheet and P&L explained

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A self employed woman sitting at a computer calculating if she needs accounting software

When do you need accounting software?

We dive into five key signs indicating that it's time small business owners should make the switch to an accounting software.

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Piggy bank showing savings for someone by comparing limited company accounting costs

How much should accounting cost?

Learn about the accounting fees for a new limited company, what's included in the costs, and FAQs for choosing a limited company accounting provider.

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Accountant working to finalise the year-end accounts for a small company

How to find an accountant

A small business guide on finding the right accountant for your company.

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Laptop with an image of a fine tuned business budget

Creating your business budget

Here's what you should include in your business budget

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Contractors in UK

Finding an accountant

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When do you need an accountant?

As a small business owner, you’re always on the lookout for ways you can save money. Therefore, deciding whether you need to get an accountant can be a difficult decision—as that’s an additional cost that you’ll incur.

But managing your business financials well is central to your small business success—and that’s something that an accountant can help you out with.

If you’re still on the fence about this, here are questions that can guide you towards making a decision:

  • Do I have sufficient accounting knowledge and abilities? 40 percent of small business owners find that financial management is the most challenging part of running a business. So if you find yourself struggling with accounting concepts and bookkeeping systems, bringing in an accountant may be your best option.
  • Do I have time to do my own accounting? As your company grows, you may find that you’re spending increasing amounts of time managing your finances. But are you the best person to do this, and could the time be better spent on scaling your business?
  • Am I facing compliance and tax issues? If you’re faced with complicated sales tax issues, or are up against a HMRC tax investigation, it’s best not to wing it without an accountant.    
  • How much help do I need with my business accounting, and what value can they bring? Do you require a full-time accountant, part-time help or periodic consultations? Will you benefit from having an accountant help out with financial analysis, meeting your tax obligations and data management? Once you’ve identified your requirements, you can then choose an option that best meets your small business needs.
  • Am I in the process of forming my company? During the company formation process, you’ll need to make decisions that can have a long-term impact on your business—such as choosing your legal business structure, conceptualising your business plan and setting up an accounting system. An accountant can provide insightful advice, leaving you better placed to make a well-informed decision.

Selecting an accountant

Here are a few things to keep in mind when you’re selecting an accountant:

  • Look for relevant experience: Seek out an accountant who’s experienced with working with small businesses. It’s a bonus if they’ve worked with businesses who are of a similar business structure, size, revenue and industry. It’s also beneficial if they’ve worked with larger clients, as that is an indication they’ll be able to manage your accounts as your business scales.
  • Ask for recommendations: Your personal network is a valuable source of information. Reach out to friends and family who are small business owners, as well as your connections on social networks like LinkedIn or Facebook.
  • Do your research: There are a few things to look out for when you review a candidate’s LinkedIn profile: their past testimonials, qualifications and experience, as well as their personal connections (keep an eye out for candidates who have a strong personal network). Before you engage an accountant for his or her services, do a background check by asking to speak to businesses they’ve worked with.
  • Ask about their communication processes and reporting frequency: Regular communication is key—you want your accountant to review your finances and offer advice on a regular basis, and not just to provide support during tax season.

When do you need an accountant?

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Contractors in UK

Small Business & Limited Company Accountants

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Categories

When do you need an accountant?

As a small business owner, you’re always on the lookout for ways you can save money. Therefore, deciding whether you need to get an accountant can be a difficult decision—as that’s an additional cost that you’ll incur.

But managing your business financials well is central to your small business success—and that’s something that an accountant can help you out with.

If you’re still on the fence about this, here are questions that can guide you towards making a decision:

  • Do I have sufficient accounting knowledge and abilities? 40 percent of small business owners find that financial management is the most challenging part of running a business. So if you find yourself struggling with accounting concepts and bookkeeping systems, bringing in an accountant may be your best option.
  • Do I have time to do my own accounting? As your company grows, you may find that you’re spending increasing amounts of time managing your finances. But are you the best person to do this, and could the time be better spent on scaling your business?
  • Am I facing compliance and tax issues? If you’re faced with complicated sales tax issues, or are up against a HMRC tax investigation, it’s best not to wing it without an accountant.    
  • How much help do I need with my business accounting, and what value can they bring? Do you require a full-time accountant, part-time help or periodic consultations? Will you benefit from having an accountant help out with financial analysis, meeting your tax obligations and data management? Once you’ve identified your requirements, you can then choose an option that best meets your small business needs.
  • Am I in the process of forming my company? During the company formation process, you’ll need to make decisions that can have a long-term impact on your business—such as choosing your legal business structure, conceptualising your business plan and setting up an accounting system. An accountant can provide insightful advice, leaving you better placed to make a well-informed decision.

Selecting an accountant

Here are a few things to keep in mind when you’re selecting an accountant:

  • Look for relevant experience: Seek out an accountant who’s experienced with working with small businesses. It’s a bonus if they’ve worked with businesses who are of a similar business structure, size, revenue and industry. It’s also beneficial if they’ve worked with larger clients, as that is an indication they’ll be able to manage your accounts as your business scales.
  • Ask for recommendations: Your personal network is a valuable source of information. Reach out to friends and family who are small business owners, as well as your connections on social networks like LinkedIn or Facebook.
  • Do your research: There are a few things to look out for when you review a candidate’s LinkedIn profile: their past testimonials, qualifications and experience, as well as their personal connections (keep an eye out for candidates who have a strong personal network). Before you engage an accountant for his or her services, do a background check by asking to speak to businesses they’ve worked with.
  • Ask about their communication processes and reporting frequency: Regular communication is key—you want your accountant to review your finances and offer advice on a regular basis, and not just to provide support during tax season.

When do you need an accountant?

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Contractors in UK

Contractor Accountants

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Categories

When do you need an accountant?

As a small business owner, you’re always on the lookout for ways you can save money. Therefore, deciding whether you need to get an accountant can be a difficult decision—as that’s an additional cost that you’ll incur.

But managing your business financials well is central to your small business success—and that’s something that an accountant can help you out with.

If you’re still on the fence about this, here are questions that can guide you towards making a decision:

  • Do I have sufficient accounting knowledge and abilities? 40 percent of small business owners find that financial management is the most challenging part of running a business. So if you find yourself struggling with accounting concepts and bookkeeping systems, bringing in an accountant may be your best option.
  • Do I have time to do my own accounting? As your company grows, you may find that you’re spending increasing amounts of time managing your finances. But are you the best person to do this, and could the time be better spent on scaling your business?
  • Am I facing compliance and tax issues? If you’re faced with complicated sales tax issues, or are up against a HMRC tax investigation, it’s best not to wing it without an accountant.    
  • How much help do I need with my business accounting, and what value can they bring? Do you require a full-time accountant, part-time help or periodic consultations? Will you benefit from having an accountant help out with financial analysis, meeting your tax obligations and data management? Once you’ve identified your requirements, you can then choose an option that best meets your small business needs.
  • Am I in the process of forming my company? During the company formation process, you’ll need to make decisions that can have a long-term impact on your business—such as choosing your legal business structure, conceptualising your business plan and setting up an accounting system. An accountant can provide insightful advice, leaving you better placed to make a well-informed decision.

Selecting an accountant

Here are a few things to keep in mind when you’re selecting an accountant:

  • Look for relevant experience: Seek out an accountant who’s experienced with working with small businesses. It’s a bonus if they’ve worked with businesses who are of a similar business structure, size, revenue and industry. It’s also beneficial if they’ve worked with larger clients, as that is an indication they’ll be able to manage your accounts as your business scales.
  • Ask for recommendations: Your personal network is a valuable source of information. Reach out to friends and family who are small business owners, as well as your connections on social networks like LinkedIn or Facebook.
  • Do your research: There are a few things to look out for when you review a candidate’s LinkedIn profile: their past testimonials, qualifications and experience, as well as their personal connections (keep an eye out for candidates who have a strong personal network). Before you engage an accountant for his or her services, do a background check by asking to speak to businesses they’ve worked with.
  • Ask about their communication processes and reporting frequency: Regular communication is key—you want your accountant to review your finances and offer advice on a regular basis, and not just to provide support during tax season.

When do you need an accountant?

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Contractors in UK

Accountants for Sole Traders & Self Employed Individuals

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Categories

When do you need an accountant?

As a small business owner, you’re always on the lookout for ways you can save money. Therefore, deciding whether you need to get an accountant can be a difficult decision—as that’s an additional cost that you’ll incur.

But managing your business financials well is central to your small business success—and that’s something that an accountant can help you out with.

If you’re still on the fence about this, here are questions that can guide you towards making a decision:

  • Do I have sufficient accounting knowledge and abilities? 40 percent of small business owners find that financial management is the most challenging part of running a business. So if you find yourself struggling with accounting concepts and bookkeeping systems, bringing in an accountant may be your best option.
  • Do I have time to do my own accounting? As your company grows, you may find that you’re spending increasing amounts of time managing your finances. But are you the best person to do this, and could the time be better spent on scaling your business?
  • Am I facing compliance and tax issues? If you’re faced with complicated sales tax issues, or are up against a HMRC tax investigation, it’s best not to wing it without an accountant.    
  • How much help do I need with my business accounting, and what value can they bring? Do you require a full-time accountant, part-time help or periodic consultations? Will you benefit from having an accountant help out with financial analysis, meeting your tax obligations and data management? Once you’ve identified your requirements, you can then choose an option that best meets your small business needs.
  • Am I in the process of forming my company? During the company formation process, you’ll need to make decisions that can have a long-term impact on your business—such as choosing your legal business structure, conceptualising your business plan and setting up an accounting system. An accountant can provide insightful advice, leaving you better placed to make a well-informed decision.

Selecting an accountant

Here are a few things to keep in mind when you’re selecting an accountant:

  • Look for relevant experience: Seek out an accountant who’s experienced with working with small businesses. It’s a bonus if they’ve worked with businesses who are of a similar business structure, size, revenue and industry. It’s also beneficial if they’ve worked with larger clients, as that is an indication they’ll be able to manage your accounts as your business scales.
  • Ask for recommendations: Your personal network is a valuable source of information. Reach out to friends and family who are small business owners, as well as your connections on social networks like LinkedIn or Facebook.
  • Do your research: There are a few things to look out for when you review a candidate’s LinkedIn profile: their past testimonials, qualifications and experience, as well as their personal connections (keep an eye out for candidates who have a strong personal network). Before you engage an accountant for his or her services, do a background check by asking to speak to businesses they’ve worked with.
  • Ask about their communication processes and reporting frequency: Regular communication is key—you want your accountant to review your finances and offer advice on a regular basis, and not just to provide support during tax season.

When do you need an accountant?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Contractors in UK

Best Accounting Software

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When do you need accounting software?

Should you stick with your current accounting practices—or is it time to implement a new way of handling your accounting? Here are the signs that indicate it’s time to make the switch to accounting software:

  • Your business is growing
  • You need faster access to information
  • You’re spending increasing amounts of time on manual, repetitive tasks
  • You’re facing an increase in manual errors
  • You lack technical accounting skills
  • You lack a proper accounting system
  • You’re not able to comply with MTD requirements (if applicable)

Selecting an accountant

Here are a few things to keep in mind when you’re selecting an accountant:

  • Look for relevant experience: Seek out an accountant who’s experienced with working with small businesses. It’s a bonus if they’ve worked with businesses who are of a similar business structure, size, revenue and industry. It’s also beneficial if they’ve worked with larger clients, as that is an indication they’ll be able to manage your accounts as your business scales.
  • Ask for recommendations: Your personal network is a valuable source of information. Reach out to friends and family who are small business owners, as well as your connections on social networks like LinkedIn or Facebook.
  • Do your research: There are a few things to look out for when you review a candidate’s LinkedIn profile: their past testimonials, qualifications and experience, as well as their personal connections (keep an eye out for candidates who have a strong personal network). Before you engage an accountant for his or her services, do a background check by asking to speak to businesses they’ve worked with.
  • Ask about their communication processes and reporting frequency: Regular communication is key—you want your accountant to review your finances and offer advice on a regular basis, and not just to provide support during tax season.

When do you need an accountant?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Contractors in UK

Accounting & Limited Company Deadlines

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VAT Returns deadlines

Most businesses need to submit their VAT return quarterly (this applies even if you don't have VAT to pay or reclaim). The deadline for submission is a month and seven days after the end of a VAT period.

Self Assessment deadline

Online returns must be filed by 31 January. Paper returns are due earlier, and must be filed by 31 October.

Company accounts deadline

As a limited company director, you’re required to file the following:

  • Annual statutory accounts: For your first year of operation, you need to file these accounts within 21 months of your date of incorporation. For subsequent years, these accounts must be filed within nine months of your Accounting Reference Date (ARD).
  • Company Tax Return (CT600): This should be submitted 12 months after your accounting year-end.

Unlike limited company directors, sole traders aren’t required to file accounts with a public body.

Contractors in UK

Accounting Terms

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Cashflow

Cash flow refers to the total amount of money that is moving in and out of your business.

Balance Sheet

The balance sheet shows how much a business owns (assets), owes (liabilities) and the amount that is left over for its owners (owner’s equity) at a point in time.

Profit & Loss

The P&L is a financial statement that shows how much money your business has made or lost.

Dividends

Dividends are a payment of profit that a limited company distributes to its shareholders. It is the money remaining after all business expenses and liabilities, as well as outstanding taxes (including VAT and Corporation Tax) have been paid off.

Year End Accounts

At the end of a business’ accounting year, limited company directors are required to file the following...

  • With HMRC:
  • Company tax return (CT600)
  • Annual statutory accounts
  • Director’s report
  • With Companies House:
  • Statutory accounts (full, abbreviated or micro)

Directors Loan Account

A DLA is is a record of all transactions between the company and its directors. It records not just the money owed by the directors, but also the money owed to them. At the end of the financial year, the amount is recorded in the balance sheet either as an asset or liability.

Benefits in Kind

Benefits in kind are benefits provided to a director or employee that aren't included in their salary or wages. These can be assets or services, such as company cars, private health insurance or non-business travel and entertainment expenses.

Self Assessment Tax Returns

Self Assessment is a tax return form that businesses need to submit to report their annual earnings to HMRC. The term ‘self assessment’ refers to the fact that it’s the individual’s responsibility to work out how much tax they should pay.

Self Assessment Payments on Account

Payments on account are advance payments for your tax bill that are spread out across the year. You'll need to make two payments each year, and these are due on 31st January and 31st July.

P11D Form

The P11D form is a tax form that records employment benefits that the employees and directors of a company have received across the year.

Holiday Pay

Holiday pay is calculated based on a week's pay. The calculation will vary, depending on the kind of hours an employee works (fixed hours, shift work with fixed hours or no fixed hours) and how they are paid for the hours. We’ve elaborated more on this, as well as payment for overtime and commission in a separate article.

Entrepreneurs Relief

Entrepreneurs' Relief is a scheme that reduces the amount of Capital Gains Tax payable when you dispose of (sell) shares in your business. You pay a reduced tax rate of 10%— instead of the usual rates—on the first £10 million of gains. There isn't a limit to the number of times you can claim.

Contractors in UK

Free Accounting Advice

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Optimizing cash flow

‘Cash is king’ is an adage that holds true—particularly when it comes to small business finances. Even profitable companies are faced with the threat of closure, if negative cash flow becomes a regular occurrence.

Keeping a firm grip on your cash flow is key, and we’ve outlined a few tips you can implement:

  • Stay on top of your accounts receivable: Late payment is a common problem faced by all businesses, but small business owners can be the hardest hit. It’s critical to stay on top of your accounts receivable, so that you’re better able to minimise delays in receiving your payments. Steps you can take include following invoicing best practices, structuring your payments by milestones and requesting for deposits if you’re fulfilling large orders.  
  • Optimise your accounts payable: Keep your cash flow healthy by maximising the potential of your accounts payable. Steps you can take include building positive vendor and supplier relationships (this is key to improving problems like late payments), as well as taking full advantage of payment terms.
  • Keep a close watch over your cash flow: Blaine Bertsch, CEO of financial forecasting tool Dryrun advises small business owners to update their cash flow projections “every time something happens in their business that affects their cash flow”.
  • Avoid expanding too rapidly: Small business owners should guard against overly quick growth, as this can create pressure on their cash flow. Business owner Tim Berry shares about his experience on Entrepreneur.com, where his business experienced doubled sales and nearly went broke.

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