Small Business Accounting Support

Explore a range of small business accounting advice from preparing accounts, filing deadlines, dividends and help finding an accountant.

How to Find an Accountant

Accounting is often one of the first aspects small business owners hand off when their business scales. 

But while you can delegate your accounting to a professional, it’s still important that you have a good grasp of the basics. With this knowledge, you can more easily stay on top of your day-to-day bookkeeping or accounting responsibilities, and communicate with your business stakeholders. 

There are a few key accounting terms and concepts you should know. 

The balance sheet and profit and loss statement are two important financial statements every business owner needs to review. The balance sheet provides a summary of a company’s financial condition, and reports its assets, liabilities and owners’ equity at a specific point in time. 

The P&L shows a company’s revenues and expenses. It also comprises other key elements like COGS, gross profit and net profit or loss.
The phrase “cash is king” rings true, particularly for small businesses. The cash flow statement, which indicates how much money is flowing in and out of your business is one that you should review on a regular basis. Optimising your accounts payable, staying on top of your accounts receivable and conducting in-depth cash flow analysis at least once a month are examples of steps you can take to improve your cash flow.

Accountant Checklist Guide

Accountant Checklist Guide

Accountant Checklist Guide

  • Why you may need an accountant
  • Key areas an accountant can help
  • Questions to ask an accountant
  • Accountant checklist
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Small Business Accounting Guide

Small Business Accounting Guide

Small Business Accounting Guide

  • When and why you may want to register a Limited Company
  • Advantages and disadvantages of a Limited company
  • Limited company alternatives
  • When to register for VAT
  • Advantages and disadvantages of VAT
  • How to take money out of your company
  • Dividend tax rates
  • Limited company expenses & corporation tax
  • Annual accounts and deadlines
  • Confirmation statements and deadlines
  • Self Assessment tax returns
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small business bookkeeping guide

Beginner's Guide to Bookkeeping for Small Business

Beginner's Guide to Bookkeeping for Small Business

Starting a new business?

Bookkeeping requirements are unlikely to be at the forefront of your mind. At this stage there are more pressing things for you to think about.

However, once your business is taking shape, you will need to start thinking about keeping up-to-date and accurate accounting details of your income and expenses. But what kind of records do you need to keep?

More than just a legal requirement, basic bookkeeping is an essential part of your ability to manage your business effectively.

Every year, your business accounts will need to be completed. If your business is operating as a limited company, you will need to submit your company accounts to Companies House. If you are self-employed, your business accounts will be used to calculate your Self Assessment tax liability.

Your bookkeeping records will form the basis of these statutory financial statements. They should include information relating to your sales, your expenses, salaries of you and any employees, along with other bank transactions.

It might sound complicated, but take it one step at a time and it's actually quite manageable.

If you're really struggling to stay on top of it all, there are plenty of small business accountants and professional bookkeepers who will be happy to help. So, even if you're terrified of numbers, rest assured that there's a solution out there for you.

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bookkeeping vs accounting guide

Bookkeeping vs Accounting Differences

Bookkeeping vs Accounting Differences

As a small business owner, having a good grasp of your business financials is key-even if you've hired an accountant.

While you can delegate your accounting tasks, understanding the basics will place you in a better position when it comes to discussing your business finances with your team members, financial professionals or potential investors.

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Previously, we've explained about the top accounting terms and concepts you need to know. In today's post, we'll explain the differences between bookkeeping and accounting. While these two terms are often used interchangeably, they refer to two vastly distinct functions and roles.

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accounting mistakes guide

5 Common Small Business Accounting Mistakes & How to Fix Them

5 Common Small Business Accounting Mistakes & How to Fix Them

A broad swath of small business owners are tackling the myriad tasks required to pay bills, invoice customers, cut checks to employees and contend with past-due accounts, among other accounting tasks.

While that might work for very small businesses, it often opens the door for firms to make accounting mistakes that undermine their growth and siphon precious time and mental focus from other important areas of their business.

Here are five accounting mistakes that can derail growth for small businesses and how to avoid them.

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Preparing Annual Accounts

Your annual accounts are prepared from your company’s financial records at the end of the financial year. It must include:

All limited companies are required to file their annual accounts at Companies House each year. In addition, you’re required to send a copy of your annual accounts to all shareholders, individuals who attend your company’s general meetings, as well as to HMRC (as part of your company tax return).

There are several deadlines you need to take note of.

The deadline for filing your company accounts is nine months after your accounting reference date—or your company’s financial year end, while your company tax return must be filed 12 months after the end of your company’s accounting period for corporation tax. If you’re in your first year of trading, your annual accounts are due 21 months after you’ve registered with Companies House.

Keep in mind that if you fail to meet your deadlines, the penalties for late filing may range from £150 for filing under a month late, to £1,500 for filing more than six months late.

company accounts guide

Your company year end accounts explained

Your company year end accounts explained

Approaching a company's first year-end can feel incredibly stressful, as there will be a lot of paperwork you need to file at this time.

In this article we provide you with a simple list of what you will need to do, along with a few tips to make the whole process easier for you. We finish with the penalties and deadlines for late filing.

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How do I file Year End Accounts?

How do I file Year End Accounts?

1. HMRC - Companies must register with HMRC to file online and obtain a user ID and password.

2. Companies House ‚- To file online companies must obtain an authentication code from Companies House

Alternatively, the accounts can be posted to Companies House.

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How long do I have to file my accounts?

How long do I have to file my accounts?

Your first set of accounts is due 21 months after the date you registered with Companies House. Your accounts for the subsequent financial years are due nine months from your financial year end. Do note that if you change the accounting reference period, the filing time may be reduced.

Different deadlines apply for public companies.

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What are Year End Accounts?

What are Year End Accounts?

A year end refers to the end of a company's financial year. As such, the year-end accounts are a summary of a company's performance across the financial year, and will typically include a directors' report, balance sheet, profit and loss statement and explanatory notes. These financial statements and reports, along with the company tax return (CT600) must be filed with HMRC.

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What is a Partnership Statement?

What is a Partnership Statement?

The Partnership Statement (SA800(PS)) is used to record details of your earnings from sources other than trading and professional income indicated on your SA800 Partnership Tax Return.

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Confirmation Statements

Limited companies and limited liability partnerships are required to file a confirmation statement (CS01) to Companies House each year. The document details information about a company’s capital position, ownership, management and activities, and helps verify that the information Companies House has about your business is up to date.

You can file your confirmation statement online, by post, or by using a third-party service (such as our GoForma accounting packages) to complete your filing. If you aren’t subscribed to our packages, completing your filing online will be your best option. It’s faster to complete the form online, and cheaper too—it costs £13, compared to the £40 fee for filing a paper form.

You’ll need to fill in the ‘additional information’ section of the form if there are changes to the following details of your company:

  • Standard Industrial Classification (SIC) code
  • Statement of capital
  • Trading status of shares
  • Exemption from keeping a register of people with significant control
  • Shareholder information

Keep in mind that even if there hasn’t been any changes, you still need to check the existing details to ensure that they’re accurate.

You need to file your Confirmation Statement up to 14 days after the due date—which is 12 months after the date your company was incorporated, or 12 months after the date you filed your previous Confirmation Statement.

We can’t emphasise enough on meeting your filing deadline. The penalties for late filing can be severe—your company and its officers could be prosecuted, with your company struck off the register.

How do I file a confirmation statement with Companies House?

How do I file a confirmation statement with Companies House?

You can file your confirmation statement online. You may view Companies House's video for instructions on how to file your confirmation statement.

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What are Confirmation Statements?

What are Confirmation Statements?

A confirmation statement (CS01) is a document that limited companies and limited liability partnerships must file at Companies House annually. It details information about a company's capital position, ownership, management and activities, and helps verify that the information Companies House has about your business is up to date.

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What is a Companies House confirmation statement?

What is a Companies House confirmation statement?

A confirmation statement (CS01) is a document that limited companies and limited liability partnerships must file at Companies House annually. It details information about a company's capital position, ownership, management and activities, and helps verify that the information Companies House has about your business is up to date.

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Paying Yourself Dividends

As a sole trader, how you get paid is fairly straightforward—you pay yourself through personal drawings from your business.

If you’re running your own limited company, there are two main ways in which you can pay yourself: by taking a salary or drawing dividends.

As the director of a limited company, you’re also considered an employee. As such, any salary you draw will be paid through the PAYE scheme—similar to how other employees of the company will receive their pay. You’ll run a payroll, report to HMRC and receive your salary (after income tax, along with Class 2 and Class 4 NICs have been deducted at source).

Dividends are payments of profit that a limited company distributes to its shareholders, and typically paid out on a monthly or quarterly basis. Corporation tax isn’t levied on dividend payments; depending on the amount of dividends paid out, each recipient may have to pay dividend tax.

For the 2021/22 tax year the most tax-efficient salary will usually be £8,840 per year, which is the NI Secondary threshold amount. There are important tax implications you need to consider when you’re deciding on the amount you should draw as a salary. If you decide to draw a very low salary (or not at all), you risk missing out on maternity benefits, part of your personal allowance and pension entitlement.

Dividends Guide

Dividends Guide

Dividends Guide

  • What are dividends?
  • Dividend tax rates and allowances
  • Paying taxes on dividends
  • Dividend FAQs
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Dividend Calculator (Excluding VAT)

Dividend Calculator (Excluding VAT)

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Dividend Calculator with VAT Flat Rate Scheme

Dividend Calculator with VAT Flat Rate Scheme

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Dividend Tax Calculator 20/21

Dividend Tax Calculator 20/21

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dividends taxes guide

What are the taxes, rates and allowances on dividends?

What are the taxes, rates and allowances on dividends?

A dividend is money that's paid out by limited liability companies to investors, usually on a quarterly or annual basis. These payouts are based on the quarterly profits of your company as well as the amount of stock you own.

Dividends are calculated based on profits-what is left in your company after all expenses have been paid-not revenue.

Dividends can be either paid in cash or reinvested into your investment portfolio via dividend reinvestment, or via SCRIP dividends-which allow companies listed on the LSE to give investors additional shares instead of cash payouts.

Dividend tax refers to the rates by which those dividends are taxed according to HMRC. Each year, these tax rates may differ.

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Filing Deadlines

As a self-employed person or limited company director, staying on top of your filing deadlines is key. The last thing you’d want is to get into the bad books of HMRC, and incur unnecessary expenses like penalties for late filing.

The filing deadlines for sole traders are as follows:

  • Register for Self Assessment by 5th October after the end of the relevant tax year. For example, if you started operating as a sole trader on 30 April 2021, you’ll need to register for Self Assessment by 5 October 2022.
  • File your Self Assessment by 31st January following the end of the relevant tax year. If your tax bill falls under £3,000 and you want to complete your payment through PAYE, you’ll need to file your online return by 30th December.  
  • If you’re VAT-registered, you need to file your VAT returns 1 month and 7 days after your VAT quarter end date.

And if you’re running a limited company, the following filing deadlines will apply:

  • File your Self Assessment by 31st January following the end of the relevant tax year.
  • If you’re VAT-registered, you need to file your VAT returns 1 month and 7 days after your VAT quarter end date.
  • File your company accounts 9 months after your company year-end. If you’re in your first trading year, your first annual accounts are due 21 months after your date of incorporation
  • File your Confirmation Statement up to 14 days after the due date. The due date is 12 months after the date your company was incorporated, or 12 months after the date you filed your previous Confirmation Statement.
tax returns deadline guide

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

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

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deadline for tax return guide

Tax return and payment deadlines you need to know

Tax return and payment deadlines you need to know

Tax season can be stressful for small business owners.

You don't have the convenience of having an employer filing for you. While there are all kinds of tips and strategies for managing your taxes, the first order of business is to get key deadlines noted on your schedule, and determine how and when to make your payment.

Here's what you need to know:

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What are the deadlines for payment of PAYE taxes?

What are the deadlines for payment of PAYE taxes?

If you're paying salaries to employees or directors, you need to register for PAYE and pay your PAYE bill to HMRC.

  • Monthly payments: Your PAYE bill is due on the 22nd of the next tax month.
  • Quarterly payments: Your PAYE bill is due on the 22nd after the end of the quarter.

There are various ways to make your payment.

  • Same or next day payments: online or telephone banking, CHAPS
  • Payments processed in 3 working days: card payments (online), Bacs, cash or cheque payments at your bank or building society, Direct Debit, by cheque through the post
  • Payments processed in 5 working days: Direct Debit (if it's the first time you're setting up a Direct Debit payment)

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What are the late filing and payment penalties?

What are the late filing and payment penalties?

PAYE

RTI late filing will incur a monthly penalty of £100, depending on the number of employees you have.

Self Assessment

A late filing penalty of £100 is imposed if your tax return is up to three months late. The penalty increases if you're later than three months, or if you pay your tax bill late. Additionally, interest will be charged on late payments.

VAT

You may be required to pay a surcharge if you submit a late return. Surcharges for late payments or VAT return filings are indicated on the HMRC website.

Corporation Tax

HMRC's penalties are as follows:

  • 1 day late: £100
  • 3 months late: An additional £100
  • 6 months late: Your total corporation tax bill will be estimated, after which a penalty of 10% of unpaid tax will be imposed.
  • 12 months late: An additional penalty of 10% of unpaid tax will be imposed.

Company accounts

The following penalties for private limited companies will be imposed if you fail to file your accounts with Companies House on time:

  • Up to 1 month late: £150
  • 1 - 3 months late: £375
  • 3 - 6 months late: £750
  • More than 6 months late: £1,500


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What is your First Accounting Year End Date?

What is your First Accounting Year End Date?

The first accounting year end date for a new company is the last day of the month in which the first anniversary falls on. For example, if your company was incorporated on 15 January 2021, the first accounting year end date will be 31 January 2022.

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Accounting Terms

Accounting is often one of the first aspects small business owners hand off when their business scales. 

But while you can delegate your accounting to a professional, it’s still important that you have a good grasp of the basics. With this knowledge, you can more easily stay on top of your day-to-day bookkeeping or accounting responsibilities, and communicate with your business stakeholders.

There are a few key accounting terms and concepts you should know.

The balance sheet and profit and loss statement are two important financial statements every business owner needs to review. The balance sheet provides a summary of a company’s financial condition, and reports its assets, liabilities and owners’ equity at a specific point in time.

The P&L shows a company’s revenues and expenses. It also comprises other key elements like COGS, gross profit and net profit or loss.

The phrase “cash is king” rings true, particularly for small businesses. The cash flow statement, which indicates how much money is flowing in and out of your business is one that you should review on a regular basis. Optimising your accounts payable, staying on top of your accounts receivable and conducting in-depth cash flow analysis at least once a month are examples of steps you can take to improve your cash flow.

accounting terms guide

31 Accounting Terms & Concepts You Need to Know

31 Accounting Terms & Concepts You Need to Know

Whether you're self-employed or running a small business, you need to stay on top of your business finances.

While you can delegate your company's financial affairs to your accountant, it's still important to have a good grasp of the essentials-such as basic accounting terms and concepts. With this knowledge, you'll be better able to communicate with financial professionals, team members and potential investors.

To help you get started, we've written up an introductory guide to accounting terms you need to know:

Accounts payable (AP)

This refers to money owed to the business by its creditors (suppliers, vendors and other service providers). These are recorded as a liability on the balance sheet.

Accounts receivable (AR)-

This refers to money owed to the business by its debtors (clients and customers). The amounts are recorded as an asset on the balance sheet.

Accruals

Accruals are amounts that are unaccounted for at the end of the accounting period. These can be expenses that have been incurred or revenue that has been earned, but aren't yet recorded in the accounts.

Assets

Any resource that is owned by a company. There are two main types of assets: current assets and non-current assets. Current assets are expected to be consumed within a year, while non-current assets are expected to be held for longer than a year.

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.

Cash flow

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

Chart of accounts

The chart of accounts is a listing of all the accounts used in the general ledger of the business.

Cost of goods sold (COGS)-

The total of all costs associated with producing your products or services.

Credit

An accounting entry that increases a liability or owner's equity account, or decreases an asset or expense account. The term may also be used to refer to an entry on the right side of a T-account.

Debit

An accounting entry that increases an asset or expense account, or decreases a liability or owner's equity account. The term may also be used to refer to an entry on the left side of a T-account.

Depreciation

The measurement of the decline in the worth of an asset.

Common methods of depreciation include: straight line, units of production, sum-of-years-digits and double-declining balance.

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.

Generally Accepted Accounting Principles (GAAP):

In the UK, the GAAP is a set of accounting standards published by the UK's Financial Reporting Council (FRC) for reporting financial information.

General ledger

A record of all the accounts that a business uses.

The accounts are classified into three categories: assets, liabilities and equity accounts.

Profit & loss (P&L)

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

Liabilities

Debts and obligations of a company.

There are two main types of liabilities: current liabilities and non-current liabilities. Current liabilities (otherwise known as short-term liabilities) are due within a year, while non-current liabilities are due after a year.

Equity

Equity can have several meanings in accounting.

Firstly, it refers to the net amount of finances an owner has invested in the company.It can also refer to the residual value of assets less liabilities, as represented by the accounting equation ‘Equity = Assets - Liabilities'.

Expenses

Costs incurred by a company for revenue generation.

A few common types of expenses a business may incur are:

  • Fixed expenses: The total amount of the expense doesn't change over the short-term, despite changes in sales volume or other business activities. Examples include lease and rent payments.
  • Variable expenses: As its name suggests, the total amount of the expense varies in proportion to changes in sales, production or other business activities. Examples include salaries, utility expenses or costs of raw materials.
  • Operating expenses: Expenses incurred for activities that aren't directly related to the production of goods or services. Examples include administrative expenses, or legal and financial fees.

Net income

Otherwise known as net profit, net income refers to a business' financial position when the total revenue is more than the total expenses.

Present value (PV)

Present value is a calculation that measures the current value of a sum or stream of money to be received in the future, through adjusting for inflation and interest.

Return of investment (ROI)

A metric of profitability used to measure the gain or loss that an investment generates, relative to the sum of money invested.

Revenue

The amount of money a company receives from selling its goods or providing its services.

It refers to the amount earned before expenses are deducted.

Trial balance

A trial balance is a report that lists the balances of all general ledger accounts of a business at a specific point in time.

An expense should be recorded in the same period that the related revenue is earned.

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debits and credits guide

Small Business Guide to Debits and Credits

Small Business Guide to Debits and Credits

As a self-employed person or small business owner, getting a good grasp of accounting fundamentals can feel like an uphill task.

As accountants who specialise in small business needs, we're familiar with the challenges that you face-and have put together a series of articles to help you easily understand the basics of accounting.

We've touched on key accounting terms & concepts and the differences between bookkeeping and accounting. Below, we'll dive in to explain what debits and credits mean in accounting.

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UK Budget 2021 Key Announcements

UK Spring Budget 2021: 19 Things You Need to Know About the Budget

UK Spring Budget 2021: 19 Things You Need to Know About the Budget

1. Furlough scheme extended to September 2021

The government has committed to continue paying 80% of employees' wages when they are unable to work, with employers not having to make any contributions until July 2021.

2. Support for the self-employed extended to September 2021

As part of the covid support package from the government, the the Chancellor confirmed that he will extend the self employed income support scheme with those submitting a self assessment tax return before midnight 2nd March being eligible.

3. Universal Credit uplift to stay for 6 months

The £20 weekly uplift in Universal Credit has been extended for a further 6 months, with Working Tax Credit claimants being eligible for a £500 one-off payment.

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benefits in kind guide

What are benefits in kind?

What are benefits in kind?

For self-employed persons or employers, it can be challenging trying to understand the rules surrounding benefits in kind. These can be complicated; some benefits are taxable while others aren't, and it gets tricky figuring out which rules apply to your situation.

To make things a little easier to understand, we've written up a quick guide below. After reading our guide, you'll understand what benefits in kind are, have a clearer idea of which ones are taxable (and which ones aren't), and get an overview of what you need to do when it comes to reporting and paying taxes on benefits in kind.

Do keep in mind that this isn't a definitive guide, as HMRC's decision to impose a tax varies by situation. If you need specific advice, doconsult our specialist accountants at Forma.

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profit and loss account guide

Your Balance Sheet and Profit & Loss explained

Your Balance Sheet and Profit & Loss explained

For small business owners and contractors who have just started out, staying on top of your business finances and documents can be daunting.

Here's where our article comes in, so you can quickly get a grip on the basics.

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Guide to the Business Asset Disposal Relief

The Business Asset Disposal Relief replaces Entrepreneurs' Relief. Learn about the changes, whether you're eligible for the relief, how to claim and more.

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Can I expense Eye Tests/ Glasses?

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What are Taxable Supplies?

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What is a Balance Sheet?

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How do I pay a Supplier?

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Can I expense Printing?

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What are Supplier References?

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Can I expense Entertainment or Dinners?

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Can I expense Marketing costs?

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What is a PAYE Annual Return?

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Can I expense Food & drink?

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Can I expense Taxi fares or an Uber?

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What are Written Down Values?

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What is Statutory Paternity Pay?

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Can I expense Phone calls?

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Can I expense Parties (or staff entertainment)?

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Can I expense Pensions?

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Can I expense Training costs?

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Can I expense Paypal charges?

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What are Rechargeable Expense: expensing a client?

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What is Statutory Maternity Pay?

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How do I pay a Limited Company Pension?

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What is a Partnership Statement?

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How should I pay overseas supplier?

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Can I expense Ebay charges?

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What are Interim Accounts?

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What are Aged Creditors?

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Small Business & Limited Company Accountants

Reach more about our complete guides to Limited Company Accounting...

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.

Best Accounting Software

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)

Accounting & Limited Company Deadlines

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.

Accounting Terms

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.

Free Accounting Advice

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.