Small Business Accounting Specialists

Small Business & Self Employed Accounting

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Read our free guides, request a call back or choose one of our accounting packages to help kickstart and operate your business.

We provide specialist accounting services to freelancers, sole traders, contractors and small businesses in the UK.

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Freelancer Accounting

From £25 per month

As a freelancer you are also classified as self-employed. You do pieces of work for various commercial organisations rather than giving all your time to a single organisation. Generally, you don't provide services to domestic consumer customers.

The most common freelancer roles include web development & design, teaching & tutoring, writing & copywriting, creative & graphic design, admin support & assistance, language translation, web research, transcription, photography, customer service support and social media coordination.

Freelancer Accounting

Sole Trader Accounting

From £25 per month

As a sole trader you run your own business as an individual and you are effectively self-employed.

Example sole trader businesses include electricians, gardeners, private taxi drivers, decorators and plasterers who are all traditional trade and easy for a skilled tradesperson to operate.

They will mainly generate work from word-of-mouth marketing and provide direct services to domestic consumer customers.

Sole Trader Accounting

Contractor Accounting

From £65 per month

As a contractor you typically work for one or two business clients at a time. You provide a service or complete a project on a contract basis. Contract stipulations, including the rate you charge are agreed before you start. Contractors generally work at their client’s premises and complete the work within an agreed time frame, although contract periods are often extended to meet project demands.

Contractor roles cover areas of expertise including finance, legal, banking, human resources, engineering, information technology, sales & marketing, operations and client services.

Contractor Accounting

Small Business Accounting

From £50 per month

As a SME business (small to medium enterprise) you are privately owned, employ less than 100 members of staff (although this typically indicates you’re a ‘small’ rather than ‘medium’ sized business) and provide products and/or services to a range of different commercial or consumer customers.

Most SME business have a limited company structure, but some are established via a limited liability partnership.

Whichever category your work falls into, you essentially work for yourself or employ other people to deliver your services. You therefore have to take responsibility for your finances, which includes preparing accounts and various tax calculations such as VAT, corporation tax, PAYE, national insurance contributions and self assessment.

SME Accounting

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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 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 terms you need to know

Cash flow: 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 (P&L): 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)

Director’s loan account (DLA): 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: 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.

When you need to…

File for VAT

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.

File your Self Assessment

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

File your company accounts:

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.

Pay yourself:

As a sole trader, you don’t take a salary in the traditional sense; instead, you’ll pay yourself through sole trader drawings from your business.

If you’re a limited company director, you may pay yourself through taking a salary, dividends and pension contributions. Dividends may be distributed at any time or frequency across the year, as long as there is sufficient profit in your company.

Advanced accounting

Improve your 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.

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.

Taxes

We have a wide variety of small business tax advice with guides on allowances and requirements whether you're self employed or running a limited company.

Our knowledge base

Explore our range of resources created by our team of expert accountants and advisors.

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