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Tax Deadlines

Business tax deadlines

As a business owner, you need to meet a range of important tax deadlines throughout the year. We have compiled a list of some of the most important, to help make sure you meet your obligations.

Please note that all of these deadlines may be subject to change. Similarly, if they fall on non-working days payment may be required on the last working day before the deadline. (This article is relevan for 2018)

Self Assessment

31 October. If you intend to file your tax return on paper, you need to do so by 31 October. The only exceptions to this are for taxpayers who received their Notice to File after 31 July, and those who have been specifically told by HMRC that they are not allowed to file online.

30 December. If you owe less than £3,000 and you want HMRC to collect it through your tax code, you must file your tax return online by 30 December.

31 January. However, if you intend to file your tax return online, you must do so by midnight on 31 January. Remember that you will need a Government Gateway login and password to do this, and these can take up to 10 days to arrive – so make sure you apply well in advance if you are filing online for the first time.

You will also need to make your first payment on account on January 31. This will usually be equal to 50 per cent of your tax liability for the tax year just gone, and will go towards next year’s tax bill.

6 April. The start of the new tax year. You can expect to receive a paper tax return shortly after this date if HM Revenue and Customs believe that you need to complete a Self Assessment.

31 July. After that, you will be required to make your second payment on account by this date.

Corporation Tax Deadlines

Starting up. If you start an active (as opposed to dormant) company, you must inform HMRC within three months. You can do this by completing form CT41G. You will normally receive this form along with the information pack that HMRC sends out to companies newly registered with Companies House.

If you start a dormant company, you should tell HMRC as soon as possible in order to avoid being treated as an active company.

Payment deadlines for taxable profits of £1.5 million or less. You will be required to pay your Corporation Tax bill by the date nine months and one day after the end of your Corporation Tax accounting period if your taxable profits are £1.5 million or less. This date is known as the normal due date.

Payment deadlines for taxable profits of more than £1.5 million. You will normally have to pay your Corporation Tax in four instalments if your total taxable profits exceed £1.5 million. You should contact HM Revenue and Customs for more information.

Filing your Company Tax Return. You must file your Company Tax Return within 12 months of the end of your company’s accounting period, in other words the ‘statutory filing date’. It is therefore important to understand that you will be required to pay your Corporation Tax before you file your return – unlike Self Assessment, where payment is normally due on the same date as the filing deadline.

VAT

Filing your VAT return on paper. This is one of the tax deadlines which have been phased out for most businesses. You must file your return online unless your business is subject to an insolvency procedure, you object to using computers on religious grounds, or you can’t file online because of your age, a disability, or because you live in an area without internet access.

Filing your VAT return online. The tax deadlines for online filing will normally be one month and seven days after the end of your VAT accounting period. There are numerous exceptions to this; for example, firms using the VAT Annual Accounting Scheme do not qualify for the seven day extension.

Paying your VAT bill. You will normally be required to pay your VAT bill on the same day it is due. Remember that you must pay using an electronic method if you file online.

If you use the VAT Annual Accounting Scheme. Firms that use the VAT Annual Accounting Scheme file just one return a year, two months after the end of their accounting period, and pay their bill in instalments.

If you make monthly payments these are due at the end of the 4th through 12th months of your accounting year, meaning you make nine payments. If you make quarterly payments these are due at the end of the 4th, 7th and 10th months of your accounting year, meaning you make three payments.

A balancing payment is then due, along with your return, two months after the end of your VAT accounting period.

PAYE and National Insurance Contributions

Monthly PAYE and Class 1 NIC payments. When you are paying PAYE and Class 1 NICs monthly by an electronic method, payment must reach HMRC by 22nd of each month. If you are paying quarterly, you must pay by the 22nd after the end of the relevant quarter. If you are paying by cheque, payment must reach HMRC by 19th of each month.

Quarterly PAYE and Class 1 NIC Payments. You may be able to pay quarterly if you pay less than £1,500 a month. You should contact HMRC to find out whether you are eligible.

Class 1A NIC payments. In case you are paying Class 1A NICs by electronic methods, payment must reach HMRC by 22 July. If you are paying by post, payment must reach HMRC by 19 July.

If you have any question regarding tax deadlines, don’t hesitate to contact us!

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tax return

How to fill in your Self Assessment tax return

If you’re self-employed, whether you run a business or work as a freelancer, you’ll usually need to fill in a Self Assessment tax return each year.

What tax do small businesses need to pay?

Depending on the particulars of your business, there may be a number of types of tax you need to pay. These are some of the most common:

  • Income tax through your Self Assessment
  • Corporation Tax
  • VAT

Am I responsible for my business’s tax payments?

You are considered self-employed (and therefore responsible for filing a Self Assessment tax return) if you:

  • are making decisions about how the business is run
  • are responsible for meeting losses as well as profits
  • can hire someone on your own terms to work for you
  • decide what work to do, how you do it and where to provide the services
  • regularly work for other people
  • complete unsatisfactory work in your own time and at your own expense

There are different rules if you work through an agency, if you’re a company director or if you’re the secretary of a club or holder of another office, but most sole traders will be responsible for their business tax.

If you’re unsure about your employment status, check out the guide on gov.uk

How does the Self Assessment process work for small businesses?

Once you’ve determined whether or not you need to register for Self Assessment and file a tax return, the process is largely the same whether you’re a freelancer, contractor, sole trader or business owner.

Registering for Self Assessment

To register for Self Assessment, you need to visit the gov.uk registration page and submit your details. If your business is run as a limited company or a limited liability partnerhsip, the process is slightly different. And you will need to register here.

After the registration you’re then able to file your tax return. You do this by filling out the Self Assessment tax return form either online or on paper. However, the government’s Making Tax Digital initiative may mean small businesses can no longer file paper tax returns in future.

Tax return deadlines

At the moment, the deadline for submitting your tax return is October for paper tax returns and January for online tax returns. For the 2017/18 tax year, which ended in April 2018, the deadline for paper tax returns is 31 October 2018 and the deadline for online tax returns is 31 January 2019.

After submitting your tax return, you need to pay the tax you owe. The deadline is usually the same as the final date for online Self Assessment tax returns, so the deadline for paying your 2017/18 tax is 31 January 2019.

How to fill in your Self Assessment tax return

When it comes to filling in your tax return, you’ll need all the information you have about your earnings for the tax year, as well as the details of any expenses you want to deduct from your tax return.

It’s important that you keep a record of all your income and expenses. That way, you’ll have it to hand when the time comes to fill in your tax return. There are a number of accounting apps and other bookkeeping software for small businesses, if you prefer to keep digital records, many of which integrate with the HMRC website to make filling in your tax return a bit easier.

In order to file your tax return, you’ll also need your UTR (unique taxpayer reference)number. The UTR is a reference number that’s assigned to you when you register. It’s usually printed on letters from HMRC regarding your tax return, but keep a note of it somewhere safe so you can easily find it when the time comes.

What are allowable expenses for small businesses?

When you’re self-employed, there are a number of costs you can claim back against your Self Assessment tax bill, so long as they’re allowable expenses. These are the main ones small businesses can claim:

  • office costs such as stationery or phone bills
  • travel costs such as fuel, parking, and train or bus fares
  • clothing expenses such as uniforms
  • staff costs such as salaries or subcontractor costs
  • things you buy to sell on such as stock or raw materials
  • financial costs such as insurance or bank charges
  • costs of your business premises such as heating, lighting, and business rates
  • advertising and marketing such as website costs

It’s important to note that if you work from home you can still claim business premises costs, but only a percentage. You can claim back for things like:

  • heating
  • electricity
  • Council Tax
  • mortgage interest or rent
  • internet and telephone use

HMRC asks that you find a ‘reasonable method’ of dividing the costs between personal and business use. They suggest using the number of rooms used for business purposes, or the time spent working from home.

If you run your limited company, you can instead deduct business costs from your profits before tax. If any of those are items you make personal use of, that has to be counted as a company benefit.

For more information on allowable expenses, check out our full guide to self-employed tax deductible expenses.

Changes to Self Assessment

In 2017, the government announced a number of changes to the Self Assessment process as part of its Making Tax Digital initiative, including quarterly tax returns and removing the option to file tax returns by paper. Some of these changes have been put on hold. Although, you can voluntarily sign up for the Making Tax Digital pilot for income tax instead of filing your Self Assessment. It’s worth keeping an eye out to see if the government makes any changes in the future.

As it stands, only businesses who pay VAT will have to submit their tax returns electronically, and only by 2019. However, the government have frequently said that they want to become ‘one of the most digitally advanced tax administrations in the world’, so it’s likely these changes will impact all small businesses in future.

If you have any questions don’t hesitate to contact us!

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How to set up your first online store

online store

Online stores are great friends to small businesses. They’re an excellent way to get started in retail without investing in bricks and mortar or staff. If you already have a physical store, an online presence can extend your reach beyond your local neighbourhood, while giving existing customers a more convenient way to shop.

If you’ve thought about creating your first online store and given up because it was too hard, take another look. As a result, handling online payments isn’t the chore it used to be. Secure, off-the-shelf services have greatly simplified what used to be a troublesome technical task. And they sync beautifully with online accounting to make bookkeeping painless. 

What should an online store have?

At its most basic, your first online store needs to:

  • showcase your products – including pictures, descriptions and prices
  • include a shopping cart where customers can build their order
  • process payments via PayPal or credit card
  • protect important financial data, such as credit card numbers
  • give shipping options

Three ways to start one

Firstly, in the early days of ecommerce, you had to build your own shop from scratch. Most of the components were custom made, which meant you spent a lot on design and development. The backend tools that managed the exchange of money were also expensive and needed technical expertise to set up.

Now you have options, come of which give you point-and-click setup. You can:

  • sell through a third-party platform
  • host a store through an e-commerce provider
  • host your own online shop

As with all choices, there are pros and cons. Let’s take a deeper look.

1. Selling through a third-party platform

If you choose to sell on a third-party site, all you need to do is set up a seller account. You won’t need to pay for web hosting or set up your own payment gateway. You’ll just need to cover the service fees – which are typically deducted from your sales.

With most platforms, you ship the goods direct to the customer. Amazon allows you to do this, too, but they also have a service where you send the goods to their warehouse and Amazon fulfills the order.

Approximately half of the Amazon shipments aren’t actually sold by Amazon. They’re sold by retailers like you who use their platform. Once you set up your account with a site like Amazon or eBay, you’re ready to start selling. It doesn’t matter if your monthly revenues are £100 or £100,000, they’ll handle payment and shipping for you. Just be aware that there may be a slight delay between when you finish creating your listing and when it goes live. Some platforms need to approve your shop before it’s opened up for customers to find you.

Setting up your first online store using a third-party platform is easy, but there’s very little room for branding. In some cases, you can’t really customise how the shop looks, aside from the product images. However, some platforms allow you to choose from different templates and change colours so take a look around. Before deciding on a platform, make sure you know what the design limits are and that you’re ok with them.

2. Hosting your store through an ecommerce provider

For example, dedicated ecommerce platforms give you a good balance of simplicity and flexibility. You’ll have more say in how the store looks and feels, and you’ll control how goods are sold and shipped. You can set up your own shop using sites like:

  • Shopify
  • Etsy
  • BigCommerce

When you choose one of these platforms, you get access to a range of templates and themes that you can use to build your storefront. Then you drop the storefront into your existing website so it’s a seamless experience for your visitors. As a bonus, with some platforms like Etsy, your product also appears on their site.

You’ll pay a monthly subscription fee for services like these, but that covers hosting, payment processing with your designated merchant providers, and security.

3. Hosting your own online shop

If you want to build the store exactly how you like it, without being limited by templates, you can use a content management system like WordPress. It will take much more time but you’ll be able to choose the layout, the design, and the entire experience. You can teach yourself how to do it or hire designers and developers to do it for you.

If you go down this route you’ll also need to choose a:

  • hosting provider, such as HostPresto
  • a virtual shopping cart, such as WooCommerce or Magento
  • a merchant provider to process payments, such as PayPal, Stripe or Authorize.net
  • spam-protection from someone like Akismet
  • SSL certificates and secure backup solutions for site safety and consumer protection

What you need to get your first online store running

Once you’ve chosen one of these services, you’re almost in business. There are three steps left to take:

Providing business details
You won’t be able to get money from your sales until you’ve given your merchant provider or third-party platform provider:

  • your business ID
  • your business banking details
  • the appropriate sales tax rate, if applicable

Get a merchant provider
You’ll also have to get set up with the  merchant provider of your choice, such as Paypal or Stripe (for processing credit card payments).

The biggest hurdle is verifying test deposit transactions for banking and merchant processing. Once this is taken care of, you’ll be all ready to go.

Choose an email management solution
You should also decide on an email management solution to build and track your customer list. This is useful for email marketing campaigns, informing customers of sales and special deals, and asking for feedback on your store. You can use a solution such as:

  • MailChimp
  • AWeber
  • Infusionsoft

Find platforms that play well together

Not all ecommerce platforms integrate with all web tools and services. Some platforms require you to use certain merchant providers or email systems, for example.

You can find which tools your store integrates with by searching under the API or integrations option on your store’s website. The solution with the most flexibility is typically the best choice for the long-term.

Setting up payment and shipping policies

Third-party platforms like eBay and Amazon have policies in place to ensure that customers receive their goods quickly and easily. When you’re selling and shipping your own product using an ecommerce platform like Shopify or BigCommerce, or a self-hosted WordPress store, you’ll need to figure this out on your own.

Payment
The most common options for payment are via credit card or Paypal. They’ve become much easier to set up. If you use an ecommerce platform, they’ll guide you through the process. You have other options, too, such as:

  • wire transfers
  • cheques
  • finance or flexible payment (flex pay) for pricier products

Shipping
It costs money to ship your product. The faster you send it, the more it will cost. Yet shoppers prefer vendors who offer fast delivery and free shipping. There’s a lot to consider here. Whatever you decide, be very clear about delivery costs and timelines in your shop.

Read more about shipping in Xero’s guide: Use online shipping to build customer loyalty

How and when do I get the money?

If this is your first online store – and you’ve got money tied up in inventory – you probably want to know how quickly you’ll get money from sale. It generally takes from two to five business days for money from a sale to hit your account. The exact length of time may depend on the merchant provider and the history of your account.

For this reason, it’s important to keep your merchant provider happy. Keep your information updated and respond quickly to questions. If you don’t, they may put security holds or even suspensions on your account.

Discovering the power of online business

You can reach a massive audience with an online shop. Because there’s no bricks-and-mortar, and often no employees either, it can also be a low-cost way to start a business. Plus your transactions are just about always digital, which makes it easy to do your accounting, track cash flow, and maintain inventory. You can plug your store straight into accounting software to automate everything – from receiving orders all the way through to tax payments.

Setting up a shop and taking payment over the internet used to be complex. But with more and more online stores opening all the time, the industry is now well served by proven, affordable and easy-to-use technologies. It’s a great time to set up your first online store.

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When Buying Accounting Software

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Buying Accounting Software

buying accounting software

You need to be extremely careful when buying accounting software. Therefore, with the introduction of the right accounting software, your small business is not going to remain small. It is bound to expand!

Your PC dealer could be your general adviser with regard to the purchase of small business accounting software. But he can’t be the expert adviser. Not even your Chartered Accountant can do that. The computer technology is updating itself incredibly fast.  Consequently, before you make any worthwhile investment for accounting software you need to take professional advice.

As a result, with the introduction of right accounting software, your small business is not going to remain small. It is bound to expand!

What is on the market?

For example publications like HMRC Guide to Small Business Accounting Software have been reportedly used by many businesses to select software. In addition, they constantly compare and reviews with reference to quality and rates some of the important software packages.

Some of them are:

– Sage

– Xero

– Quickbooks

– Kashflow

Consequently, these packages are reviewed for the important aspects of small business accounting needs. For example, general ledger accounts, receivable and order processing, accounts payable, inventory control, purchase orders, payroll, and global features module.

You will see that the module-by-module report with illustrated screenshots, for each package detailing various aspects and performance ratings. These features given by the report are of immense help to you to take the decision.

Pricing

Study charts on pricing, operating platforms, support policies, make your tasks of comparison very easy. Even calling for quotations, studying and analysing the information is a time-consuming process. Moreover, your selection cannot be an expert’s selection. So, the opinion of the impartial competent analyst, who has the necessary expertise, is likely to prove profitable to you in the long run. You can tailor your needs in relation to the budget from the various options available.

When you are buying accounting software some of the important applications covered by the HMRC are:

– General Ledger

– Accounts Payable

– Accounts Receivable

– Sales Order Entry

– Inventory Control

– Job Cost

– Order Processing

– Report Writing

– Purchase Order

– Fixed Assets

– Payroll.

These will define the software needs for your small business.

Final thought

In conclusion, but consider one important point. Any given information is what it is. Do not rush to the newly introduced products offering with high discounts!  Unless they are from the well-established companies having proper warranty system. It is better to pay the higher cost and buy the best instead of going for some immediate profits and suffer eventual loss.

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Annual Return And Accounting Rules For A UK Dormant Company

dormant company

Annual Return And Accounting Rules For A UK Dormant Company

Rules apply to a dormant company in the UK with regard to accounting documents and submission of information to companies house. This needs attention even if the company has not traded during its fiscal year. Consequently, dormant companies risked being fined if these rules are ignored.

Firstly, a dormant company in the UK is defined as a company that has had no significant accounting transactions during its fiscal year. It is not sufficient that the company may not have traded. If the company has had any accounting transactions at all with the exception of three specific transactions that are allowed.

On the other hand, transactions regarded as allowable for the company to retain its dormant company status. These are the amount received by the company. For example:

  • in respect of the first shares issued to the memorandum of association subscribers
  • the annual filing fee payable to companies house
  • fines and penalties issued by companies house for non-filing of the annual return.

In short, the term dormant company has legal significance quite separate to a company which might be described as a non-trading company. Therefore the difference being that a non-trading company may still have other financial transactions entered into its accounting records. These are even though not related t trading would disqualify that company as a dormant company and the special rules applicable to a dormant company.

A company may be in a dormant state for a number of reasons such as:

  • holding assets or documents
  • merely protecting a trading name
  • perhaps plans to start a business have otherwise been delayed

Timeframe

So, there is no limit on how long a company can remain dormant. However, there are procedures which must be followed to avoid fines and keep the company on the companies house register. Every dormant company must retain at least two officers, a director and company secretary.

The directors are responsible for ensuring the dormant company submits the annual return, form 363, each year which contains details of the directors, company secretary, registered office and shareholders. The companies house filing fee of thirty pounds which is reduced to fifteen pounds if the web filing service is used to file the return online.

In addition, the directors are also responsible for submitting to companies house a set of financial accounts each year. Failure to submit a set of accounts can result in companies house striking off the company from the company register and would also leave the directors open to penalty fines and a potential criminal prosecution.

If the dormant company is no longer required the directors can arrange for the company to be dissolved by one of two methods depending upon whether the company has outstanding financial affairs. If the company has no liabilities then it may be able to apply to companies house for a voluntary striking off and dissolution. If the company has outstanding financial affairs then the voluntary liquidation procedures need to be followed.

The annual accounts a dormant company must submit to companies house each year consist of a balance sheet which also contains statutory notes in compliance with the companies act. For a private company the annual accounts must be delivered within 10 months of the financial year-end, commonly called the accounting reference date and filed each year thereafter even if the company has never traded.

What to do?

The accounts of a dormant company can be filed online.

The annual accounts of a private dormant company do not have to be audited if the exemption is claimed and would normally consist of an abbreviated balance sheet with the statutory notes. The director’s report and profit and loss account are not required. If there have been any accounting transactions that would have appeared in a profit and loss account then the company would be disqualified from being dormant except for the exemptions stated above.

Companies house provide a standard form for the submission of a dormant company accounts. While suitable for companies that have not traded this form may not be suitable for a company that has balance sheet entries from previous years trading activities when a more detailed balance sheet would be required.

The model set of balance sheets that a dormant might adopt are available from the companies house website and contain the statutory statements that should accompany the annual accounts stating the entitlement to exemptions from detailed accounts and audit and include a statement from the directors that the accounts have been correctly prepared.

The balance sheet must be signed and dated by a director before submission. If the option to file online has not been taken then the annual accounts should be posted either to companies house at Cardiff if the company registered office is situated in England and Wales or to Edinburgh if the registered office is situated in Scotland.

If you have any question don’t hesitate to ask an accountant!

Or Visit our website for further articles at www.spartanaccounting.co.uk

 

 

 

 

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The Importance of Accounting For Small Business Startups

Small Business Startups

Small Business Startups

For small business startups accounting is a crucial part of running a business. Many people mistakenly believe that if you are starting a small business, you really do not need accounting. However, this is not true. If you want your business to reach its full potential, you have to follow basic accounting practices. You might find accounting boring, but you cannot avoid it.

Accounting is a crucial part of running a business. Many people mistakenly believe that if you are starting a small business, you really do not need accounting. However, this is not true. If you want your business to reach its full potential, you have to follow basic accounting practices. You might find accounting boring, but you cannot avoid it.

Importance Of Accounting

When you are a small business startup, you need an accounting system in place. This could help you create a record of all the revenue and the expenditure of your business on a daily basis. Maintaining this data is crucial because you will need it when you file for tax returns. You might also need it for legal purposes. If in the future, you apply for a loan to expand your business, this data can help you get one.

Another important purpose of maintaining an accounting system is that it provides you with a tool to assess your business’s performance. An accounting system provides you with information about your business that will help you analyse the weak and the strong points of your business. You will realise what is helping your business and what is not.

Once you realise how important accounting is, you will be more than eager to put in that extra effort. Moreover, accounting is not that hard for small businesses. All you need to do is ensure that your financial records accurately reflect your business’s income and expenditure.

Ledger

Most business startups maintain their records in a ledger, which is a record of sales receipts and expenditures. You need to transfer all your receipts and expenditures to this ledger. You can do this on a daily, weekly, or a monthly basis. Basically, this will depend on your business.

Three Financial Measures

Accounting for small businesses usually consists of three financial measures: Balance Sheet, Profit and Loss Statement, and Cash Flow Statement.

The Balance Sheet portrays how much your business is worth. This statement will list all your assets (cash, inventories, account receivables, etc) and liabilities (loans, accounts payable, and debts). If done in a proper manner, the Balance Sheet can show you exactly where your business stands. Your ledger will not show accounts payables and receivables; however, your balance sheet will.

The Profit and Loss Statement shows how your business is performing. This statement covers a time period, which could be monthly or quarterly.

The Cash Flow Statement provides an assessment of future cash needs of your business.

So now you understand how important accounting is for your business. If you have been educated in the field of commerce, you might be able to do the accounting yourself. However, if you do not know much about accounting, you can consult an accountant to help you set up your accounting system. Consulting an accountant is cheaper than hiring a bookkeeper.

Another thing you can do is purchase accounting software. It will not only help you keep track of all the receipts and expenditures, but will also help you create quality financial reports.

Conclusion

The bottom line is that as long as you make the commitment to setting some time for your accounting needs and start maintaining your accounting system, you will realise how easy it is. Good Luck with your business startups!

If you have any question don’t hesitate to ask an accountant!

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