If you had a March year end, your company accounts should have been submitted by 31 December. So, if this still needs to be done, you would already have incurred a penalty from Companies House to the tune of £150, and that’s if you file them by 31 Jan.
Go past 31 Jan, and submitting them anywhere between 1 – 3 months late will incur a penalty of £375. Being late by 3 – 6 months will cost £750, and over 6 months will cost £1,500, plus you have the threat of being struck off the company register if accounts are not filed at all.
If you then repeat this next year, all of the above penalties will be doubled.
So if filing your accounts are low down your list of priorities, it might be an idea to move them up the list, or you might end up spending a lot more on them than you thought.
You may have made the decision to buy Sage Accounts, but are you sure you’re getting the right version? On the one hand you don’t want to spend more than you have to, but on the other you want to use Sage to it’s full potential to get the most out of it.
Sage Accounts packages range from Instant, for very small, simple businesses to Accounts Professional for more complex businesses. You’ll probably know yourself where your business fits on this spectrum, and so you can acquire the right software accordingly.
So think carefully before you buy – don’t be misled by salesmen telling you what you can have, think about what you actually need.
As a company, there are limits to what dividends can be paid out to shareholders. It may well be that you are the owner manager of the business, and why shouldn’t you take what you want?
The reason is that under Company Law, dividends can only be paid out of ‘distributable profits’. This is the total accumulated profit the company has made, and you’ll find the figure in the balance sheet in the capital and reserves section. If you take dividends over this balance, they are treated as illegal dividends, and the company and possibly the directors could face penalties under the Companies Act.
So before you pay yourself that dividend, check you have the reserves to do so.
If you, as an employer, provide any benefit to an employee, you are required to complete a form P11D and submit it to HMRC. This form records the cash equivalent of each benefit provided during the tax year. So, if you provide medical cover, gym membership, a car, fuel etc. then you will need to make a submission.
The deadline for this to reach HMRC is 6 July, and penalties will start accruing for any returns not submitted by 19 July.
Some of these benefits provided will result in a Class 1A national insurance charge, payable by the employer. Payment of this is due by 19th July (or 22nd if payment is made electronically).
In times of growth, or even temporary decline, your business may need an injection of funds to aid cash flow. Normally, your first thought may be to get a bank loan – receive a lump sum up front, pay it back in instalments.
However, there are many other forms of finance that you may want to consider, each offering different benefits and each with different costs.
Instead of a loan, it may be that you just require a temporary overdraft to dip into for short term funds. Or perhaps if customers are paying you too slowly, use factoring or invoice discounting to ensure you receive your sales receipts immediately, rather than relying on your customer to pay you.
Alternatively, from an outgoing point of view, rather than buy an asset outright, would it be worth your while to lease it and pay over a number of years?
So before you pick up the phone to the bank manager, you may wish to consider your options.
As your business grows and becomes more successful, there may come a point where you are required by law to register for VAT. Registering for VAT isn’t a particularly difficult task, but under what scheme should you register? The simplest VAT scheme would be the standard, whereby you pay over VAT you charge on invoices and claim VAT you pay on invoices from suppliers.
But is there a better scheme for your business?
If you are a service based business in particular, joining the VAT flat rate scheme could actually make you money. You charge 20% VAT on your invoices, but you only pay over a fixed % of your gross turnover to HMRC, meaning you get to keep the difference. You don’t claim input VAT, but overall you should be up.
Or if cash flow is a key issue for your business, why not join the cash accounting scheme. Here, you only pay and claim VAT when you physically receive payment and make payments, so you are more in control of your cash flow. If your customer doesn’t pay you for 60 days, at least you don’t have to pay the sales VAT over before you have the money.
In the course of your business, you may well be doing a lot of miles travelling from potential client to client. If you’re not recording them accurately and claiming all you’re entitled to, you could be missing out.
Currently, for the first 10,000 miles per year, the allowance is 45p per mile. This drops to 25p per mile after that in each tax year.
At the moment you may well just be sticking petrol receipts through the business. If you do a lot of miles, keep a mileage log and chances are you will be able to claim much more and reduce your tax bill.
It is often a given that if you need an in-house bookkeeper, you try and find an employee to add to the payroll. However, have you thought of the benefits of using a self-employed bookkeeper?
Here are a few:
- No employer’s NIC
- No pension contributions
- Save on other staff costs – subsistence, travel, insurance etc.
- No statutory sick pay or holiday pay – only pay for the days worked
- No drawn out terminations; don’t like your bookkeeper, change them
As a business owner, keeping your accounting records in good order may be low down on your list of concerns. Many a time in my career I have been passed a large box containing (in no sequential order) invoices, receipts, bank statements and other pieces of paper that need to be dealt with.
If this sounds like you, then don’t delay in getting help. For most businesses, accounts and/or tax returns will be due at the end of the calendar year, and to find out what taxable profits you have this will need to be sorted and put into accounts format.
If you don’t want the burden of maintaining your records, don’t hide them away, get a bookkeeper!
Hopefully, you have sorted out a venue for your Christmas party already, as you may struggle to find somewhere. If you haven’t, then bear in mind the amount you can spend as a business so that you don’t have to pay tax on it.
HMRC allows £150 per employee for staff functions. This is over the course of the year, so if you had a summer party, chances are you will go over this limit with the Christmas party. It’s an all or nothing thing, so if the average cost per employee was £151, technically the company would be taxable on the whole £151, not just the £1 you went over.