In a time when any good news is welcome, many are thrilled to know that the UK has a growing number of small businesses active in the current economy. As a matter of fact, the start of 2018 was a time when 99 percent of all private sector enterprises were small businesses.
While this is great news, what’s not news is that most small businesses are usually in a cash crunch, nor do they have enough hours in the day. This is worst when they’re just getting started. If you’re running such a business, you might feel like your normal day is just juggling more things than you can handle. However, there is one thing above all else that you should find some time for. That’s doing account management.
It can be really tempting to neglect your accounts when you just never have enough time. However, doing this could mean considerable trouble for you later on. If you want to make your life easier, then keep reading to learn 3 great tips you can use when you’re starting up your small business accounting.
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1) Be Aware Of Your Deadlines:
Deadlines are things that can come up seemingly out of the blue. Missing any of them could mean HMRC fines. You’re in business to make money, not waste it! The following are a handful of crucial company accounts you need, as well as related tax submission and payment deadlines you should know about:
Filing Accounts: If you registered your business as limited, then you have to file your very first accounts within 21 months of that registration with Companies House.
Corporation Tax: This is due nine months and one day following the end of your accounting period.
Company Tax Return: These need to be filed a year following the accounting period.
Self-Assessment Tax Return: You are required to finish and submit this if you’re a director who receives dividends from your limited company, a sole trader, or a member involved in a limited partnership. January 31st of the next tax year is the HMRC deadline for submission of these.
Tax Year: Don’t get your tax year confused with your calendar year. Inside the United Kingdom, the tax year starts on April 6th and ends on April 5th. If you have to submit your tax return, then HMRC is going to mandate any information that relates to this period.
The accounting period typically aligns with the financial year of your company. Every business has a different financial year, and it usually is based on when your company was specifically incorporated. Your year-end date should be the final day of the particular month that your company was incorporated in. For instance, if June 12, 2016 was your company’s incorporation date, then your year end would be June 30, 2017. After that, your business financial year or accounting period would continue to end on the 30th of June every following year.
Keep in mind that if your tax liability, which is the tax you have to pay from your annual profits, is more than £1,000, then you will need to make two different payments on account. Your first one would be due on January 31st, with the second one due by July 31st of that very same year.
2) VAT Registration:
Many small business owners or leaders wonder if they should register for VAT.
You would need to undergo VAT registration should any of the following criteria apply to your company:
-The VAT taxable turnover you have is underneath the current threshold, which is £85,000. VAT taxable turnover gets defined as the cumulative value of anything you sell which isn’t VAT-exempt.
-Your company only sells products or services which are VAT-exempt.
-Your company spends over £85,000 on goods that were brought in from suppliers who are EU VAT-registered.
Even if any of those criteria do not apply to you right now, you might choose to undergo VAT-registration voluntarily. It does mean a bit of paperwork. Also, your products and services are going to get VAT added onto them. However, you’d be able to reclaim any VAT charged to your company from other businesses. Take a look at this VAT rate table.
3) Tracking Company Expenses:
Make sure that you record every single company expense. Any expense which you incur only for business purposes is something that you can claim. Some items can be allowed for tax purposes, which means you’re able to deduct such costs from your company revenue, although some aren’t allowed.
Tracking company expenses can be burdensome. However, if you’d like to simplify things, then just put notes or even transaction receipt photos into your Tide app.
Whether you do your travel by car or train for a company trip, it’s possible to claim money back. At the time of writing, that was 45p for all of the first 10,000 miles. After that, it’s 25p for each mile.
Also, if you are working from home, then you can claim portions of household bills as expenses, be it telephone, lighting, or heating bills, as well as mortgage or rent costs. Other select things that count as company expenses include training, accountancy fees, professional memberships, stationery, and computer equipment.