Micro Business Accountants Guide

Micro-Business

What are Micro-Business Accounts?

Every business must file the statutory company tax return with HMRC. However, small and micro businesses have several options for submitting their returns. You can save money and time by submitting your return in a simple micro-entity account format.

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According to the Companies Act 2006, we can classify a limited company as a micro business if any two of the following three conditions are true during a particular financial year.

It may not have an annual turnover above £632,000.

The balance sheet total may not exceed £316,000.

It may not have an average of more than ten employees in the financial year.

How Do Micro-Entities Do Accounting?

Microbusinesses can do accounting by:

  1. Opening a bank account
  2. Tracking their income and expenses
  3. Developing a bookkeeping system with digital records
  4. Setting up a payroll systems
  5. Investigating import tax
  6. Determining how they will get paid
  7. Establishing VAT procedures
  8. Determining their tax obligations
  9. Calculating net profit margin
  10. Finding good accounting partners

Business Expenses

You can think of any expense as a business expense by determining whether it is for private or business use.

Setup Costs: You can include the pre-trading expenses in the first period of your accounting.

Office Costs: They include printing, stationery, internet, separate landline phone for business.

Clothing Expenses: Protective clothing and uniform except for everyday clothing costs

Insurance and Subscription Expenses: Recognized body relating to business and public Liability insurance

Banking Expenses: Bank charges, annual arrangement fee, credit card expenses

Transport Expenses: Mileage allowances with car parking charges, Specific percentage of motor expenses for business

Using Home for Business: You can use HMRC rates or actual expenses incurred in the period.

Subsistence Costs: You can claim it if you are away for more than five hours.

Hotel Expenses: If you need an overnight stay in a hotel for a business trip

Disallowable Expenses

The taxable profit is different from your accounting profit. The expenses are also disallowable if they are wholly and exclusively not for business purposes.

Drawings for personal use; however, wages are allowable for a limited company

Goods for personal use

Part of landline/ mobile and internet, if you use it for both business and private

Entertaining customers, suppliers, and clients

Repayment of interest on a loan

Business gifting for entertaining

Donation amount

Late filing penalties, motor fines, and similar expenses

An Icing on the Cake

We provide a personal accountant for small businesses to help in:

Giving necessary tax advice whenever required

Managing your salary planning, dividends, taxes, and VAT issues

Filing PAYE, VAT, corporation tax returns, and annual accounts

Why Choose GM Professional Accountants?

We provide accounting software as default in our all-inclusive monthly packages. You can quickly manage your routine bookkeeping activities on your phone app or computer. You need not postpone your work till the end of the day as you can do these activities online on this software. For instance, send invoices and record receipts online.

We take care of complex and time-consuming activities: E.g., Preparing P&L account; Checking business cash flows; Checking if business finances are in a strong position; Filing tax returns, etc. The best part of associating with us is that you need not spend hours together in front of mundane spreadsheets.

We have offices in London, Manchester , Birmingham and Essex.

Tax-Efficiency

Small entities need to keep as much of their earnings as possible to maintain positive cash flows and be profitable in business. We can help you make this possible by advising you about ways to keep your business accounting in line with HMRC rules. You will end up paying as few taxes as legally feasible because we ensure that you retain more of your earnings.

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