What are Annual Accounts and Corporation Tax Return Deadlines?

In every business may it for-profit or non-profit, there’s always a need to hire an accountant who is in charge of all the recording, classifying, summarizing and interpreting of financial transactions. Accounting knowledge, skills, and expertise are always important and big contributors to the overall flow and operation of the business.

Most limited companies are liable and there’s a need to file annual accounts with HMRC and Companies House annually on or before the deadline. If you fail to submit this, you will be penalized by paying substantial fines and other cases will lead to companies finding themselves struck off the register and worst case facing legal action. Your hired accountant is the best person who will not let these scenarios happen. They will gather all the documents needed, prepare all significant business-related paperwork and ensure they are all submitted before the deadline. The preparation of all these documents especially financial statements depends also on the size of your business. Common statements included in their works are a profit/loss account or income statement, balance sheet, changes in owner’s equity, cash flow statements, and a report from the company’s director.

 

What Allowable Expenses Can Design and Marketing Agencies Claim?

Talking about claiming business expenses for your limited company, there are different rules you need to follow:

• Claiming for expenses can only be made if you incur those expenses wholly and exclusively during the daily business operation.
• You can’t claim if the expense incurred has a dual purpose like using it for personal and business purposes. Like if you have a business trip abroad and extend your days for leisure purposes or personal consumption, then you can only claim for those business-related days, not the additional personal days.
• These business expenses can be paid through the bank account of your company or you can reclaim the monetary value of business expenses paid by you and reimburse those expenses by your company.
• The majority of limited expenses of a company can be compensated against its corporation tax liability but there are exceptions to this like business entertainment.
• You need to sustain the accuracy of all the records of pre-formation and running expenses including receipts of VAT.

Do Limited Companies Need an Accountant?

When you started your design/marketing agency, you did it out of a passion for the art of marketing!

Then came all the complicated work like preparing legal documents in setting up a company, bookkeeping and accounting tasks, taxes, and all business-related transactions. Your business is as unique and simple as any other business when it all started and when it becomes progressive and at its peak of success, more accounting work is needed to be performed. That’s why you need an accounting firm or an accountant who will do the tasks that better understand how it works and free you from the stress and burden of the complexity of numbers.

 

What Does an Accountant Do for a Company?

An accountant is a big help for the business as their analysis and interpretation make critical financial decisions. Collecting, monitoring, and making adjustments to the finances of the business, will make sure everything works well. They are responsible for reconciling bank statements, and financial audits, and making sure that all financial records are precise throughout the calendar year.

 

In every business may it for-profit or non-profit, there’s always a need to hire an accountant who is in charge of all the recording, classifying, summarizing and interpreting of financial transactions. Accounting knowledge, skills, and expertise are always important and big contributors to the overall flow and operation of the business.

 

Gm professional accountants have offices located in London Canary wharf, London Wimbledon ,Ilford Essex and Birmingham

How should you choose your company name?

You can easily set up a private limited company in the Uk following six simple steps. Here are the six steps to setting up a limited company.

Start by choosing an appropriate name for your company. The company name you choose should be unique and not closely resemble an existing company. In addition, the name shouldn’t be offensive or create false implications. While you can trade using a different name, the law restricts you from adding ‘ltd’ to this company name if you haven’t registered it as your name.

 

How do I add a director to company House UK?

The law requires you to have at least one Director (where you can include yourself) to register the company. While the minimum is one, you can include several directors who should follow the company’s rules. The directors help to agree on decisions pertaining to the company collectively. In addition, directors help to file accounts and ensure the company adheres to the corporation tax.

 

How do I add shareholders to Companies House?

The law states that a company must comprise at least one shareholder (the Director can be the shareholder). The company can divide the shares among the directors or shareholders. Company shareholders help in voting on various issues at shareholders’ meetings, where one share represents one vote. The significance of shareholders varies, as the one with over 25% of shares becomes a ‘Person of Significant Control’ (PSC).

 

Create Your Company Documents

You must create documents that show your company formations and describe how you’d want to run it. These documents include the following;

● The memorandum of association – it’s a legal statement that all initial shareholders sign that shows the agreement to form the company.

● The article of association – this document contains rules on how you intend to run the company. All directors, shareholders, and the company secretary must sign it. You can write your own or choose model articles of association.

 

Confirm What Records You Need to Keep

While setting up the company, you’ll need to keep records of the essential details of the company. These records include accounting records, PSCs, etc. Remember that you have to keep these records for approximately six years. You can visit the government’s website to find out more.

 

Does my company have to be registered with Companies House?

You can register the company and the official address after finishing these steps. Select the right Standard Industrial Classification (SIC) code when registering your company with Companies House. The SIC code helps to specify your business’s nature. While registering with the Companies House, remember to register for corporation tax.

 

How to Register a Limited company?

You can either use Form INo1 to register your company or register it with Companies House online. The law requires you to register by post if you consider not using ‘limited’ when registering the company name.

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How long does it take to set up a limited company?

It takes very little time to set up your limited company in the United Kingdom. You register the company in eight to ten working days when setting up the company by post.

 

Can you set up a limited company yourself?

The law allows a single individual or multiple stakeholders to set up a limited company. You can register as the company director and sole shareholder.

 

What is needed to set up a limited company?

Here are the things you require to set up your limited company:

● Business activity

● Shareholders’ details

● Registered office

● Secretary details (not compulsory)

● Director’s details

● People with significant control (PSC) detail – when the person isn’t a shareholder, secretary, or Director.

 

Gm professional accountants have offices located in London Canary wharf, London Wimbledon ,Ilford Essex and Birmingham

What is Meant by Management Accounts?

While the words, management accounts, may seem self-explanatory, it actually is not. Management accounts refer to financial reports designed for managers and business owners. Generally, management accounts include a Balance Sheet and a Profit & Loss report that these business professionals can use quarterly or monthly.

These reports are similar to Year-End accounts. However, they tend to be personalized for business owners, and these reports tend to be more informal than Year-End accounts.

Management accounts allow company owners to gain a better understanding of their company’s financial trading position. And from there, business owners can make better business decisions.

 

What Should Management Accounts Include?

The lifecycle stage of the business determines what management accounts should include. The business goals and the business sector it is in also decide what should be in management accounts. Other than that, the usual management accounts include:

• The Balance Sheet
• The Cash Position
• A Profit & Loss Statement
• Key Performance indicators

 

How Often are Management Accounts Prepared?

Management account preparations are usually done on a monthly or quarterly basis. There is no set time to prepare management accounts. Nevertheless, they must be prepared regularly and consistently, so business owners or management teams can take full advantage of these reports.

 

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What are the Benefits of Keeping Management Accounts?

As previously mentioned, management accounts do not have a set format. They are also not mandatory, but it is in the best interest of every business to consistently produce them. Doing these reports on a consistent basis goes a long way because the financial performance data obtained can lead to decisions for optimal business results. In fact, the following includes some of the benefits of maintaining regular management accounts:

• Growth Monitoring

Businesses can compare their management accounts on a monthly, quarterly, semi-annually, or annual basis. And from that, they would gain accurate monitoring of their performance and financial growth.

• Planning for the Future

With management accounts, companies can observe cash flow and income patterns. This observation gives companies the power to make more accurate revenue forecasts. Companies can also make allowances for accounts that are doubtful, and they can plan accordingly around slower months.

• Motivating for Funding

Investors love to see a good business plan which includes a good set of management accounts. So, business professionals can confidently approach investors with their business plans and be better prepared to answer investors’ questions.

• Optimizing processes

Companies can make any required improvements when they understand their cash flow.

 

What is the Difference Between Statutory Accounts and Management accounts?

Statutory accounts include a breakdown of the company’s financial actions during the year and they have set standards that must be met and must be submitted to Companies House and HMRC at a set deadline. Management accounts, however, are for internal decision-making preparation purposes.

 

Is Xero Good for an LTD Company?

Yes, Xero is an adaptable and versatile cloud accounting tool that companies can use to prepare management accounts. And even though management accounts are not mandatory, these reports are beneficial for companies to perform regular financial health checks. Also, as previously stated, management accounts are spectacular for any business.

 

Gm professional accountants have offices located in London Canary wharf, London Wimbledon ,Ilford Essex and Birmingham

What are quarterly management accounts?

Management Accounts are financial statements that provide valuable information to business owners and managers for making decisions and effectively managing the company based on recent performance. These reports are typically prepared on a quarterly, monthly, or weekly basis and include essential key performance indicators that offer insight into the company’s financial health.

 

Reporting only one Profit and Loss statement for the entire company is insufficient. To truly understand where your business is making money, it’s necessary to report Profit by Product, Service, Customer type, or location. For instance, a hotel might analyze profit by location and the most lucrative types of rooms. Without this level of detail, it’s difficult to assess profitability accurately.

 

Management Accounts are financial reports that the business owner and management use to make decisions and run the company based on recent performance. They’re typically produced every quarter, month, or week and include Key Performance Indicators. By providing insight into a company’s financial health, Management Accounts can help improve future decision-making.

 

Regular reporting of Management Accounts is crucial because it allows you and your team to see the impact of business decisions shortly after they’re made. This enables you to continually fine-tune your strategies and make informed decisions that drive the company’s success.

How to Know if You Need Monthly or Weekly Management Accounts?

Weekly

To minimize costs when dealing with multiple transactions, it’s advisable to generate weekly reports. This approach is especially advantageous for restaurants, which can benefit greatly from weekly management accounts and budgeting.

Large restaurants typically have average net profit margins of 6%-8%. By improving this margin by just 5%, a restaurant can increase its earnings by £60k. Success in this industry is dependent on continuous monitoring and analysis of key metrics. The advantage lies in the details. By implementing this strategy, you will outperform your competitors who are unwilling to put in the effort, and you’ll see the results firsthand. Generally, large restaurants can save at least 4% in net profit margin by using weekly budgets. For more information on this, please refer to the “Why do you need Management Accounts?” section above, which includes a comparison between professional and hobbyist budgeting.

 

Monthly or Quarterly

For industries with mostly fixed costs, such as nurseries or hotels, it is unnecessary to provide weekly reports. Instead, you can choose to provide reports on a monthly or quarterly basis, with monthly reports being the recommended frequency. You can gain a competitive advantage over your rivals by using more up-to-date information in your decision-making.

 

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What should be included in monthly management accounts?

As for what should be included in monthly management accounts, typically, they should contain financial statements such as profit and loss, balance sheet, and cash flow statements. In addition, you may also want to include key performance indicators (KPIs) such as sales figures, gross profit margin, customer acquisition costs, and employee productivity metrics. Including these KPIs will give you a more comprehensive understanding of your business’s financial health and help you make informed decisions.

 

• Profit & loss statement.
• The balance sheet.
• Key performance indicators
• The cash position.

What Are the 5 Accounting Elements in Bookkeeping?

Your finances can be categorized into five major account types: equity, assets, liabilities, expenses, and revenue, which are organized in the chart of accounts.

 

The Does Xero have management accounts?

Answer is yes if you’re wondering whether Xero includes management accounts. Xero is a flexible cloud accounting platform that can be used to prepare management accounts.

 

At Gm Professional Accountants, our team of experienced management accountants can provide you with all the necessary information to help plan a promising future for your business. If you have any pressing questions or are interested in our Management Accounts Service, please reach out to us by sending an email to info@gmpa.co.uk.

What is a Self Assessment?

Simply stated, a Self Assessment, otherwise known as Form SA100, is HMRC’s way of determining how much National Insurance and Income Tax you require to pay on any income which is not taxed at source.

Check our calculator to see if you need to complete a tax return

Is it mandatory to do a self assessment tax return?

In general, anyone who receives income not taxed at source is required to complete a Self Assessment.

In the case of the sole trader, the income that you receive from the trade does not have Income Tax or National Insurance Contributions deducted from it, which means you need to let HMRC know about such income on the Self Assessment form so it can calculate what tax you owe, if applicable.

If you are a limited company director, you will typically require to file the Self Assessment so you can notify HMRC about any dividend income that you have received from the company.

Other examples of income that are not taxed at source may include income from abroad, investment (dividend) income, or rental income from any of the properties you own.

Consider visiting the Gov.uk website so you can take a look at a complete list of who requires to complete the Self Assessment, The website has an online tool as well that will let you know if you require to file a return.

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When must I submit my self assessment?

You need to file the Self Assessment by January 31st after the end of the tax year that it applies to. As for tax years, they run from April 6th to April 5th. In case you are employed, you may submit the Self Assessment immediately after you receive Form P60 from the employer.

If you run the company, you will have to issue Form P60 from the PAYE system or get an accountant to prepare the form for you.

In case you are a sole trader, you may file the Self Assessment immediately after the tax year ends. Also, note that there are many good reasons why filing the Self Assessment early is the necessary step to take.

What happens if I don’t do a self assessment tax return?

If you do not notify HMRC, you may face a penalty or fine and will be required to submit Self Assessments for previous tax years if applicable. If you are not sure whether you have registered, try contacting HMRC with a National Insurance number at the ready to confirm one way or the other.

If you will not able to submit your return after you have registered for the Self Assessment, you may incur fairly significant penalties as HMRC is becoming more and more strict on the deadlines and penalties for any late returns, therefore, we cannot stress enough how important it is for you to get the Self Assessment filed right on time.

In case you are a GM client, our GM team can take away the hassle and headaches associated with completing and filing personal tax. We will prepare the Self Assessment for you and after you have approved it, we will then submit it online and let you know how much you require to pay to HMRC.

Gm professional accountants have offices located in London Canary wharf, London Wimbledon ,Ilford Essex and Birmingham

Claiming Capital Expenses as a Builder

PAYE Builders cannot claim capital expenses. If you, as a builder, are working under CIS, you can claim capital expenses for business use. The prime example is a car you use for business purposes or a laptop you use for your work.

 

Claiming Motor Vehicle Costs as a Builder

The rules for claiming motor vehicle cost as capital expenses are the same as stated above. If you use the vehicle only for business purposes, you can claim vehicle costs as capital expenses and the tax back. While buying a vehicle, numerous tax-related expenses are involved like insurance, road, and fuel tax. You can claim them back.

 

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Claiming for Tools, Equipment, and Uniform

PAYE individuals can claim money spent on any tools and equipment as expenses. CIS workers can claim even the replacement of tools and the purchase of new tools as an expense. The only caveat is that the item shouldn’t be from your employer.

CIS and PAYE workers can claim the expenses of uniforms or protective equipment. Check out our uniform expenses guide to know the details.

 

Travel and Subsistence Expenses

CIS workers can claim travel and subsistence expenses while working temporarily. If the workplace contract is less than twenty-four months, it is temporary. Even if the contract duration is uncertain, it is also considered a temporary workplace. It is considered a permanent workplace only when you have completed twenty-four months.

PAYE worker who has a permanent workplace cannot claim travel and subsistence expenses. However, if the same worker works at a construction site or anywhere else, they can then claim travel and subsistence expenses for travelling to that place.

 

Builder Admin Costs

CIS workers can claim administrative costs, separate from the categories highlighted above. However, the expenses should relate to your work. A few examples include stationary, phone and postage expenses.

PAYE Builder usually doesn’t anchor admin costs and, therefore cannot claim such expenses under this category.

 

What expenses can I claim as a subcontractor?

We will highlight the categories under which you can claim expenses below.

• Tools, equipment, materials and so on

• Travel expenses

• Protective clothing and uniform

• Phone, stationery, postage

• Use of home (for business purposes)

• Administration costs

While claiming the expenses, make sure you file them under the right category. Also, you shouldn’t miss label the expenses as that can lead to penalties and other problems.

 

Can you claim fuel as a contractor?

Yes, you can claim motor vehicle expenses, including fuel, servicing, repair, and oil. You can even claim interest on your vehicle loan. If you have re-leased it, you can claim lease payments. Of course, insurance, registration, and appreciation of the vehicle can be claimed as well. The only condition is that the vehicle should be used exclusively for business purposes. If it is partially used for business purposes while the rest of the time it is used for personal reasons, you cannot claim any of these expenses.

When claiming vehicle expenses like fuel, ensure that you record every payment made accurately. That way, it makes it easy to claim expenses.

 

Gm professional accountants have offices located in London Canary wharf, London Wimbledon ,Ilford Essex and Birmingham