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In order to get paid most businesses need to produce an invoice of some sort although it’s not compulsory to do this. You could just ask your customers and clients to pay you. However it looks much more professional to produce one and at least make it obvious that it’s an invoice by putting that word in big letters at the top. The best advice is to keep the invoice format simple. You could spend hours designing a lovely looking document but by far the simplest way is to use the templates available for a standard invoice format that you…
Self Assessment is a system that HMRC use to collect Income Tax. The title of “self assessment” is very important. It means that as an individual you self assess the amount of tax that you must pay. Obviously you must follow the current tax rules when you do this. What this means is that you need to know the rules and you are ultimately responsible for your tax affairs even if you appoint someone else to act on your behalf to help you such as an accountant or tax advisor. Who has to complete a self assessment If you meet…
HMRC and Companies House are two entirely separate Government functions with little interaction between them. For the business owner this means that the same information may need to be filed with both organisations. For example accounts and tax returns as well as changes to details such as change of addresses. HMRC HMRC is His Majesty’s Revenue & Customs. It’s the government department charged with collecting the right amount of tax. There is an HMRC Charter which sets out the standards of behaviour and values to which HMRC should follow. The Charter, which is a legal requirement can be read at:…
Life doesn’t always go well; that also applies to your bookkeeping and accounting meaning that you end up in a mess. Not only does this mean that you are in danger of missing a deadline and incurring fines or penalties, without up to date accounting information you have no control over your business. Have you made a profit? Who owes you money? Who do you owe money to? How much do you owe in tax? How much can you take out of the business to live on? The answers to all of these questions would be found in your accounting.…
As the list of named tax avoidance schemes, promoters, enablers and suppliers grows with Umbrella Company providers being added to it on a regular basis just how do users of Umbrellas know if they are unwittingly caught up in a tax scheme. Payslip Checker Tool This really useful tool provided by the Freelancer & Contractor Services Association (FCSA) will check your payslip ensuring that you are properly informed about all deductions made by your Umbrella provider. FCSA The FCSA say: “If you’re employed through an umbrella company and want to be sure your employer is calculating your pay correctly, simply…
Money lent to the company Often when a business is being set up money will be needed to fund any initial outlays that may be incurred. Loans can be made to a company by the director (usually also the shareholder in a one person business) without any tax consequences. The money is simply paid into the business bank account and repaid back as or when funds are available. Interest can be charged on money lent to the company and maybe tax free if it is less than the savings allowance. Any interest paid must follow rules set out by HMRC…
A term which is often misused is that of a dormant company. There is a strict definition of what a dormant company is being one that has had no significant accounting transactions during the accounting period. A significant accounting transaction is one which the company should enter in its accounting records. For the purposes of this definition the following transactions can be disregarded: Significant accounting transaction Consequently this means that a company is not dormant if for example, but not limited to: Any such transactions, all of which would need to be recorded in the accounts, will mean that the…
Self Assessment Your self assessment tax bill has to be paid by 31st January following the end of the tax year. You may also be required to make payments on account which are paid in two instalments – the first on the 31st of January following the end of the tax year and the second on the 31st of July. More information, as well as details on how you pay your self assessment tax bill, can be found on the GOV.uk web site » CLICK HERE Corporation tax Corporation tax must be paid 9 months and 1 day after the…
Paying dividends out of your company is something that you will start to do routinely when the business is making enough profit. However getting the timing of these dividends right, or rather wrong could cost you dearly when it comes to your tax bill. Business owners often decide to declare a dividend at the start of a calendar month. There is nothing wrong with this practice at all except for exercising caution during one month of the year being April. The importance of tax years comes into its own here. It’s worth remembering that the tax year finishes on 5th…
With the increase of side hustles (work or a job that you do and get paid in addition to your main job) as well as the ease of being able to set up a business, these days many are turning to innovative ways to earn extra income to make ends meet. From freelancing in your spare time via sites such as Fiverr or People per Hour, upcycling, selling on eBay, Vinted or at a car boot through to running online training courses there are literally thousands of easy ways to bring your entrepreneurial spirit alive. Many a new start up…