Why should I use an accountant when I have the latest software?
The right software always helps to make the job easier, but remember it’s a tool to assist the accounting process. It should not replace you or your accountant.
What book-keeping system or software should I use?
This depends on the size of your business. If your trade turnover is less than £85,000 per annum, you don’t need to be ‘Making Tax Digital’ (MTD) compliant and you can use a manual or paper system. If your turnover is above the VAT threshold or will be over the next 12 months, you will need an MTD compliant system, involving either spreadsheets you can upload to the internet, or an accounting software which can file your VAT return for you. Most of the popular accounting software systems are MTD compliant and relatively easy to use, but unless you have a background in bookkeeping or accounts, you will need some training.
System prices vary, according to the extras you get with the software, such as reporting options, whether multi user, cloud based (storage of data then is not an issue), and foreign currency options. Often you can download a trial version of the software, so you can try it for yourself before you buy.
Where can I get training?
Most of the software suppliers will offer some training for new users. Sometimes they will charge for this, or if you need additional training, this can be offered for a limited time. If you have an accountant now, they will be able to train you, but will probably charge for this on an agreed rate up front.
As part of the service at Aviatrix, we will help you choose, develop and run your own system. Then you can call us free of charge at any time if you have any questions.
Do I need an accountant to file my year end accounts for my Limited company?
If you need to have your business audited, you will need an independent auditor to complete this. If you don’t need an audit, then you don’t need an accountant to file your accounts. However, you will need to know the requirements of FRS102 and FRS105, for items to include and exclude on your submitted accounts. If they are submitted incorrectly, they can be rejected by company’s house and as it is very difficult to get any incorrect submissions removed, it can result in too much information relating to your business’ finances held on record, for anyone to see.
The errors held on record and the fact that your accounts have not been verified by an independent third party can make it harder to obtain finance or credit when trading with larger suppliers.
When do I need to submit my accounts by?
Accounts need to be submitted nine months after the financial year end. You have longer to file your tax return which relates to your accounts, but only nine months and one day in which to pay it.
My company is a subsidiary of a foreign parent company, what format do I use to file my accounts?
To be compliant with UK laws, you should file your accounts with the required disclosures under the Companies Act 2006 and the current Financial Reporting Standards. If you have to disclose additional or different information, to be compliant with the laws under which your parent company is trading, you can disclose your accounts under International Accounting Standards with explanations for any deviation from disclosure requirements. However, most small businesses will file accounts under UK standards and then transfer data via a separate form to the parent company for inclusion in its group accounts.
I am in a partnership; do I have to file a self-assessment return?
Yes, however when preparing partnership accounts, your accountant will use the information from there to file each partners’ return on their behalf. Remember, if a partnership has three partners, then four returns need to be filed, one for each partner plus one for the partnership itself.
What is a confirmation statement? Do I have to file one?
A confirmation statement is separate from your annual accounts, as it just advises companies house of who owns the business and who the officers are. After incorporation, you need to file this once a year with any updates, stating no updates if everything is unchanged. You can request that your accountant files these on your behalf, as they often have a different filing deadline to the accounts, as this would depend on your incorporation date.
Do I have to file dormant accounts?
Yes, however these are very basic and if done on your behalf, the fees for this should be a lot less than for a trading company. Again, as with the confirmation statement, your accountant is best placed to ensure that this is filed on time.
If I file dormant accounts, do I need to file a confirmation statement?
Yes, you must submit both accounting statements and confirmation statements every year. Failure to do so could result in your company being struck off.
What is future planning?
This is a ‘catch all’ phrase for business planning and future growth as typically they go hand in hand.
What kind of software might be needed?
There are many software aids available for planning and many companies find them useful. They help you to plan and develop your business with the information that you put into them. They are a tool, however and won’t think for you. We still have to do the hard stuff!
When should I plan?
Planning and development are part of running any business, large corporations have whole departments dedicated to new ideas and directions to strategize growth. So, the simple answer is ‘all the time’.
Is business planning the same as project planning?
Essentially yes, you have an objective in mind, you work out the tools, cost, manpower and time needed to complete it, and plan your strategy accordingly. However, a project is usually short term, measured in months with deadlines in specific places, whereas a business plan is measured in years. Also, the deadlines can be blurred due to vague descriptions, such as turnover above £1M, or over 50 employees. In addition, there are outside factors, for example changes in staff and suppliers. You therefore need to consider what you want in broader terms and how you can overcome any obstacles to progress.
How does my accountant help?
Your accountant is in a unique position to help you and your business. By meeting to discuss your plans, Your accountant can take an objective look at the business, use ‘SWOT’ and other methods to analyse and review your systems and financial activity, and then help you decide on a strategy with completion dates to meet objectives as well as setting deadlines for actions. Importantly, they can tell you what you are able to do: eg to change year ends, shareholders or types of financing, as well as what you should not do! Having these conversations in advance can save a lot of costs and additional work later.
In short, by setting a regular meeting schedule, you can discuss what has happened, where you are in relation to where you want to be, and plan the road to achieving success.
What about other business advisors?
There is a wide industry of business and marketing advice available. All good business advisors will have accountants to assist with the advice they give, and all good accountants will have recommended marketing and finance advisors who will supply specific help in how to market your product and finance your business. Sometimes it’s as simple as your website isn’t communicating your message properly to your audience.
Your accountant however, will let you know if it is your cashflow, suppliers or market that looks like the biggest threat or opportunity, so that you can approach any business advisors and ask them about a particular area which needs support. Please note that accountants cannot give financial or investment advice, equally your financial advisor cannot give tax planning and accounting advice. The best scenario is your accountant and your other advisors working together to help and support you.
I have a VAT error; how do I correct it?
If the error is on accounting software, you can correct the error in the postings, and the next VAT return will automatically be adjusted to account for the difference. If the error is old/not on your software, then you need check that the value is below the HMRC current error thresholds. If so, you can then amend the error on the next VAT return after advising the HMRC in writing. If the error is above the error thresholds, you must advise the HMRC and fill in the form VAT652, and pay any balance of tax due.
What is IR35? How does it affect me?
IR35 is the short name for the rules relating to staff who work for a business, but who are not on the payroll. If you are employed full or part time for a business which is not your own, but paid as freelance worker, you may fall within the IR35 rules If so, you could be deemed to be employed by that employer and have tax deducted from your income.
If you are a business who is employing freelance workers, you must check to see if they fall within the IR35 rules. If the HMRC decides that they do, then you may have to deduct tax from what you pay them and also pay employers NIC calculated on what you pay them.
There are specific tests to determine who does fall under IR35, so please let us know if you would like to know more.