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Once appointed, you can relax knowing you have a dedicated accounts clerk to look after your year-end accounts. The goal is to minimise your tax bill, while at the same time removing your concerns about year-end accounts. Ultimately, you can let us worry about your accounts while you get on with your business.
A set of accounts can be a useful tool for business owners, and should not be seen as just a necessity to calculate earnings and tax bills each year. Once prepared, we will analyse accounts and compare results from year to year to assist our clients in getting ‘under the bonnet’ of their business. This service can extend into the preparation of periodic management accounts which some clients really see the benefit of.
These can take the form of monthly or quarterly reports and help to keep a much tighter handle on your business’ performance rather than waiting for a year to go by and ‘running blind’ before you know if it is has been a good year or not.
Your business or venture can be set up in a number of different formats and LJS can offer advice from the outset to structure this in the most efficient way possible. For those clients who approach us who are already trading in one form or another, our first approach is to review the set-up of their business and often restructure this to suit the client’s needs. In some cases where businesses have associated entities or subsidiary companies, this can often lead to a further group restructure, again to maximise tax efficiency.
More information is available regarding this point on our Group Restructure information page.
Here we will explore the two most common options available in which to house your business. However, in some cases more complicated structures may be appropriate. These can include Partnerships, Limited Liability Partnerships (LLP), Community Interest Companies (CIC), Social Enterprises.
Our Senior Accountants and Client Managers are very experienced in assessing the position of clients for both commercial and taxation purposes. This is usually following a free consultation meeting where our technical team where will advise on the best type of structure to suit your requirements. We’re always happy to take a call on this subject, please contact us to discuss further.
This is usually the most simple of set ups – however can be just as effective as a much more complex structure when used in the right manner and for the right individual.
Sole traders can still employ workers under a Pay As You Earn scheme (PAYE) and become VAT registered if necessary.
A full set of accounts can still be prepared for Sole Traders although not as many reporting requirements exist. The results shown within your accounts are adjusted for tax purposes and are then included on your Self-Assessment Tax Return which is submitted to HMRC each year. The accounting period or year-end usually adopted is 5th April of each year to fall in line with the fiscal year, although this can vary from business to business.
As the sole trader, you and your business are considered to be one and the same thing in the eyes of the law and HMRC. Any tax that is due for the business to pay becomes your income tax liability and will also include National Insurance at the prevailing rate as well as a small contribution of Class 2 National Insurance which applies to self-employed individuals only.
As the trading business is effectively you as the sole trader, this can also have a downside as you will not benefit from limited liability which a limited company director would enjoy.
Limited Partnerships & Limited Liability Partnership (LLP)
A limited company has members who own shares in the company, and directors who run the company who can also (although not always) own shares too. A limited company pays corporation tax.
Social Enterprise, Charities, Community Interest Companies
With a clear purpose to assist a social or community goal, social enterprises can take any of the above forms of incorporation as well as a charity, a charitable incorporated organisation, a co-operative, an industrial and provident society or a community interest company. The exact form is best chosen dependent upon a number of factors including whether a proportion or the entirety of generated profits are dedicated to the social purpose.
This is the most common set-up for our clients who run, own and control their own businesses. Much different to a sole trader, a limited company is viewed as its own legal entity and benefits from limited liability. This effectively protects the director and owner (shareholders) of the business if things didn’t quite go planned. The fear factor of owning your own business can be daunting and off-putting to a lot of people especially if they are taking the leap for the first time. The main fear can be the potential of failing and being left with the liabilities of the company. The limited liability aspect of a limited company protects the relevant individuals from this potential problem.
Limited Companies do have some greater reporting requirements to endure but we take the stress out of this on your behalf. A company will have to prepare accounts to be submitted to Companies House within nine months of its year-end, this is usually the last day of any month throughout the year.
For HMRC, any tax of the company will be due nine months and one day following the year-end, whereas the annual accounts and tax return is due to be submitted to HMRC within twelve months of the company’s year-end.
The company will pay a different type of tax to a sole trader, being Corporation Tax.
As a business owner, you will often be named as the Director of the company and may be its sole shareholder owning 100%. In some complex cases or group structures, this can vary based on the technical tax advice we give.
In most cases, you will be treated as an employee of the limited company and receive remuneration by way of a salary. If you own shares in the company and the business has made profits then this can be distributed to its shareholders in the form of dividends. These types of taxable income and then reportable on your personal Self-Assessment Tax Return.
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