The below list contains common questions and answers that associated with accounting.
An accounting period is a timeframe that’s used for financial reporting. Accounting periods are often 12 months, and there may be different accounting periods for different businesses. Your accounting period is often set when you start a new company with Companies House, with the end of the financial period known as ‘year end’. The ‘year end’ is usually set at the end of the month 1 year after incorporation, and this dictates when your company accounts and confirmation statement is due.
There are several key accounting dates to be mindful of:
– 31st January 2023 – The 2021-22 self-assessment tax return is due for payment and online submission.
– 05th April 2023 – This is the last day of the 2022-23 tax year.
– 06th April 2023 – This is the first day of the 2023-24 tax year.
– 06th April 2023 – The 45% additional rate of tax threshold will be reduced from £150,000 to £125,140.
– 06th April 2023 – The tax-free dividend allowance will decrease to £1,000 per annum.
– 06th April 2023 – The tax-free allowance for capital gains will reduce from £12,300 to £6,000 per annum.
– 31st July 2023 – The second payment on account is due for the 2021-22 self-assessment tax return.
– 31st October 2023 – Deadline to file the 2022-23 self-assessment tax return by paper.
Read more:
https://www.gov.uk/prepare-file-annual-accounts-for-limited-company
https://www.gov.uk/corporation-tax-accounting-period
The expenses that you can claim through your business vary depending on the nature of your work. Common expenses include business travel, office equipment, tools, stationery and communications, phone and internet, rent, professional services (such as an accountant), pension contributions, staff/employee costs, car/vehicle costs, uniforms, marketing advertising and more.
Read more:
https://www.gov.uk/expenses-if-youre-self-employed
Corporation tax varies depending on your company’s profits. The below figures are starting 1st April, though this may change over time:
– Small profits rate (companies with profits under £50,000) – 19%
– Main rate (companies with profits over £250,000) – 25%
– Marginal Relief lower limit – £50,000
– Marginal Relief upper limit – £250,000
Read more:
https://www.gov.uk/government/publications/rates-and-allowances-corporation-tax/rates-and-allowances-corporation-tax
These days a lot of receipts will already be electronic, making them easy to save to a secure location. It’s recommended to save your receipts in the cloud, such as on Google Drive or Dropbox. This means you can access them anywhere, and they wont be lost if your device stops working.
For physical receipts, you can of course keep them, but it is recommended to also scan/photograph each one. You can also use book-keeping software like Xero, FreeAgent, Sage or QuickBooks.
Read more:
https://www.gov.uk/keeping-your-pay-tax-records
It’s important to keep records of every payment, expense, statement, invoice and more. We recommend using book-keeping software like Xero, FreeAgent, Sage or QuickBooks.
UTR stands for Unique Taxpayer Reference number. It’s a 10-digit number that is given to you when you register for self-assessment, or setup a limited company.
Read more:
https://www.gov.uk/find-utr-number
You must send your monthly returns to HMRC by the 19th of every month following the last tax month. For example, if you’re making a return for the tax month of 6 May to 5 June, it must reach HMRC by 19 June.
Read more:
https://www.gov.uk/what-you-must-do-as-a-cis-contractor/file-your-monthly-returns
Like most late payments, you will receive a fixed penalty of £100. This can increase up to a staggering amount of £3,000 or more for severely late payments.
Read more:
https://www.gov.uk/government/publications/compliance-checks-penalties-if-you-dont-file-construction-industry-scheme-returns-on-time-ccfs18b/penalties-for-failure-to-file-returns-on-time-the-construction-industry-scheme-cis-ccfs18b
Every company must file a confirmation statement at least once every 12 months.
Read more:
https://www.gov.uk/guidance/confirmation-statement-guidance
There are several ways to pay your self-assessment tax bill, some of which are more convenient than others. This includes, direct debit, online banking, telephone, debit/credit card, at a physical bank or building society and cheque.
Read more:
https://www.gov.uk/pay-self-assessment-tax-bill
VAT is currently charged at the standard rate of 20%. Some goods are reduced or zero-rated, such as books and newspapers, children’s clothes and shoes and motorcycle helmets.
Read more:
https://www.gov.uk/how-vat-works/how-much-vat-you-must-charge
The current VAT registration threshold is £85,000. If your taxable turnover for any consecutive 12-month period exceeds this, you must register for VAT.
Read more:
https://www.gov.uk/register-for-vat
VAT registered businesses must add VAT to their sales invoices (unless products are exempt) and can then reclaim any VAT included in the items they have bought. If you are not VAT registered, you still have to pay the VAT, but are unable to reclaim it.
Read more:
https://www.gov.uk/register-for-vat
As a sole trader, the company is owned and controlled by one person who has unlimited personal liability. This means that your assets, such as your home, are at risk in the event that you are sued or similar. A limited company is seen as a distinct legal entity, separate from shareholders/directors.
Read more:
https://companieshouse.blog.gov.uk/2018/07/18/choosing-the-right-business-structure/
Generally speaking, an accountant will charge a one-off fee for an annual self-assessment tax return, typically ranging from £150 to £250+. It often depends on the complexity and scope of your finances. At Dead Simple Accounting, you can find all our pricing on our Prices page.
Bookkeeping simply refers to the recording and organising of financial information, whereas an accountant is the interpretation and presentation of that data.
Put simply, you will be issued with a penalty. For up to 3 months late, this is a late filing penalty of £100, which will increase as time goes on. You’ll also be charged interest on late payments.
Read more:
https://www.gov.uk/self-assessment-tax-returns/penalties
The current personal allowance is £12,750. This is the amount of income you can earn that you do not have to pay tax on.
Read more:
https://www.gov.uk/income-tax-rates
If you are a limited company, you are required to setup a business bank account. This is because it’s considered a separate legal entity, and you shouldn’t be using a personal bank account for this. If you’re a sole trader or freelancer, you are not required to have a business bank account, but it can help to keep on top of your finances.
There are lots of options when it comes to choosing a business bank account. At Dead Simple Accounting, we recommend Wise, Starling, Coconut, Mettle, Revolut, Tide and ANNA.
To setup a limited company you need a company name, registered office address, service address (if applicable), at least one director and at least one member.
Read more:
https://www.gov.uk/set-up-limited-company
The best way is to use the company name availability checker.
There isn’t a legal requirement to have an accountant if you have a limited company. However there are substantial benefits, such as completing your annual accounts, company tax return, on going support and advice and tax registration for new companies.
