Here are some FAQs which you may be thinking of – the answers are just for starters and not intended to be relied on as advice, you should refer to our terms and conditions and bear in mind that answers may vary depending on an individual’s circumstances.
Do I need an accountant?
Ask yourself the following questions:
- Are you confident with numbers? Do you have any experience with accounts?
- Do you have time? If you had a day to spare would you rather spend it doing something far more exciting than your accounts?
- Consider the size of business and how fast you plan to grow – will you be able to keep up?
- Does anyone else rely on your business – employees, investors?
- An accountant could help you to maximise profit, by focussing you on what works well and what isn’t working for you
- An accountant could help to minimise your tax bill – which is always nice
- An accountant should save you time and energy which are the most precious of resources
What should I look for in an accountant?
- Anyone can call themselves an accountant so check yours is registered either with the ICAEW (Chartered Accountant) www.icaew.com/en/about-icaew/find-a-chartered-accountant or with AAT www.aat.org.uk/find-accountants (accounting technician)
- Speak to or meet with the actual person who you will deal with day to day – you might be wooed by a partner and then handed over to a junior
- Make sure they have experience with your type of business and can really understand who you are and what you are about so you can feel like they are part of your team
- Will you be a good fit: are you super organised and have everything ready? Do you bundle up receipts the day before? Take time to think on how you would make use of an accountant and what ‘type’ of person fits the bill
- Are their hours flexible? Will you be able to speak to them when and where it suits you? Or will you need to get all dressed up to haul your cookies onto the high street?
- Look for affordable packages and fixed fees based on time not as a percentage of your turnover
- Check what will be included in your fees so there are no surprises
How should I do my book keeping?
- Keep it simple
- Find something you can commit to
- A folder or box by the front door you that can drop everything in to on your way in and even all the post you don’t open – like bank statements – at least you’ll know where they are then!
- Set up a folder on your computer desktop to download your bank statements, card statements, phone bills if you don’t get paper ones
- Make it easy – get yourself a file box, get an envelope for each month to put your bank statement, credit card bill and all your business expense receipts into
- Depending on how busy or how organised you are you might need to transfer receipts to your box daily, weekly or monthly but set a day and stick to it.
- Get the kids to help – make a pile of receipts for each month and then pop each pile into an envelope (really you’ll need a good soundtrack and maybe popcorn too for this to work properly)
- Use your bank statement – online or paper – if you use a card for all of your transactions and bank all of your income you can just use your bank statement as a record (of course you will still need to keep your receipts)
- If all that sounds like too much hassle – let someone else do it! Just dedicate a drawer or nice box to the job, stuff everything in then hand it over to your trusted accountant. You may have to pay for an extra hour or two of their time but if it makes your life easier…
Do I need to be a limited company?
- The simple answer is…. sometimes
- Factors to consider would be profit levels, whether you want to separate ‘you’ from ‘the business’ (this may be important if you are at higher risk of being of litigation if something goes wrong) and what you plan to do with all the money you make
- Some of your target market may only deal with you if you are a limited company
- There is more admin and there are more deadlines to keep on top of, but your accountant would be able to advise you
- You would need to consider how you intend to get out in the future – do you plan to sell your business?
Do I need to register for VAT?
- If your sales in any 12 month period go over, or look like they will go over the VAT threshold, currently £79,000 then you will need to register
How much can I pay myself?
- Essentially, you can pay yourself as much as your business can afford
- It’s important to budget what you need to live on and look at how much you can make
- It’s better to pay yourself a basic amount than dip in to business funds every time you go shopping
- You can earn up to £9,440 this tax year without paying any income tax
Can I do my own tax return?
- Yes you can, BUT you will need to be organised and register with HMRC early
- There is lots of help available on HMRC website
- You will need to file your return online by 31 January 2014
- Honestly, it’s really dull
- There are better ways to spend your Christmas break
What expenses can I claim for?
- The obvious expenses for your stock or materials, rent can be claimed but many other expenses that are ‘wholly and exclusively’ incurred in the course of your business should be allowed or at least a ‘business use’ proportion of many other costs such as mobile and home phone cost , computer and internet costs;
- Motor expenses – you need mileage records or fuel and expenses receipts;
- Loan interest for certain business loans or personal loans used to finance the business;
- Any items bought for use in the business eg computer equipment, van, car;
- You can include a cost for using your home for your business
Do I need to keep receipts?
- 5 years from 31 Jan after tax year eg 2012/13 records until 31 jan 2019
- 6 years from end of company year
The information contained on our site or in emails is for general guidance only. You should neither act, nor refrain from action, on the basis of any such information. You should take appropriate professional advice on your particular circumstances because the application of laws and regulations will vary depending on particular circumstances and because laws and regulations undergo frequent change.