Here are six of the commonest questions that people ask about accounts – or in fact sometimes don’t dare ask, because they think they ought to know. But everyone has to start somewhere, so let’s deal with the half dozen questions that we get asked most frequently.
1. Should I trade as a limited company or as a self-employed sole trader?
In terms of tax efficiency, if your profit before tax is over £25,000, you will probably be better off trading as a limited company. Also, your personal assets outside the business are protected. However, there’s quite a lot more to do when you trade as a limited company, so the best thing is to talk to us and see whether it would work in your circumstances.
2. What am I allowed to claim against my business revenue?
If you’re a sole trader, you can use a government scheme called “simplified expenses” – see here for details: https://www.gov.uk/simpler-income-tax-simplified-expenses. In general, the rule is that you may only claim items that are bought solely for business purposes. Mileage and car expenses are complicated, but Cheltenham accountants Randall and Payne will be able to advise you on this.
3. Can I get my tax rates reduced?
No – they are the same for everyone and are never reduced for individuals.
4. What should go on an invoice?
If you aren’t registered for VAT, you just need your business name and address, what you’re invoicing for and how much you are invoicing. If you are VAT registered, you must show the VAT amount. If you’re confused about this, talk to Cheltenham Accountants Randall & Payne, who can explain it clearly to you.
5. Do I need a business bank account?
You probably do, and it certainly makes organising your finances and completing your tax return much easier. It will help you to separate your personal and business spending.
6. What is a UTR?
This stands for Unique Taxpayer Reference, and it’s your unique 10-digit number for tax purposes. You need it when you go online to do your self-assessment tax return if you’re a sole trader.
That’s our six questions dealt with – hopefully, it’s cleared up a few queries and pointed you in the direction of some help for your accounts.