Setting Up a Limited Company: a Guide to Why and How

If you’re starting your own business, there’s a good chance you’re thinking about setting up a limited company. However, not everyone chooses this option. If you’re a contractor, for example, you might be torn between launching a limited company and a becoming a sole trader, and there are benefits to each. Here’s a guide to why setting up a limited company might be the right choice for you, and how to get started. Why set up a limited company? Setting up a limited company has a number of potential benefits, including: You’re not liable for your business’ debts in the same way you are as a sole trader, because it’s a separate legal entity. You can have shareholders (although shares cannot be sold publicly). It can increase your credibility. Depending on what you do, you might be seen as more professional by clients and customers if you operate as a limited company. You might be able to pay less personal tax. UK Corporation Tax on profits is 19% for the 2017/18 tax year, so you could pay yourself a small salary and take the rest of your income in dividends. It can also be affordable to set up. How to set up your limited company First, you’ll need to incorporate at Companies House. You can do this online, or your accountant can do it for you. You need to choose a name and then send a memorandum of association (which includes your name, address and type of business). The director must sign this, and it must be witnessed. You’re also required to submit your articles of association, which set...

Tax Tips for Small Businesses

Tackling your taxes can seem like a task that requires infinite expertise, but with our tax tips for small businesses things might become a little clearer. There are more than 5 million small businesses currently in the UK, representing 98% of UK business as a whole. Although current tax rules can make it difficult for small businesses to know where their money is going, keeping up with your taxes will ensure things should run smoothly.   Keep track of everything It might seem trivial, but making sure you’re recording your small business’ finances from day one is essential. According to HMRC, documentation to support your tax returns needs to be kept for six years, so make sure your employees are aware of this. Retaining these records may also allow you to track your business’ growth and observe any changes that might be taking place.   Think about going digital HMRC have been moving towards a more digital system for a while now, and many small businesses are embracing apps and other software to keep track of their finances. Their ready reckoner tool allows small businesses to plan their monthly budgets to manage their tax payments, and was used over 40,000 times between 2015 and 2016. There are also webinars and other e-learning resources available with plenty of tax tips for small businesses so you can continue to build your knowledge.   Be aware of international requirements Tax payments obviously vary significantly by country, so it’s a good idea for small businesses to get to grips with international financial regulations. Make sure anyone responsible for payroll carries out their research...

Choosing the Right Tax Accountant

Whether you have recently finished your degree and have just started your first proper job at a firm, or you have been in the business for many years and are well established, having good relationships with the people inside and outside your firm is a key ingredient to successful and congenial business. At the end of the day, people are mainly concerned with how skilled you are. When it comes to accountancy, how well you do the job is obviously the main concern for everyone. However, the more subtle factors of your interactions with clients, partners, and your superiors are still a vital part of your career.   The Importance of Networking Networking is a massive part of your life as an accountant. Forming a tightknit circle of clients requires steady and caring communication, both verbal and written. One must ensure that the flow of information between you and a client is clear, honest and invested. This clear channel of communication, coupled with your talent and effort, will ensure that you become a renowned an in-demand accountant. When you have developed several strong relationships, the ripple effects of your efforts begin to pay off. The first few connections you make are the most important, as your influence and development will branch off from these foundations.   Accountant’s Reputations Accountants have a bad reputation for being cold and pedantic people that prefer getting down to brass tacks over sentimental chitchat. It is your duty to ensure that people see otherwise. Show them that you are friendly, outgoing and interested. Much of accounting liaising now happens over text or email. Many...

How To Attract Millennials To Your Small Business

Knowing how to attract millennials to your small business can seem impossible. Many are drawn to the bigger companies they recognise and overlook smaller businesses. Small businesses can greatly benefit young people – show them how! We’ve created a top 4 list of our favourite tips to help you attract millennials to your small business. 1. Is the job advert ‘youth-friendly’? Create company pages on social media to advertise your jobs. Consider using bright infographics rather than wordy descriptions to attract a younger audience. Social media is the fastest way to get to your millennials, as well as making your business look tech-savvy. If you don’t want turn to Facebook, there are small changes you can make to the application process. Rachel Suff (Policy Advisor from the CIPD) said “This can be as simple as avoiding technical business jargon in the advertisement”. Consider your response time to applicants – the social media world is fast-paced, you have to keep up! 2. Do you have a fun workplace culture? Working with millennials is a two-way street. Try asking yourself the question, why should they work for you? Offer a social workspace to encourage their creativity and promote one of the personal side of a small business. Try posting photos of your office events on social media, or create small YouTube videos of the office. This is a great way to help potential applicants suss out your office culture. Read our blog post on how to make a workplace fun for some tips. 3. Is your business socially conscious? 90% of millennials surveyed agreed that a business’ success shouldn’t only be based on their financial...

How To Create a Fun Workplace

The Google offices are the Disney Land of the corporate office. They conjure up images of a powerhouse of creativity and the sound of millennial laughter. While others can’t fund an indoor slide or host monthly Guitar Hero competitions, there are easy ways to create a fun workplace. 1. Are you having fun? Like anything to do with your business, change starts with you. If you look happy and motivated then lead by example and encourage others to feel the same. No one is going to feel inspired by a stressed-out and distant boss, so keep it light and cheerful! Take a note out of comedian George Wallace’s book, “You cannot smile without your body feeling better.” 2. Motivation, motivation, motivation! When was the last time you gave a genuine compliment to a co-worker? Positivity and motivation are the single most powerful tools in upping staff moral and helping to create a fun workplace. Try taking a negative situation, such as a review of a staff member, and try and turn it into a positive learning experience. This will make you and your co-worker happy and motivated, and relieve you from the stress of delivering unwelcome news! 3. Healthy competition Nothing livens up an office like a bit of healthy competition. Try investing in a ping-pong table or a football table to encourage staff interactivity as well as enforcing proper breaks. This will help the office bond as well as helping your staff let off steam. Get stuck in yourself and let the professional boundaries down to bond with your team. 4. No “I” in “Team” Instead of seeing yourself as a leader, try...

Make the Most of Your Small Business Accountant

With skills extending in numerous directions and years of experience, it makes sense for you to make the most of your small business accountant.   Plenty of small business owners do their own accounting. For others, an accountant is merely someone to turn to during the annual tax return season. While accountants can work wonders with expenses and self-assessments, that’s just the tip of the iceberg. Take the following steps to make the most of your small business accountant.   Pick the right accountant   If you live in or near a large town or city there should be plenty of accountants that you can call upon – but don’t just opt for the first listing on your results page. Take the time to get into the details. Does this accountant specialise in small businesses? Does this accountant have experience within your industry? These are the questions you should be asking throughout the process. It’s not about finding the most prestigious firm or the lowest rates – it’s about finding the option that fits around your business.   Start early   Another way to make the most of your small business accountant is to seek their help right from the beginning. It’s tempting to delay hiring an accountant until you feel you’re up and running, but they can be invaluable during the formation stage. One of the benefits of finding an accountant relevant to your business is being able to seek advice concerning anything – from business structure to financial analysis. An experienced accountant can also prove critical if you’re applying for a bank loan or other funding source. Half of UK businesses fail...

Work Effectively With a Remote Accountant: 5 Top Tips

Working remotely has become increasingly popular. If you’ve jumped on the bandwagon, you’ll need to make sure you can work effectively with a remote accountant.   Here are our tips for working remotely with your accountant: Use the cloud One of the best ways to help you work effectively with a remote accountant is to move everything related to your accounts onto the cloud. Having to send vital documents back and forth via email just isn’t effective. You’ll be creating multiple copies of each one, and it isn’t practical for your accountant to receive a new message about every individual payment or transaction. Instead, use the cloud. You can transfer the files on your computer to a service such as Dropbox, then provide your accountant with the password to allow access. All changes and additions will be recorded for all users. Record everything online   Once all your files are stored on the cloud, make sure every transaction is noted straight away. If payments or costs aren’t uploaded, your accountant won’t be working with a full deck, and that can lead to problems. To make things easier, try downloading an app to your smartphone that lets you upload documents and receipts straight to the cloud. Make notes   When you’re working remotely, you’ll probably only speak to your accountant once or twice every month – so make the most of that time. Forgetting to mention something can be tiresome if you aren’t going to speak again for another couple of weeks. To make sure this doesn’t happen, note things down as you think of them. Dedicate a Word document or spreadsheet to questions and concerns you need to raise,...

Accounting Tips for Cash-in-Hand Businesses: How to Keep on Top

Are you in need of accounting tips for cash-in-hand businesses? Accepting cash as payment for goods and services is valid and legal, as long as your business declares its full income. In fact, paying with cash is sometimes more convenient for customers as they might not have access to debit or credit cards. Many businesses prefer cash, as there’s always a possibility that cheques could bounce, and accepting credit card payments can be costly. Be that as it may, it can be tougher to keep track of your accounts when most of your revenue is derived through cash-in-hand transactions. These accounting tips for cash-in-hand businesses should make things easier: Open a business bank account   Yes, business bank accounts do levy charges, but they’re worth the expense. Having a separate bank account ensures minimal confusion when you’re working on your accounts. You’ll also find things much less stressful if HMRC ever investigates your business, since you’ll be able to show transactions concerned only with your business finances. Understand your legal responsibilities   It may be that your business consists solely of you, in which case you won’t need to deal with paying employees. However, if your business has employees you’ll need to keep track of every penny your employees accept so you can properly enter the information using PAYE. If your employees reach the National Insurance Lower Earnings Limit (LEL), you’ll need to use the employee’s tax code and National Insurance category letter to work out how much Income Tax and NICs to deduct from their pay and how much Employer’s Class 1 NICs you owe on their earnings....

Reinvesting Your Tax Rebate as a Small Business Owner

Are you a small business owner thinking about reinvesting your tax rebate? If there’s one thing better than finding you’ve saved enough money during the business year to pay your taxes, it’s finding you actually paid too much. In this case, you could end up with a nice lump of cash that you didn’t expect to have. You can always just take your family out to dinner or book a weekend away, but there are plenty of better ways of reinvesting your tax rebate. Put the money in an ISA   When you put money into a standard savings account, you pay tax on the interest you earn. This can be annoying, but you can avoid the inconvenience by putting your rebate into an ISA. These are tax-free up to a certain amount (£15,240 for 2016/17). ISAs are a great way to invest unnecessary tax savings, since the yearly allowance resets at the beginning of each tax year. Upgrade your technology   If you run a small business, you probably rely on a computer. Unfortunately, a fast computer that’s able to handle being used every day usually costs a pretty penny, especially if you need it for high-end applications, so it can be tough to budget for a new one. Consider reinvesting your rebate by upgrading to a newer piece of technology that might otherwise have taken a healthy bite out of your monthly budget. Invest in a course or business product   One of the best reasons to pick up a new piece of technology with your rebate is that it’s a rare cost, just like the rebate is, at best, a once-a-year...

Making Tax Digital: Advice for Small Businesses

Making Tax Digital: Why You Should Care The government is set to transform its tax system and make tax administration more effective, efficient and easier for all taxpayers. So what does it mean for your business and how it will be affected? A recent report found that this year 75% of businesses do not currently maintain accounts electronically using accounting software. If your business is one of them, you will need to prepare yourself for the new digital tax system. The digital tax system will roll out in April 2018 and will complete by 2020. From 2018 most businesses, self-employed and landlords will need to use software or apps to keep their business records and to update HMRC quarterly. HMRC will refer the start of making tax digital for some small businesses giving them extra time to get used to the system. Also the smallest firms with a turnover of £10,000 or less will be excluded from the system. Benefits of the New Digital Tax System Many business owners find it challenging to manage their cash flow. The new system should provide a clearer picture of their cash flow position, financial obligations through the course of the year, and greater clarity of their tax liability. The system will also enable business owners to make future investment decisions. It will help businesses concentrate on their business activities, as new software and apps will take care of admin and bookkeeping activities. How the New System Will Work Businesses will record and categorize receipts and expenses in a record keeping software or app. All financial information will be stored in the cloud....