If you run a small business, there is a good chance you will have asked google to answer an accounting or tax question
Here are some of the most common questions asked.
Do I need an accountant?
There is generally no legal requirement for a sole trader or limited company to use an accountant. However, an accountant can help make sure your accounts and tax returns are correct, deadlines are met and available tax reliefs and expenses are not missed.
As a business grows, VAT, payroll, Corporation Tax and Making Tax Digital can also make the administration considerably more complicated.
How much does an accountant cost?
Accountancy fees vary depending on what you need.
A sole trader requiring a Self Assessment return will normally pay less than a VAT-registered limited company requiring bookkeeping, payroll, VAT returns, annual accounts and Corporation Tax.
When comparing accountants, check exactly what is included rather than simply comparing the headline price.
What expenses can I claim?
A common question, but one without a single answer.
Allowable expenses depend on the business and circumstances. Typical examples can include software, insurance, accountancy fees, business travel, equipment, advertising and certain costs of working from home.
The important point is that an expense should have a genuine business purpose and appropriate records should be retained.
When do I need to register for VAT?
VAT registration is normally required when your VAT-taxable turnover exceeds the registration threshold over a rolling 12-month period.
This is something businesses should monitor regularly rather than waiting until their year-end accounts are prepared.
Should I be a sole trader or limited company?
Neither structure is automatically better.
A sole trader is generally simpler to operate, while a limited company is legally separate from its owner and has different accounting and tax requirements.
The right structure depends on profit levels, risk, future plans and how you intend to take money from the business.
Do I need to complete a Self Assessment tax return?
You may need to complete a tax return if you are self-employed, receive property income or have other income that needs reporting to HMRC.
With Making Tax Digital being introduced for qualifying sole traders and landlords, keeping good digital records is becoming increasingly important.
When should I speak to an accountant?
Ideally, before making a major financial decision rather than afterwards.
At GMS Accountants, we work with sole traders, limited companies, landlords, freelancers and small businesses across Cambridge.
If you have an accounting or tax question, please get in touch.
