FAQ

If you want to start working as self-employed, you must register with HM Revenue & Customs, but first make sure you have a National Insurance Number. After the registration, you will receive your Unique Taxpayer Reference (UTR) and HMRC will set up the right tax and National Insurance contributions records. You should keep your UTR safe because you will need it when completing your Self-Assessment tax return.

There are various options including Sole Trader, Partnership, Limited Company, Community Interest Company or Limited Liability Partnership. We will look at your individual circumstances and advise on the pros and cons of each option for you.

This depends upon what your contract says or what your working arrangements are. You can be employed and self-employed at the same time. When defining your employment status, you should refer to the following questions:

a) A self-employed person:
– Runs own business and decides about the type and time of its work
– Bears responsibility for the success or failure of the business
– Have more than one customer at the same time
– Can hire people
– Takes care of the main equipment needed to perform business activities

b) An employed person:
– Has to perform the tasks imposed on their own
– Is told how, where and when to do your work
– Works within fixed hours
– Work for just one person at a time
– is not in charge of the business nor takes responsibility for it, that is the employer’s task
– is paid a regular wage or salary

When you are self-employed it effectively means that you are receiving income from a business or trade that is not taxed at source by an employer or agency. This money therefore needs to be declared to HMRC as part of a self-assessment tax return. We can help you to register for self-employment, provide guidance as to what expenses you can claim tax deductions for and complete your tax return for you each year.

There are no formation costs
– Sole traders are not required by law to have annual accounts nor to file accounts for inspection. However annual accounts are necessary for tax returns
– Sole traders are unrestricted in the amount and purpose of borrowings (but cannot create floating charges)
– Losses generated by a sole trader can be set against other income of the year or carried back to prior years.

The tax year runs from the 6th April to 5th April each year.

Your tax return is due by 31st January following the end of each tax year.

The expenses you can claim for are very specific to each trade, for example, a consultant cannot claim for all the same things a plumber can claim for although there will be some things that can be claimed for by both such as travel and telephone bills. We can provide some general guidance in the form of a leaflet or a bespoke list. Fill out our contact us form for more information.

The best way to pay this is via monthly direct debit straight from your bank account, a voluntary contribution can be made (Class 3) and class 4 on the profit of the business.

CIS stands for the Construction Industry Scheme. CIS regulates the procedures of making payments to subcontractors by contractors in the construction industry.

The main advantage to trading as a limited company is that companies pay a fixed rate of 20% in corporation tax on annual profits up to £300,000. As a sole trader you are subjected to the normal income tax rates which includes the 40% bracket for taxable income over £32,001 and class 4 national insurance of 9%

Accountancy fees are higher for limited companies as there is a lot more administration required but if we make a recommendation that you should incorporate (go limited!) we will always demonstrate to you exactly how much tax you will save and go through the pros and cons in full so that you can make an informed decision.

Companies have their own financial year end given by companies house, this is usually twelve months after they initially set up. They then have 9 months from their financial year end to file their abbreviated accounts with companies house and 12 months to file their corporation tax return and accounts with HMRC.

The expenses you can claim for are very specific to each trade, for example, a consultant cannot claim for all the same things a plumber can claim for although there will be some things that can be claimed for by both such as travel and telephone bills. Bells can provide some general guidance in the form of a leaflet or a bespoke list. Fill out our contact us form for more information.

Standard VAT works by adding up all the VAT you have charged on your sales (20% on top of your net fees), deducting all the VAT you have paid out to your suppliers and handing over the difference to HMRC. This information is usually reported to HMRC on a quarterly basis via completing a VAT return. There are different schemes available such as the flat rate scheme which can help to save you money but speak to us about the different options and we will help you decide what’s best for your business.

You may need to register for VAT if you are doing business in the UK as an individual, a partnership, a company, an association, a charity, a local authority or any other organization or group of people acting together under a specific name.

The current compulsory threshold for VAT registration is £85,000 which means if your turnover in the last 12 months is over this figure or it is likely to go over in the next twelve months you will need to think about registering your business for VAT. We can advise you on the whole process and help you to decide which VAT scheme to go on to save you the most money. It may even be worth you registering for VAT voluntarily as for some businesses this means they can claim back considerable amounts of VAT they have paid out or even make additional profits from charging VAT to their customers and paying it over at a lower rate.However, it may happen that your turnover has exceeded the registration threshold temporarily. In that case, you may apply for exception from registration. This applies for entrepreneurs supplying goods or services within the UK. If you take over a VAT registered business, your VAT taxable turnover over the last 12 months must be added to the turnover of the business you are taking over when checking if the registration threshold has been exceeded. And if you have received goods from other countries in the EU, registration for VAT is compulsory if the total value of the goods acquired has gone over £85,000 in the current year since 1 January.

Note that you cannot register for VAT if you sell only goods or services that are exempt from VAT or you are not in business according to the HMRC’s definition

There are some exemptions available for some trades but you need to be very careful not to misunderstand the guidance available from HMRC as there are hefty penalties for those who get it wrong despite this area being a minefield of information:

https://www.gov.uk/vat-registration

You may find it beneficial to be able to charge VAT on your sales and claim back VAT on your purchases in various ways. By way of example, if there is a zero VAT rate for the items you sell but you buy standard-rated items, HMRC will give you a VAT refund. Note that if you voluntarily register for VAT, you have the same rights but also responsibilities as in the case of compulsory registration.

If you are paying any individuals to assist you with your business and they meet HMRC’s guidance for what is deemed “employment” rather than “self-employment” then you will need to administer a payroll scheme to ensure they are being taxed appropriately. If you fail to do this you can be held responsible for the tax and national insurance that you should have deducted from them and passed over to HMRC. We can advise you on whether you require a payroll scheme and also run it for you in full right through to providing payslips for your staff and even physically making the BACS payments into their accounts on pay day. If you are a one man band limited company you may still benefit from setting up a payroll scheme to take advantage of the tax free personal allowance you can pay yourself. We can look at your individual circumstances and advise you on the best course of action

You may be eligible to pay some of your team on a self-employed basis which means they will be responsible for their own tax and NI. We can help you decide if any of your team meets the criteria and ensure that you meet your responsibilities as a business owner.

If you need to close your business you should plan it carefully. First of all, it is important that you inform HMRC of your intent. Only then will you be able to settle matters related to tax and National Insurance. In some circumstances it is possible to extend the deadlines for payments or even to claim back some tax or National Insurance. Some of the steps are:

• Shareholders may still have to file Company Tax Returns and pay Corporation Tax while closing the business. You will need to account for any capital gains made in the closing process through your Company Tax Return.

• Employers must also submit a final Full Payment Submission (FPS) when running their final payroll, in addition to the standard procedure. It is important that you pay all outstanding PAYE tax and National Insurance deductions on a timely basis.

• VAT-registered businesses will need to deregister from VAT.

A good question and one of the most common ones we get.

We are a digital accountancy, meaning that our accountants, bookkeepers, tax specialists and in fact every member of our team, get to focus on their jobs, rather than other admin, paperwork or other tasks. This means that they can work more efficiently, keeping your fees down.

In the same way, unlike traditional high street accountants, we do not have 2 or 3 meetings a year with you, saving time and money, although we do miss those nice lunches.

When you sign up with us you’ll be given details of how to contact us  Our prices are fixed fee so you can be assured that no extra bills will appear as long as you use the service fairly.  You can get in touch with us in a variety of ways including email, phone .  All that we ask is for you to be aware that when you call you may be asked for a time that your Accountant can call you back.  We’re sure that you’d want your Accountant to give your accounts their full attention, so if they are working on a few tricky tax calculations they will call you back when they have finished.

There is a lot of information available to help you on HMRC’s website: https://www.gov.uk/government/organisations/hm-revenue-customsWe will always be very happy to help you translate any of the technical jargon you find or direct you towards the right section.

Not at all. All our accounts work is undertaken by real live flesh and blood people. Don’t get us wrong, we love modern software  (we give you access to our own software if you want to use that) and it helps us produce quick clean accounts, in fact with MTD (Making Tax Digital) around the corner, a modern online accounting system is essential, however, no software, however good, can currently replace a trained accountant. If we do get replaced by robots, we’ll let you know.

MTD stands for Making Tax Digital and is HMRC’s plan for modernising tax in the UK. Essentially the goal is to have every company (and self-employed person) using approved software to run and submit their tax returns. This came into effect in April 2019 with making Tax Digital for VAT, where all VAT registered companies above the VAT threshold have to submit their VAT returns via a MTD compatible system.

A short while ago, the answer would have been a simple no, although it helps. Now it is a little more complicated, do not worry though, as all of our clients have access to our free accountancy software or you can use your own.

If you are VAT registered and above the VAT threshold (currently £85,000), then from April 2019 onwards you have to have MTD compatible software in order to submit your VAT returns. There are many options available, you may have heard of some popular solutions such as Xero, Quickbooks or Sage.

For everyone else, there is currently no legal requirement for an accounts package, although this will change in the future as MTD is going to be rolled out for everyone. In addition, having a good accounts package can make your life much easier, with up to date reporting and the ability for your accountant to log in and work on your records directly. Some packages also have clever features such as the ability to automatically scan receipts or track mileage.

So in summary, many people do need cloud based software and eventualy almost everyone will. If you join us, then you will need cloud accounting software, and we provide our own free for you.

It doesn’t have to be. Yes, some tax matters can be very complex and we have in-house experts whose role it is to keep on top of current legislation and help our clients pay the correct amount of tax, rather than too much.

Most individuals and small companies though, do not require in-depth planning and as such, we do not charge for that.

If you do find that you need or want some more detailed help and advice, we are here for you. There is no fee for a quick chat and should it emerge that tax planning could be beneficial, we can arrange this with you.

If you want bookkeeping in your accounting package, we will ask you how many bookkeeping transactions do you have a year. This is basically the number of records that we would input for you, so the number of sales you make (or perhaps the daily/weekly takings), the number of purchases you make (i.e. total number of invoices and receipts) and the number of transactions on you bank statements.