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Sole Trader or Limited Company?

Sole Trader or Limited Company?

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Sole Trader or Limited Company?

Are you starting up a new business and do you need some help deciding whether you should set up as a sole trader or a limited company?
Are you starting up a new business and do you need some help deciding whether you should set up as a sole trader or a limited company?
If the answer is yes, then this article is written for you.
Sole Traders
 
Sole traders are self-employed and solely set up their businesses on their own. It is the simplest business structure to opt for and it is the most popular.
Benefits of Being a Sole Trader
 
• you must register as a sole trader with HM Revenue & Customs, but it is a much easier process then setting up as a limited company.
• you do not have to file your accounts with Companies House, and you do not have to submit a Corporation Tax Return
• you have more privacy because the general public cannot search for your company and see your accounts.
• you complete your accounts for the year and then annually complete a self-assessment tax return.
• if you decide you need an accountant fees are usually lower.
Drawbacks of Being a Sole Trader
 
• a sole trader is wholly responsible for the tax on the profits of the business and any losses that are made.
• there is no distinction between you and your business, so you are personally liable to pay any debts from either your business or from your personal assets.
• you may find it is more difficult to hire and retain high caliber employees.
• your are likely to find it more difficult to raise capital to fund your business growth because banks and investors prefer limited companies.
• sole traders usually pay more tax than limited companies.
Limited Companies
 
These are private companies whereby the owner is only legally responsible for the debts of the business to the degree of the capital that they invest in it.
Benefits of Being a Limited Company
 
• owners of a limited company that operate in a tax efficient way may have lower tax bills due to the combination of corporation tax and personal income tax from a company salary and after tax profits withdrawn as dividends.
• banks and other lenders are more likely to issue loans to finance your growth plans because limited companies are sometimes seen as being more professional and to be in business for the long term.
• you are more likely to attract and retain high caliber employees.
• if you are doing business with larger companies they usually prefer or in some cases will only work with limited companies.
• the name of your business is protected by law once you have registered with Companies House. No-one else can trade under the same name as you.
Drawbacks of Being a Limited Company
 
• as well as completing the annual self-assessment return for any personal drawings from your limited company, you also must file annual accounts in a very specific format with Companies House. Plus, on top of that you must complete a corporation tax return and an annual confirmation statement.
• accountancy fees will be higher but remember you are operating from a more tax efficient business structure which will allow you to easily recover these costs. Obtaining some good advice in the early days should be considered essential in order to maximize your savings in tax payable.
Tips for All New Business Owners
 
• visit the gov.uk website to register your business
• care needs to be taken early on, to ensure a system is put into place to capture funds, so you can pay your taxes on time.
• be fully aware of your reporting deadlines and requirements to pay your taxes.
• keep good records of all your income and expenditure
• always keep invoices and receipts to support the numbers in your accounts.
• save all your documents for 7 years in case you are randomly selected for a HMRC audit.
• NEVER leave everything until the last minute. If you do, you are very likely to pay more tax and accountancy catch up fees if you are unable to resolve any issues yourself.
• Remember HMRC will levy penalties and interests on late submission and payments.
If you would like any further advice or information regarding anything in this article, then please contact:
Tracy Wayte
Complete the contact us information boxes on our website
or send us an email to [email protected]
or you can call us on telephone number 01283 819385
Some of the services we can provide to help you:
 
• set up your sole trader business or limited company
• set up your accountancy software
• prepare your accounts
• provide regular updates with an estimate of taxes currently due
• communicate with HMRC on your behalf
• submission of all your accounts and taxes to HMRC

Sole Trader or Limited Company? Read More »

An Accountant’s Role

An Accountant’s Role

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An Accountant’s Role

Have you ever wondered what an accountant does and how they can help you? Or have you ever thought, I do not need an accountant I can do everything myself?
If the answer is yes, then this article is written for you.
At Woodville Accounting in Swadlincote we can offer you a 1 hour’s FREE consultation to discuss any of our services & to assess your needs.
Your Business Journey
As a business owner, you are on your own journey and you choose your own unique path to achieve your set of goals. Equally you have your own set of knowledge, skills and capabilities to do different things.
One thing for sure though, is that you are driven by your passion to sell and deliver your products and services. You may be great at this but your journey to success can be a lot easier, quicker and more profitable if you make sure you do not forget another core skill, your Finance Department.
If you are an individual or a small business you probably do not need a full time Finance Department, but in order to help you meet your obligations to HMRC and run your business effectively here I talk about some of the ways an accountant can help you on a part-time basis while you concentrate on your real passion to achieve the results you deserve.
What can an Accountant do for you?
We can help you register your company or self-employment and from the start-up we can help, advise, organise and process your accounting records.
Being compliant with the law and HMRC rules, regulations and deadlines is very important and we can also help you to do this.
Plus, when everything is set up and running smoothly, we can then perform value adding services to really help you review your performance and grow your business.
Advisory Services
  • We can review your current systems and offer you advice on how you can streamline your activities to make your processes more efficient and effective. The idea is to save you time and to provide a framework that gives you organisation and delivers information at the correct time so that you can resolve any issues quickly.
  • We can be a resource you draw upon to find the latest tax and accountancy rules & regulations. Our role is to make sure you are keeping up with the changing demands from HMRC. We can advise what you are legally bound to do before things become overdue and we can discuss your options with you when there is more than one route to take. Reducing your tax bill is something we help you with. We understand what expenses are allowable against tax.
  • Starting a new business can be very daunting. We can listen to you and advise what the best business structure would be for you. We can then help you set everything up.
  • At some point especially if you are growing you are going to need accountancy software. We can find out your needs and then advise and set up the right package for you.
  • Most growing businesses these days choose cloud-based technology to run their accountancy systems. There is now a whole host of add on applications that help you run your business more efficiently. When we know your business, we can demonstrate these and advise how they may help you.
Processing Services
  • The bookkeeping services we offer are not just about recording your income & expenditure and producing your profit and loss account. We also make sure your accounts are complete and accurate, generate journals for timing differences and make sure everything is fully reconciled ready for your VAT return and your Year End accounts.
  • We can set up your payroll and make sure that all your employees and HMRC are paid correctly and on time. If any of your employees are on the national minimum wage we make sure that they are on the correct rate for their age and make note of any birthdays to make sure that earnings are uplifted in the very first month they become applicable.
  • Then following on from this are pensions and your compliance with Auto Enrollment rules set out by the Pensions Regulator. We can take care of all your pension requirements making sure that all contributions are taken correctly and paid over to the pension scheme. Plus we can complete the declarations to the Pensions Regulator noting your compliance. We can also set up the pension schemes and communicate with your employees on your behalf regarding their pension.
Compliance Services
  • The main compliance activity is looking after your deadlines. Whether you are a sole trader or a limited company, we ensure all your deadlines and filings with HMRC and Companies House are met on time and in full. We are that friendly valuable nudge or reminder that you might sometimes need.
  • Our role is to make sure everything is complete, accurate, above board and timely in action.
  • We do what is called company secretarial work. We can register and set up your business, we can add and remove directors, change shareholding, change registered company address, file your company accounts, shorten and lengthen your accounting period and complete your Annual Returns.
  • For individuals we can look at your personal tax liabilities and submit your online self-assessment tax returns.
Value Added Services
  • We can provide a regular management accountancy service that looks at your actual performance compared to your budgets. We can also carry out work to identify parts of your business that are creating very little benefit, holding you back or losing you profit. For example, if your company has a few sectors or divisions, we can identify which areas are doing well and those which are not. We can also drill down to do a profit analysis by customer, product or service.
  • Cash management is essential if you wish to continue trading. It is very important to raise sales invoices as soon as you sell your product or complete your service. You have not really generated a sale though until you have collected your cash. This is where we can step in to really help. We can offer credit control services to ensure you receive your money when it is due. We can also provide you with a cash flow forecast so that you know exactly when you are going to run into any cash shortages. Be assured that knowing issues in advance can really make a big difference.
  • We can help you create and manage your budgeting processes so you can track your actual expenditure against your targets.
  • Accountants can provide you with a reference & verify your accounts if you are applying for loans or a mortgage.
  • There is a service to offer you tax investigation insurance in case your taxes are audited by HMRC. This covers you for the advice & communication on your behalf with HMRC during these difficult times.
  • We can attend onsite meetings to discuss your accounts or attend board meetings & help with planning & strategy.
  • Stock Control is important. We can set up a stock system and provide help and advise with your stock takes.

An Accountant’s Role Read More »

5 start accounting firm near swadlicnote
5 start accounting firm near swadlicnote

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