August 7th, 2011
We have tried to make this easy for you.
Create an account, which is free without any commitment, at this point no payment details are requested. Add your business information so you immediately get free SMS business reminders and access to your own business diary of events.
You can then choose the service that you want from within your account. Go to Services and make your selection, then request sign up.
You complete your payment details only when you’ve decided on the level of service and are ready to get going.
You will be contacted by your Personal Manager to help set up the practical side of getting going.
August 6th, 2011
You probably already know if the options are essential to your business. Read “what do the options mean” and “what’s best for me”.
Selecting your basic package is simply a matter of thinking about the paperwork you receive. Use our “calculator” to assess the right Capacity level.
August 6th, 2011
We have a fair usage policy so you don’t need to upgrade just because one or two months exceed your Capacity, but where you exceed Capacity continually you should upgrade.
Upgrading, or indeed downgrading, is very easy, log into your account, go to Services and select your new package and the options you want. The new package applies from the beginning of the next calendar month.
You can change as often as you want, but our fair usage policy is designed to avoid this becoming repetitive for small changes in your business.
If you find you need the optional services just follow the same process to add a new option.
August 6th, 2011
Capacity refers to the number of physical documents we receive and process.
Typically this means purchase invoices, expense receipts, cash vouchers, but if you don’t use automated bank feeds or export your bank statements and email us the file you may have to add bank transactions as well.
To help you keep costs down we provide templates in the form of Excel spreadsheers for you to record sales invoices, daily takings and cash or employee expenses. Each template counts as 1 document becuase we can import the details as one process. People use templates when they dont want to use the online accounting system to input sales or for employees to enter themselves.
Our Capacity calculator can help you select the right level.
August 6th, 2011
Basic packages are based on paperwork Capacity. We don’t measure the cost by turnover or the type of business.
There are 4 basic packages with fixed monthly prices plus one for the larger businesses where the fixed price is “on application”. The base package includes your VAT Return on an invoice or cash accounting basis and includes any flat rate scheme operators. The basic price covers both quarterly and annual VAT, but monthly is extra.
If you have more complex VAT affairs, i.e. require monthly returns, use a special VAT scheme or account for VAT annually an additional charge is applied.
We adopt a green policy and typically recycle all paper we receive, holding your information electronically so it’s accessible online.
If you want we can return your paperwork but you have to pay the additional postage. For those more security conscious you can opt for a premium postage service that guarantees next day delivery and insures your paperwork.
If you want us to prepare your payroll our prices are clear and simple. We charge based on the number of employees and the frequency of their pay; why not also add reporting expenses and benefits at the year end.
August 2nd, 2011
Many expenses and benefits must be reported to the Taxman on forms P11D and P9D at the end of the tax year which is the 5 April.
It’s important to choose correctly between forms P11D and P9D for each employee. The form to use depends on the employee’s earnings and on whether they’re a director of your company.
Employees earning £8,500 or more a year – form P11D
Use form P11D to report expenses and benefits provided to an employee earning £8,500 or more per year; but see below for what to include when looking at the £8,500 threshold.
Employees earning less than £8,500 – form P9D
Use form P9D to report expenses and benefits provided to employees earning at a rate of less than £8,500 per year again see below for what to include when looking at the £8,500 threshold.
What the £8,500 threshold includes
The £8,500 threshold doesn’t only include wages or salary that you pay the employee. You must also include the value of the expenses and benefits they receive from you. You will need to work out what benefits would have to be included if their earnings were above £8,500, then add this notional amount to see if the threshold is exceeded.
The £8,500 operates on a pro rata basis if the employee only works for part of the year. For example, if an employee only works for six months of the year then you’ll need to use a form P11D if their earnings in that period are £4,250 or more.
Company directors – usually form P11D
Use form P11D for almost all company directors. Only use form P9D if all of the following apply:
1. they earn at a rate of less than £8,500 per year, and
2. they do NOT own or can control more than five per cent of its ordinary share capital and
3. they are a full-time working director
July 28th, 2011
If you work at or from home, the part of the property used for work may be liable for business rates.
If the Valuation Office Agency (VOA) has given a rateable value to a part of your home then you will have to pay business rates on that part.
The remainder of the property will still be liable for council tax.
How is the assessment made?
There are a number of factors that the VOA will consider when they are deciding whether or not the part of your property used for work is liable for business rates. These include:
- the extent and frequency that the room (or rooms) is used for work
- if any modifications have been made to the building to accommodate work use
Each case is considered on its own merits, and the VOA will normally ask to visit your property to check the facts before an assessment is made.
Your local authority will use the rateable value to calculate the business rates bill and send it out annually.
There are several rate relief schemes available which may reduce your bill. Your local authority will administer these.
What is a composite property?
The Valuation Office Agency use the term ‘composite’, or ‘comp’, to indicate whether a property is mixed use. This means it contains both domestic and business/non-domestic areas, and these areas are used by the same occupiers.
Examples of composite properties include:
- a guest house with living accommodation for the owner
- a hotel with staff quarters
- a house that contains an area used exclusively for working from home
The domestic area of a composite property will be liable for council tax. The business or non-domestic area will be liable for business rates. You will not pay both taxes on the same part of the property.
Use of home as an office
Many small businesses use their home as the principle place of business. Where part of the house is used solely for business purposes there is a genuine risk that Business Rates will apply.
A balance needs to be made between maximizing the claim for tax relief for use of home as office and the extra cost of business rates compared with domestic council tax.
Generally those small businesses that merely set aside part of a room or use a study as a workplace, but also use the same room for domestic purposes are not especially at risk.
However where a person builds a loft or garage conversion, or builds a “summer house” in the garden for business use should consider themselves likely to be caught out as a composite property.
July 28th, 2011
Use of home as an office
Many people find themselves working from home, either as an employee dividing their working life between their employer’s office and working from home or the self employed using their home as the principle place of business.
In either case working at home ultimately increases some of the household costs and it’s not unreasonable to consider that the increase is largely the result of the employment or the business.
HMRC recognize the legitimacy of making such a claim and provided that you have set aside a fixed area in the house for work based activities then you will be able to claim a tax deduction to reflect these additional costs.
You do not need to dedicate an entire room for business, but there ought to be at least some fixed area within one room that is set aside for business or work based activities.
There is a general principle that tax deductible expenses should only occur because of the business itself, the term wholly and exclusively for the purpose of the business is often quoted, but in practice this is often very difficult when looking at household expenditure.
HM Revenue and Customs also recognize this difficulty and have introduced a flat £3 per week (£156 per annum) that can be claimed; this is often a practical solution to apply in a majority of cases.
But, if you are running a business and your home in the principle place of business, then the additional costs can be much higher.
For example you may have set aside an entire room as an office, even built a room in the loft or use the garage to store materials.
HMRC don’t offer a higher flat rate to reflect these circumstances but do permit a more specific calculation based on the proportion of the home used for business purposes.
The calculation is not difficult but can be time consuming.
The starting point is to add up the variable costs incurred in the year, this would include gas, electricity, heating oil, mortgage interest or rent, council tax and buildings insurance.
If you identify any costs that are specifically business they should be claimed in full and therefore excluded from the calculation, as should any costs that are specifically domestic.
It is worth explaining that some costs are of a capital nature and you must be careful when trying to include capital costs such as loft conversions, building an office extension or converting the garage in the claim for tax relief.
Remember that normally any gain in the value of your main home is tax free; and you may jeopardize that exemption if you start including capital costs. You may also create a taxable benefit in kind if your employer (or own company) pays for the capital cost.
One other factor you may wish to consider – your local authority may consider your property partly as business premises where large areas are specifically set aside and assess the property partially to business rates – note that business rates are much higher than council tax!
Once you have established the costs to be included the next stage is to calculate the proportion of the house that is used for business purposes. The most obvious way to do this is calculate the total floor area and divide that by the floor area used by the business to establish a proportion for business use.
Once you have calculated the proportion it only needs to be reassessed when circumstances change.
Apply the proportion to the variable costs established above and add any specific business costs to determine the Use of Home.
July 28th, 2011
To put your business on a proper footing with HM Revenue & Customs (HMRC) and other authorities, you need to make sure that it has the right legal structure. It’s worth thinking carefully about which structure best suits the way that you do business, as this will affect the tax and National Insurance that you pay, the records and accounts that you have to keep and your financial liability if the business runs into trouble.
There are several structures to choose from, depending on your situation.
To be a sole trader, a partner, or a member of a limited liability partnership as an individual rather than a company, you must be self-employed – and registered as such with HM Revenue & Customs (HMRC).
This does not mean that you can’t also do other work as an employee, but the work you do for your own business must be done on a self-employed basis.
If you are not sure whether your work counts as self-employment, ask yourself these questions:
- Do you present your clients with invoices for the work that you do for them?
- Do you carry out work for a number of clients?
- Are you responsible for the losses of your business as well as taking the profits?
- Can you hire other people on your own terms to do the work that you have taken on?
- Do you have control over what work has to be done, how the work has to be done and the time and place where the work has to be done?
- Have you invested your own money in your business or partnership?
- Do you provide any major items of equipment which are a fundamental requirement of the work you carry out?
- Do you have to correct unsatisfactory work in your own time and at your own expense?
If you can answer ‘yes’ to most of these questions then you are probably self-employed already, and should let HMRC know this immediately if you have not already done so.
You may be fined £100 if you fail to register within three months of becoming self-employed. There is no fee for registration.
If you answer ‘no’ to most of the questions above, you will normally be an employee.
Being a sole trader is the simplest way to run a business – it does not involve paying any registration fees, keeping records and accounts is straightforward, and you get to keep all the profits.
However, you are personally liable for any debts that your business runs up, which make this a risky option for businesses that need a lot of investment.
You need to register as self-employed with HM Revenue & Customs (HMRC) and will probably have to notify HMRC that you will have to submit Self Assessment Tax Returns
- As you are self-employed, your profits are taxed as income.
- You also need to pay fixed-rate Class 2 and Class 4 National Insurance contributions on your profits.
Class 2 is normally paid by direct debit and is a fixed weekly amount. Class 4 is variable and a percentage based on profits.
In a partnership, two or more people share the risks, costs and responsibilities of being in business. Each partner is self-employed and takes a share of the profits. Usually, each partner shares in the decision-making and is personally responsible for any debts that the business runs up.
Unlike a limited company, a partnership has no legal existence distinct from the partners themselves. If one of the partners resigns, dies or goes bankrupt, the partnership must be dissolved – although the business can still continue.
A partnership is a relatively simple and flexible way for two or more people to own and run a business together. However, partners do not enjoy any protection if the business fails.
Each partner needs to register as self-employed and will be responsible for compiling Self Assessment Tax Return.
The partnership itself is also required to file a Self Assessment Tax return
It’s a good idea to draw up a written partnership agreement.
As partners are self-employed, they are taxed on their share of the profits. Each partner also needs to pay Class 2 and Class 4 National Insurance contributions.
Creditors can claim a partner’s personal assets to pay off any debts – even those debts caused by other partners. In England, Wales and Northern Ireland, partners are jointly liable for debts owed by the partnership and so are equally responsible for paying off the whole debt. They are not severally liable, which would mean each partner is responsible for paying off the entire debt.
Partners in Scotland are both jointly and severally liable.
However, if a partner leaves the partnership, the remaining partners may be liable for the entire debt of the partnership. Also, a creditor may choose to pursue any of the partners for the full debt owed in the case of insolvency.
Limited liability partnership
A limited liability partnership (LLP) is similar to an ordinary partnership – in that a number of individuals or limited companies share in the risks, costs, responsibilities and profits of the business.
The difference is that liability is limited to the amount of money they have invested in the business and to any personal guarantees they have given to raise finance. This means that members have some protection if the business runs into trouble.
Each member needs to register as self-employed
There must be a minimum of two designated members – the law places extra responsibilities on them. If the LLP reduces in number and there are fewer than two designated members then every member is deemed to be a designated member.
LLPs must register at Companies House.
It’s a good idea to draw up a written agreement between the members.
The LLP itself and each individual member must make annual self-assessment returns to HM Revenue & Customs (HMRC).
All LLPs must file accounts with Companies House.
Members of a partnership pay tax and National Insurance contributions on their share of the profits.
The profits of a member of an LLP are taxable as profits of a trade, profession or vocation and members remain self-employed and subject to Class 2 and Class 4 National Insurance contributions.
Limited liability companies
Limited companies exist in their own right. This means the company’s finances are separate from the personal finances of their owners.
Shareholders may be individuals or other companies. They are not responsible for the company’s debts unless they have given guarantees – for example, a bank loan. However, they may lose the money they have invested in the company if it fails.
Must be registered (incorporated) at Companies House.
Must have at least one director (two if it’s a plc) who may also be shareholders. Directors must be at least 16 years of age. At least one director must be an individual, rather than a company.
Private companies are not obliged to appoint a company secretary but if one is appointed this must be notified to Companies House. Plcs must have a qualified company secretary.
A director or board of directors make the management decisions.
Accounts must be filed with Companies House before the filing deadline to avoid a late filing penalty.
Accounts must be audited each year unless the company is exempt.
When you file your annual return for the first time a letter will be issued to the Registered Office containing the company’s authentication code and instructions for use of Companies House web filing services. You should follow the instructions in the letter.
Directors are responsible for notifying Companies House of changes in the structure and management of the business.
If a company has any taxable income or profits, it must tell HM Revenue & Customs (HMRC) that it exists and is liable to corporation tax.
Companies liable to corporation tax must make an annual return to HMRC.
Company directors are an office holder of the company and therefore regarded as an employed earner for National Insurance. As such, company directors must pay both income tax and Class 1 National Insurance contributions on their director’s earnings. However, while regular employees’ Class 1 NICs are calculated on their monthly or weekly earnings separately, directors’ NICs are calculated on an annual cumulative basis.
Shareholders are not personally responsible for the company’s debts, but directors may be asked to give personal guarantees of loans to the company.
Overview of legal structures
independence, ease of set up and running, and all the profits go to you.
lack of support, unlimited liability and you are personally responsible for any debts your business runs up.
ease of set up and running, and the range of skills and experience different partners can bring to the business.
problems can occur when there are disagreements between partners, unlimited liability and you are personally responsible for any debts that the business runs up.
Limited liability partnership (LLP)
retain the flexibility of a partnership, personal liability is limited. At least two members must be ‘designated members’ – the law places extra responsibilities on them.
the formation is more complex and costly and problems can occur when there are disagreements between the members. If the number of partners is reduced, and there are fewer than two designated members, then every member is deemed to be a designated member.
Limited liability company
your personal financial risk is restricted by how much you invest and any guarantees you give in order to obtain financing.
this type of company brings a range of extra legal duties, including the maintenance of the company’s public records, eg for the purpose of the filing of accounts.
July 28th, 2011
Work related training:
If an employer pays for staff training, or reimburses an employee training costs, any benefit to the employee is not subject to tax.
An employee is generally unable to claim training costs as deduction for their own tax if the employer does not reimburse his costs.
Recent case law indicates that training costs will be deductible in the employee’s hands if training is part and parcel of the employee’s job specification.
The term “work-related” is defined very widely; it can include anything from a first aid course to a motivational team building activity course.
Other (non work related) training costs:
Training not related to the employees’ duties are taxable as benefits in kind for higher paid employees or taxable as earnings if employer reimburses employee (all employees).