You’ve been steadily running your own business for a while, keeping up with your accounts and managing your workload well. But perhaps you’re looking to make some changes like expanding your business, adding new employees, starting your own limited company, or securing the best deal possible for your commercial property.
While this can be a nerve-wracking time, it’s also exciting. And at exciting times like this, you’ll want to make sure you’ve got the right support, advising you on accounting requirements, government regulations and taxes you might not be aware of, while making sure you make the best choices.
But how do you know when you might need more assistance and advice? What regulations or taxes might you come up against that leave you stumped, or worse, facing penalties and fines? Let’s take a look at some of the ways you can find help whenever you need it.
Self Assessment and sole traders/limited companies
As your business as a sole trader evolves, your personal finances will as well, which, in turn, will change the information included in your annual Self Assessment return to HMRC. This means your finances will become slightly more complex and you’ll need to consider the different types of income you must include in your Self Assessment.
If you’re freelancing and moving on to becoming a limited company, you’ll have to start including dividends and salary in your Self Assessment. You’ll also need to be aware of things such as Capital Gains, pension contributions, Gift Aid, P11D, money gained from overseas, payments on account, and interest among other things. Individually, these aren’t complicated, but a combination of one or two can make for more complex finances, which often needs the expertise of an accountant to make sure you’re making the most of your annual allowances and that you’re recording your finances accurately. To give you a starting point, we've got a dividend tax calculator and a capital gains tax calculator which produces an estimated tax amount for each value based on the figures you provide.
Changing the legal structure of your business to a limited company
If you’ve been working as a sole trader for a while, you might have thought about running your own limited company, but how do you know if changing your business structure is right for you?
There are some real benefits to setting up your own limited company, especially if you’re looking to expand your business. For one, there’s the potential to reduce the amount of tax you pay, based on the way you take income from the business. You’ll also have more opportunity to raise capital against your company’s assets or receive investment from a new shareholder, which is perfect if you’re planning on expanding.
Another benefit to running a limited company is that the company assets and liabilities are completely separate to your own personal finances. If your company runs into any financial difficulties or needs to close, your own personal assets can’t be taken from you to pay any debts.
Once you leave sole trading, your taxes and accounts will become complicated, so seeking out support from an accountant will help you to keep on top of your bookkeeping.
Working off-payroll (also known as ‘IR35’)
Off-payroll working means your company is paid by your end-client or agency for the work you do. There are complex rules set by the government (known as IR35) which you’ll need to know about when you decide to start working as a contractor via your limited company.
IR35 rules are applied to work out if you’re using your limited company to ‘disguise’ your actual role as an employee to reduce the amount of tax you pay.
HMRC are very strict on this and can impose penalties on you if you’re not compliant, so it’s important to seek advice to help you navigate this complicated legal area.
A good accountant should offer IR35 reviews to reduce the chances of an investigation by HMRC and remain compliant with the law. Our IR35 calculator can help you decide if you’re at risk of being caught out by the legislation; we can advise you on the next steps if so.
If your business has grown and your turnover exceeds £85,000 a year, you’ll need to register for VAT. VAT is a bit of a minefield and knowing how to navigate it properly requires expertise.
VAT is split into two main schemes: Flat Rate VAT and Standard Rate VAT. When you decide to register for VAT, the scheme you choose will depend on your company’s turnover, the types of clients and your expenses. An accountant can help you decide which scheme is best for you and help you to be as tax-efficient as possible.
Checking the financial health of your accounts and business
If you’ve been in your business for a while, you might be considering the ways in which you can improve its finances, make it more efficient or even plan for the future; perhaps you’ve had some big ideas and want to work on them soon.
Seeking support from specialists and experts can ensure you’ve laid the groundwork for any improvements. Getting an accountant to provide a financial health-check on the state of your business is a really good way of tackling any issues you might be facing. Our accountants will give you proactive advice on making sure you’re claiming the right expenses and being as tax-efficient as possible.
If you’ve decided you want to expand your business but don’t know where to start, you might want to consider looking to startup funding.
You can apply for a start-up small business loan from a traditional bank, but you’ll need to ensure you’re prepared to provide information on your business plan. One of the benefits of starting your own limited company is that you’re able to establish its own credit rating which can support borrowing to invest in the business.
There are a whole variety of funding options including government-backed startup loans, local authority schemes, and crowdfunding. If you’ve been unemployed for a while but think you have a good business idea, the government’s New Enterprise Allowance might work wonders, providing you with a designated mentor and a weekly allowance.
All in all, while you might think you’re doing OK, a fresh pair of expert eyes in different places can really improve your business prospects. Investing in a quality business advisor and accountant can make a real difference.
We’ve got some great examples of how we’ve helped our customers grow – read about who we’ve helped here. Or, if you’re ready to get in touch, we offer a free consultation. You can call us on 0333 920 3239 or you can book a call-back. We’ll be happy to discuss how we can help you grow your business.