This question entirely depends on what is stated in the employment contract you have in place with your employee. Usually, if an employee is unable to make it in to work because of adverse weather conditions, they can take annual or unpaid leave or more frequently nowadays, employers are comfortable with staff working from home.
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Choosing the VAT Flat Rate scheme as a business owner may mean a simpler route for calculating, paying and recouping VAT in your business, where you pay a fixed rate of VAT and you get to keep the difference between what you charge to customers and what you pay to HMRC. There is therefore little need to monitor your VAT position on an ongoing basis as you always know what VAT you are due to pay and you could be left cash flow positive if you have a bumper level of sales in a given period.
So what circumstances would you no longer consider using the VAT Flat Rate Scheme (FRS)? There are a number of rules to consider which may cause you to reconsider your VAT position.
If you are currently in the FRS and you are aware that your turnover in the last 12 months was more than £230,000 including VAT or if you forecast it will be at this level in the next 30 days, you will need to consider leaving the FRS.
New entrant to the FRS must have a turnover of £150,000 or less and the £230,000 maximum threshold means that you will need to consider moving on to either the Cash Accounting Scheme or Annual Accounting Scheme.
The FRS rate of tax varies dependent on the industry you work in, a full list of FRS rates can be found here.
When HMRC consider the FRS rates of tax they will firstly decide whether you are a ‘limited cost business’ or not. If goods in your business cost less than 2% of your turnover or £1,000 a year, if your costs are more than 2%, you are considered a limited cost trader.
If you are classified as a limited cost trader, you have to pay a higher rate of VAT at 16.5%.
There is therefore no real economic benefit of using the FRS if you are classed as a limited cost trader, although the reporting to HMRC is much simpler. For example, the FRS rates currently range from 4% to 16.5%, quite a difference in VAT costs across industries using the FRS.
If you are lucky enough to be an industry that has a FRS rate of 4%, such as a retail clothing store or a newsagents, you can see the attraction of staying in the FRS if your turnover is below £230,000 – cash profit and less reporting to HMRC.
As a business, we recommend regulator monitoring your turnover (excluding VAT) to ensure that you are on the right VAT scheme. Compulsory registration in the UK is required from businesses earning £85,000 or above in a given 12 month period, but businesses can also join FRS if they are below this turnover threshold if, for example, they are subject to suppliers who charge VAT on a regular basis, to reduce running costs.
We understand how difficult it is to run a small business and understand fully your tax and legal obligations, and making the most of the tax reliefs available to you.
Please call if you would like to discuss your options.
Written by Shaima Todd.
As a self employed individual or a director of a limited company, you may be experiencing the best that a modern day accountant has to offer, or at least we hope so!
25 years ago, an accountant’s role was limited to review of numbers on paper, with a view to past performance. The stereotype of a middle aged, balding man in a suit with a calculator in his front pocket existed for a reason! At its core though still, the accountant’s goal was to provide business support via reliable numbers to help determine profitability and pay the right amount of tax.
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According to research released this month by Starling Bank, small businesses spend on average almost 2 hours a week on accounting, equivalent to 20% of a small businesses time. Furthermore, 32% of small business owners cite accounting as the most stressful part of running their business.
According to the same research, 16% of small business owners saw the benefit of integrating their bank account to online accounting software, such as QuickBooks or Xero.
20% of other small business owners saw the benefit of being able to see all their business financial information in one place would make a huge difference to the time spent on finance in their small business.
The importance of small businesses can’t be overstated. They make up the majority of enterprises in the UK, employ almost nine million and generate nearly a trillion pounds in revenue each year.
Southside Accounting are your local cloud accountants in Wimbledon and London. We’re local, like you. And we’re a dynamic small business. Just like you.
We are fully chartered, certified accountants so we’re well qualified to be the trusted advisers you need to help make your company a success.
All our clients are on the cloud and have access and support on cloud accounting software, in both QuickBooks and Xero.
Our fixed fee structure means there are no surprises. And our smart Service Plans are tailored to meet the particular demands of your business.
So whether you’re a sole trader just starting out, a Limited Company, PAYE, or an established business with employees, we can help.
Call us to book a free no-obligation meeting today.
We always offer an initial free face to face meeting with prospective clients, so we can get to know you and your business and understand your unique circumstances and business goals.
Written by Shaima Todd.
It is certainly tempting to wait until the eleventh hour to submit your Self Assessment Tax Return, and according to HMRC statistics, there is a surge of submissions close to midnight on 31 January each year. Here are 3 reasons why you should file your tax return early!
Rather than rushing around a couple of days before the deadline to get your books in order and seeking out receipts from more than a year ago, if you start and organise early, you will hopefully avoid the annual panic that comes around every January!
If this is the first year you are completing a tax return, you may not realise that it takes 1-2 weeks to register with HMRC, who send you a PIN code via post, which is required to submit your return.
Remember, if you miss the 31 January deadline, you will be immediately penalised with a £100 fine, so it’s worth getting organised now!
Did you know that you can submit your tax return as early as April after the tax year in question, for example for the 2018/19 tax return due by the end of this month, you could have completed this as early as April 2019!
By getting organised and completing your tax return as early as possible, you are gifting yourself more time to plan and budget for your tax bill, which is still due by the 31 January deadline no matter how early you submit your tax return!
The good news is that you won’t be hunted down by the taxman or the police with a late night knock on your door – phew! – although you will incur an immediate £100 penalty fine from HMRC as well as interest on any unpaid tax you are due.
The best next step is to complete and submit your tax return as soon as possible if you miss the 31 January deadline as the penalties will only keep going up. If you want to know what penalties you are liable for, HMRC have a handy calculator to check.
If you’re a sole trader or director of a Limited Company, we would be happy to help you through the self assessment process and get your tax return submitted as soon as possible. We may even be able to help you reduce any penalties you have incurred if you have a good enough excuse.
Please get in touch to see how we can help.
Team Southside wish all our clients and contacts a very prosperous year ahead, whatever your business ambitions may be!
This is a fantastic time to take the opportunity to take stock of your business and personal finances and consider if you would do anything differently.
Are you happy with your finances? Are you getting the support you need from your accountant currently, support that will help drive growth or sustain cash flow, so your small business can thrive? If not, get in touch; we may be able to help.
Southside Accounting are a team of chartered accountants in Wimbledon and London, supporting sole traders and limited companies through state of the art cloud accounting software, with transparent and fixed monthly fees.
Our smart Service Plans are tailored to meet the particular demands of your business.
So whether you’re a sole trader just starting out, a Limited Company, PAYE, or an established business with employees, we can help.
Call us to book a free no-obligation meeting today.
We always offer an initial free face to face meeting with prospective clients, so we can get to know you and your business and understand your unique circumstances and business goals.
Written by Shaima Todd.
We can all appreciate Christmas is an expensive time of year both in business and personally, whether it’s buying gifts for loved ones and colleagues or increasing your advertising budget. So here are four Christmas business expenses you should be claiming this festive season to help with cash flow into the new year. Let’s just call it an early Christmas present from us at Southside Accounting – you’re welcome!
… Continue ReadingBelow is a comprehensive list of what a small business needs to be remember in the tax year to help keep on the right side of HMRC.
If you work for yourself, you may not have anyone to prompt you to remind you of the important dates you need to remember your obligations.
Some of the dates may change year to year but the deadlines will fall broadly at the same time each year, so these are worth remembering or keeping a note off to keep you on track.
… Continue ReadingChristmas parties for staff: can I claim tax relief on the Office Christmas Party and must all staff attend?
The cost of the Christmas staff party can be accounted for as ‘staff welfare’, forming part of general staff costs and is wholly tax deductible.
You can include costs such as transport to the party venue, venue hire, decorations and food and drink.
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