Southside Accountants Wimbledon

Is Sole Trader Structure Best?

Mar5

This is the third and the final blog on business structure that would be suitable for you. The first blog in the this series covered limited companies and the second blog covered partnerships.

Sole trader is the simplest form of business to start where you carry on business on your own account. You are liable to income tax and Class 4 National Insurance on your profits. You can employ people including your spouse for work done.

Your business format is not set in stone forever and you can change between them. It is fairly simple for a sole trader to take on a partner and become a partnership and for a partnership to become a Limited Company. There are however more complications with changing from a Limited Company to a sole trader or partnership.

If you would like any further information, please do not hesitate to contact Southside Accountants Wimbledon & London.

Is Partnership Structure Best?

Mar4

This is the second of third blog covering the area of which would be most appropriate business structure for you. The first blog covered limited company structure. This blog cover the partnership structure. The third and final blog will cover sole trader structure.

Partnership

A partnership is two or more people carrying on business together with a view to making profit.

The partners are all joint and severally liable for partnership debts, although this does not apply to personal tax bills based on partnership profits.

It is advisable to have a partnership agreement to document the agreement between the partners. However, the partnership is often between husband and wife and there is no agreement.

 

Limited Liability Partnership (LLP)

LLP’s are treated like a normal partnership for tax purposes but have the protection of Limited Liability.

A LLP is a separate legal entity and can enter into contracts and deeds, sue and be sued. With normal partnerships every partner has to be party to certain documents and litigation. Floating charges can be granted over its assets in its own name, which normal partnerships can’t do. As with Limited Companies, there is public availability of accounts.

If you would like any further information, please do not hesitate to contact Southside Accountants Wimbledon & London.

Limited Company Structure – Best?

Mar3

This is the first of three posts looking at 3 business structures:  Limited Company, Partnership and  Sole trader. We hope this will help you decided which is the best structure for you.

A limited company is a separate legal entity from its members. These are the basic facts…

  • The business is owned by the limited company, not you.You are the shareholder who owns the business and with small businesses, the director who runs it.
  • It must have at least one shareholder.
  • It must also have at least one director. From 6th April 2008 it is no longer necessary to have a company secretary although the position may be retained if so desired.
  • The shareholders do not have to be directors. Directors are employees of the company.
  • The company pays corporation tax on its profits. A small company pays corporation tax at 21% (2009/10).
  • They are governed by company law.

Main Advantages of using a Limited Company…

  • A Limited Company may appear more credible and substantial although in reality this is not necessarily the case.
  • The Liability of its shareholders is limited to the amount of the share capital issued and so offers protection to personal assets. In the event of company failure and not being able to pay its creditors,your personal assets are protected. However, banks, landlords and others when dealing with a Limited Company will often require personal guarantees.
  • A Limited Company has better borrowing potential as it can use current assets as security by creating a floating charge over its assets.
  • You can use shares to enable different people to have different shares of ownership that they can pass onto the next generation.
  • You can have different classes of shares with different rights, such as non-voting shares for someone who wants to invest some money into the company but doesn’t wish to take part in the management.
  • Having a limited company can change the tax rate of a higher rate tax payer from 40% to 21%, more than halving their tax bill. The exact savings do depend on how much of the profit you leave to reinvest in your business. Taxpayers can also avoid paying any national insurance at all by using dividends. For someone earning £30,000 in a year as a sole trader, the amount of Class 4 NI to be saved is around £2000.

Main Disadvantages of using a Limited Company…

  • Your annual accounts have to be filed at Companies House and are available for public inspection as is other information about the company.
  • Directors are personally subject to regulations and can be fined or found guilty of a criminal offence for failing to comply.
  • A company is more complicated to wind up.
  • Generally involves higher accountancy fees as there is more for the accountant to deal with.
  • Taxable benefits on having your car in the company can be substantial.

If you would like any further information, please do not hesitate to contact Southside Accountants Wimbledon & London.

Filing Small Company Accounts

Feb24

As a Director of  a small limited company you have 9 months, from your accounting year end date to file your accounts with Companies House. However, if you are a new company you have 21 months to file your accounts from the date of incorporation of your company.

You will get a reminder from Companies House about 6 weeks before your accounts are due. This reminder will be sent to your registered office address.

If you miss the deadline of filing your company’s accounts you will incur an automatic penalty. Please be aware that late filing of accounts or not filing the accounts may mean you could be prosecuted and may end up with a criminal record and a fine that could be as high as £5,000.  You may also be disqualified acting as a director.

Late filing penalties are as follows:

Missed Deadline by:                                                  Penalty

Less than 1 month                                                            £150

Over a Month but less than 3 months                                 £375

Over three months but less than 6 months                         £750

Over 6 months                                                                £1,500

The above penalties will be doubled if you are late in filing the accounts again in the following year.

 

If you would like any further information, please do not hesitate to contact Southside Accountants Wimbledon & London.

4Networking Putney Business Breakfast

Feb10

I am looking for people who would be interested in joining  a 4n (4 networking) group in Putney. Networking as you may know is the most effective way to form good relationship this in turn will further your business.

I was cynical about networking. After attending 4n networking  meetings I am converted. Very friendly and easy going meetings. You will not be held up by rules. I did not like BNI at all – just too many rules. 4n is different.

Please call me on 020 875 3314 if you are interested in attending  a meeting  just to find out more. You are allowed to attend two meetings before deciding to join.

If you would like any further information, please do not hesitate to contact Southside Accountants Wimbledon & London.

Big Caution on Joining a Franchise

Feb10

This is just a big caution for those considering a franchise – be very careful. There are more than a few franchisors who are very good at presenting a positive picture of how well you will do. The reality may will be very different.

Do not take the fact that they are a member of  The British Franchise Association (bfa) as an indication of additional security. BFA  is funded by franchiors. In addition, it does not have any legal authority over franchiors. When you have problems, it may suggest mediation. This is likely to cost you.

I am sure they are some good franchisors but they are many who simply will not to do much to help you.

There are many people I know who have been bitten badly by money grabbing franchisors.

If you decide to join a franchise please make sure you go with your eyes fully open by doing  your own research. Proceed with extreme caution.

If you would like any further information, please do not hesitate to contact Southside Accountants Wimbledon & London.

 

How do I keep my Accounting Records?

Dec17

bookkeepingThis is a question we are asked very often. There is no simple answer to this. It depends on the type of business you run and the type of person  you are. There are certain records you need to keep. However, you have several options how you keep these records. The following link will take you to a Business Link website that explains this area extremely well:

http://www.businesslink.gov.uk/bdotg/action/detail?r.s=m&r.l1=1073858808&r.lc=en&r.l3=1073860617&r.l2=1073859227&r.i=1073789114&type=RESOURCES&itemId=1073789112&r.t=RESOURCES

If you would like any further information, please do not hesitate to contact Southside Accountants Wimbledon & London.

How Long to Wait Before Chasing for Payment?

Dec16

debtAfter your credit period (for example 30 days) there is no hard and fast rule on how long you should wait before taking further action.

The following is an excellent link that  provides an interactive questionnaire on process to follow when chasing a debt.

Link http://online.businesslink.gov.uk/bdotg/action/logicToolStarting?r.l1=1073858790&r.lc=en&r.l3=1075135408&r.l2=1074453392&r.i=1077731036&type=BLTTOOL&itemId=1077731036&r.t=BLTTOOL

If you would like any further information, please do not hesitate to contact Southside Accountants Wimbledon & London.

Do you Need an Accountant to Submit Accounts to Co House?

Dec12

companies House The short answer is no, you do not have to be an accountant to submit accounts to Companies House. However, it is would be best to employ services of an accountant. He/she would ensure all the changing regulations are complied with. Further, the accountant will be able to identify any tax savings. These tax savings may outweigh their fees.

It would be best to employ a Chartered Accountant for this.  There are many people calling themselves accountants. However, they have not undertaken any professional examinations and are not monitored by any one.  Chartered Accountants are monitored by their Accounting body. They are required to keep up to date with changing regulations.

Before employing an Accountant please check that they are a qualified Chartered Accountant.

If you would like any further information, please do not hesitate to contact Southside Accountants Wimbledon & London.

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