FAQs As an accountant, I often get asked lots of questions relating to all aspects of accountancy and taxation. I have compiled a list below of the areas of concern which are put to me most frequently.
Is it possible to ask you questions relating to my accounts or tax without my bill going up?
Yes. You won’t be billed for asking questions on tax or on any subject under the sun for that matter. I understand that you may want to check something relating to your business accounts and need an answer quickly. I always aim to respond with answers to your accounts queries promptly. Also, most firms of accountants, when they take on a new client, stipulate that they must immediately set up a monthly Standing Order to go towards their accountancy bill for the year, meaning that they get your money up to a year before doing any work for the client. I prefer to do the work first and I only send out a bill for the year’s work when you the client is happy with everything – tax liabilities etc. – and we have reached the point when we are ready to file your tax returns with HMRC. I generally work to around half the hourly rate charged by firms; it make using my services more cost-effective.
Can you cope with all aspects of accountancy that I might need doing?
Yes. I can deal with all aspects of accountancy and taxation which you require, including bookkeeping, payroll, VAT returns and year end compliance. I can also provide management accounts and business consultancy if needed.
For how long should I keep my business accounting records?
You need to keep your accounting records for at least six complete tax years, so it’s safest to keep the records for seven years to cover any possible overlap into different tax years.
Would it save me tax if I include my car in company or sole trader accounts?
There can be both tax saving benefits as well as additional tax charges if a private car is included in the accounts. It is generally the case that private cars should be kept out of the accounts for limited companies, certainly if the company is controlled by just one or two directors; it’s much better to put in claims for business mileage at accepted rates per mile. There are no such restrictions if you are a sole trader; in that case all business related car costs can be included; your tax reducing life is even better if you use a van for work.
Which accounting software do you recommend?
Accountancy software is available from many suppliers; they generally have similar functions. I can advise on what is most suited to your business – for example online cloud accounting. Also one very good option is that I have designed several accounts recording systems which are both easier and quicker to use than most commercial applications, plus for sole traders you can see accurately just how your tax and Class 4 National Insurance liability is building up each month so you know just how much you should be putting by to pay whatever is necessary for the current tax year. Needless to say, I will always do everything within my powers to help you minimise the total amount of this unpopular liability!!
Which is the most tax efficient way for me to operate: working through a limited company or as a sole trader?
Operating as the director of a limited company was always extremely beneficial from a tax saving point of view, but that has all changed in recent years. The director of his own company, where he was the sole shareholder used to be able to earn profits up to the point where 40% tax became payable (£50000 per year for 2019-20), but sadly adverse changes to the taxation of dividends means that the limited company route is no longer automatically the best option. I would have to go through a number of things with a new client to be able to work out what’s best. Generally I tend to advise operating as a sole trader (even though that halves the client’s yearly accountancy costs!!).