Questions and Answers
We are a start-up business and do not know accurately our revenues, costs, cash flows and profits or losses? How can you help?
We can arrange an initial free no-obligation meeting with you at your convenient time and place and run a free health check-up e.g. number and value of transactions, accounting software requirements, tax payment status, overdue bills analysis and expected receipts and payments etc. We will sort out your books of accounts, prepare your reports and help you pay minimum tax resulting in potential tax savings. You can use that strong footing to keep working on it with us which would help you to progress your business to next level of growth.
I think my business makes reasonable profits but I don’t see reasonable cash balance in my business bank accounts. I’m concerned. Can you help?
Absolutely. There could be a number of reasons for this. One is if you sell on credit and your sales bills are either not being paid in time or some of them are not paid at all. It affects cash flow directly while profits are shown healthy. We advise to get in touch and we will make a plan to fix it e.g. re-structuring credit control system.
What is difference between statutory audit and internal audit?
A business is required by law to have a statutory audit conducted when certain conditions are met e.g. turnover or number of employees exceed a limit. However, an internal audit is simply conducted by choice as it lends credibility to your business.
As corporation tax is charged on profits so is VAT also charged on my profits?
No. VAT is charged on turnover or sales value instead of profits.
I own a small business. When do I need to register for VAT?
You must register for VAT if:
- You expect your VAT taxable turnover to be more than £85,000 in the next 30-day period
- Your business had a VAT taxable turnover of more than £85,000 over the last 12 months
You might also need to register in some other cases, depending on the kinds of goods or services you sell and where you sell them.
I want to sell my business as a going concern. Am I liable to pay VAT on it?
The sale of a business as a going concern to another taxable person (i.e. whose revenue exceeds the VAT registration limit) is outside the scope of VAT. So no VAT is charged on such sale.
Can I voluntarily register my business for VAT? Is it good or bad for me?
Yes, you can. Even if your turnover is below the HMRC set limit for VAT registration, you still can register for VAT. The good thing is you can reclaim the VAT you pay on your purchase invoices but the bad thing is that your sales invoices now include VAT element. It means a consumer who is unregistered cannot reclaim it and may find your product/service expensive. We can advise you precisely after analysing your business transactions, type and market.
Are zero-rated VAT sales invoices and VAT exempt sales invoices the same with regards to reclaiming VAT paid on purchases?
No. A business with zero-rated sales invoices CAN reclaim the VAT paid on its purchase invoices while on the other hand a business with VAT exempt sales invoices CANNOT reclaim the VAT paid on purchase invoices. In simple words, zero-rated sales invoices are beneficial compared to VAT exempt sales invoices.
I have a home with a room for letting. As ‘Rent a Room’ relief is increased to £7,500 from 6th April 2016 so is it beneficial to use this relief or show both my rent and costs on my tax return?
Normally if your rent received less costs paid is more than your income by claiming this relief then it is beneficial for you to claim this relief to make best use of tax planning.
I have made some gifts to my adult children. Do I have to pay inheritance tax?
With inheritance tax, the prime question is how many has been given away. The first £325,000 of gift transfers is exempt from tax as long as donor (one who gives gift) survives 7 years from the date of gift. If not, tax is charged on the transfers excluding exemptions e.g. £3,000 per year.
HMRC have sent me a letter regarding opening a case for my tax investigation. I always declare and pay correct taxes. What’s reason for this and can you help?
Sure. There are numerous reasons HMRC may commence tax investigation in a business or individual’s affairs. It could be unusual transactions found, low tax paid compared with sector averages or just a random pick. But we can look into your business or individual affairs and not only advise you but represent you to HMRC in such tax investigations.
Finance & business advisory
I am going to start my business. How should I structure it e.g. sole trader, partnership or a limited company?
The most important thing in this decision is your aim and commercial needs of the business. A sole trader is easy to form, has full control and can keep all the profits but main downside is unlimited liability which mean in case of loss, personal assets of sole trader may be sold to pay business debts. The main partnership advantage are variety of partners’ skills and more capital availability but disadvantages are mainly profit is split between partners, their disagreements on business direction and each partner is responsible for actions of all other partners. Formation of a limited company has main advantage of limited liability i.e. in case of business loss the personal assets of owner/directors are NOT at risk to pay business debts and a company can attract investors to get finance. However, limited company is subject to various compliance requirements of Companies House like keep some documents on public records so less secrecy and if some criteria e.g. turnover of no of employees exceeds a set limit, a company has to conduct statutory audit which has a cost. We recommend to speak to us before you make your decision on your business structure
Can you recommend us a good accounting package?
Yes. First of all we need to understand a number of things like your business sector e.g. property, healthcare or media etc., your in-house reporting requirements and finally your budget. If you are unsure of any of these points, your best bet is to contact us before your purchase as a lot of businesses makes purchases of accounting packages not suitable for their specific needs.
I want to grow my business by raising extra finance. Can you advise how and what is the best solution?
There are a number of strategies to grow your business. We need to understand your existing business financial position and structure and your growth objectives. For example, if you presently have plenty of business bank loans then it may be challenging to raising further loans until you can show your business has the ability to pay them off. We can provide you tailored solution after discussing your specific case.
I own a small business. Do I need a strategy and if so why?
Every business, irrespective of its size, needs a strategy. When you have one, you can plan and grow your business in much more organised manner than if you don’t have one. For example, you can set a business strategy and establish KPIs (Key Performance Indicators) and then periodically compare your business performance against actual results. It will help you monitor it with more control and visibility and take action when things go wrong without wasting time, resources and opportunities.
I want to change my accountants. How are you different?
When a business develops to the next level, its needs become different naturally. We make it our business to fulfil all your needs which may be to overcome cash flow problems, or book of accounts being all over the place or even you are paying too much tax. As we provide personalised service in many different areas, we are well placed to offer you all the solutions you need. Lastly, for your peace of mind, we are Chartered Certified Accountants carrying a licence to work issued by the Association of Chartered Certified Accountants.
How simple is it to switch to you?
It’s as simple as ABC. All you got to do is to let us know the name of your existing accountants. We will write to them and obtain all the information we need to start working with you.
How much does it cost?
We have the most economical fees in the market. As we believe in and establish built to last relationships so you will find us among the best value for service providers. Our initial consultations are FREE. You can speak to us, discuss your needs without any obligation. We will provide you an itemised ‘menu’ with fixed prices for each service and then you can make an informed decision.
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