Good record keeping is essential if you are to file accurate business accounts and returns, and avoid unwanted attention from HMRC. The ramifications of failing to meet your obligations in this respect can be daunting, as a strict penalty regime exists for non-compliance.
So is there a particular process for completing your accounts and returns, and how do you get started? Good bookkeeping is the initial step – it makes your financial position clearer, and gives you easy access to vital day-to-day management information.
One of your obligations as a business owner or company director is to keep ‘proper’ records of business transactions and financial activity. Depending on the size and nature of your business, bookkeeping might be carried out daily, or perhaps only once a year, but in any case you will need to retain all your receipts, invoices, and financial documentation.
Bookkeeping and accounting software helps you view details of your cash flow situation and other financial information at the touch of a button, and provides the figures needed to complete your accounts and returns accurately.
You will also need to register for self assessment, which is the process by which your income tax and National Insurance is calculated and reported. The majority of self assessment returns are now filed online rather than in paper form, with the deadline for online tax returns being 31st January following the tax year that you are reporting.
Corporation tax and annual accounts
If you are a limited company director you file your Company Tax Return (CT600) with HMRC, and your annual accounts with Companies House - this can be done separately or together via HMRC’s online service.
It is advisable to use a qualified accountant to prepare and file limited company accounts and returns, given their complexity and time-consuming nature. This also helps you avoid the penalties and surcharges that are imposed for inaccuracies or late filing.
- You must file your Company Tax Return within 12 months of your company’s financial year-end, along with the computations and full statutory accounts.
- Annual accounts must also be filed with Companies House within nine months of the company’s accounting reference date (ARD).
Whether or not you are a sole trader or a limited company director, if your annual turnover in any rolling 12-month period reaches the VAT threshold (currently £85,000 in 2018-19), you must register with HMRC for VAT.
You charge your customers VAT at the appropriate rate by adding it to your sales invoices. These amounts, and the VAT you have paid as a business, are accounted for separately in your books.
The difference between the two figures is then either paid over to HMRC, or reclaimed from them if you have paid more VAT than your customers have been charged. VAT returns are submitted online, typically every three months, but this can vary depending on the business.
If you are an employer you will need to calculate the income tax and National Insurance Contributions (NICs) on behalf of your employees where appropriate, deduct the relevant amounts from their pay, and submit the total of these deductions to HMRC. Employer NICs are also applicable, and these represent a cost to your business.
Limited companies must file an annual confirmation statement that records details about the company, including its name, registration number, and office address, as well as information about the directors and company secretaries, if applicable. The date it is due generally matches the company’s formation date, but it can also be the date of the company’s annual accounts.
If you need help with your business accounts and returns, it can be difficult to know where to find reliable support, and to differentiate between the service levels offered by different accountants.
We can help you find a fully qualified, reliable accountant in your area, with experience in your industry. Handpicked Accountants have developed longstanding professional relationships with accountants and accountancy practices around the UK.
We will provide a shortlist of professionals who offer only the highest levels of service, and who we trust to provide the assistance you need. Please call one of the team to find out more.