Ask an Accountant
At K&K Business Consulting we specialise in helping small businesses. Whilst we have qualifications in law, bookkeeping, IT, marketing and administration sadly we are not experts when it comes to accountancy. This is an area that we feel is very important and we often get asked questions by current clients, new clients and within our Facebook group.
So what did we do? Yes you guessed it we asked an accountant
We asked Kieran from Swift Accounting & Bookkeeping Services Ltd some of your frequently asked questions. But first a little about why we picked Kieran.
Kieran became known to us simply by providing helpful advice. He answered questions in plain English, didn’t just say no and added merit to local groups. He also specialises in small business which of course is the same area we cover. He is also a fellow Devonian and so his face pops up in local networking groups.
So here comes those all important FAQs
Should I register as Self Employed or Limited?
This depends on a variety of factors some of which are:
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profits/expected profits
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the type of business
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your plans for the business
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if you personally earn any other income and much more.
Usually, if someone is in full or part-time employment alongside the business they are setting up, then it’s more tax efficient to be a Ltd company but clear advice can be given after a discussion with an accountant.
Should I register for VAT?
This can depend on two main factors:
- Have you gone over the £85k threshold in any 12 month period or will go over in the next 30 days? If the answer is yes then you must register for VAT within 30 days of exceeding the threshold (unless you produce Exempt supplies).
- The second factor is, who are your main clients? If the majority of your clients are VAT registered themselves they usually do not mind. This is because they can reclaim the 20/5% from HMRC. If your clients are outside the EU then there is no VAT to charge on goods sent to them. Although the end customer may pay import duties but this does not affect your VAT. You can still recover the VAT on your expenses resulting in a potential reclaim of VAT every quarter!
So in summary:
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If your clients are VAT registered or outside the EU – Yes, you will usually end up better off registering
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If your clients are not VAT registered and sales are under £85k – usually not as this could make you less competitive in the market
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If your sales are over £85k – Yes, you have to register unless exempt
Can I go from a Sole Trader to Ltd and what are the implications?
Yes, you can definitely do this and it is quite common for businesses. Although there are tax implications of doing so. Any assets owned by the Sole Trade business would be transferred over to the Ltd at market value. This could result in additional taxable profits from the Sole Trader. If you are transferring property over then this could incur capital gains and/or stamp duty land tax. This is where your accountant comes in. Its useful to have a chat with them so you are fully aware of implications. You can also discuss which works best for your business.
What can an accountant do for me?
A good accountant can save you paying unnecessary tax. They should also be genuinely helping your business grow. This could be by suggesting:
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using software for processes
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tax planning
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what you can claim
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advice on dividends and payroll
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when to go Ltd (if you are a sole trader)
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and much more!
We also ensure that your business adheres to all HMRC & government rules, laws and guidance so then you can rest in the fact that your business is always up to date and compliant.
If you look around at businesses now you will see a very clear pattern – they do not know what they can claim from the government in relation to Covid support. This has resulted in good accountants stepping up and helping these businesses, to ensure they can make it through this struggle and come out the other side.
Do I have to use an accountant local to me?
No. Although there certainly are benefits to using a local accountant, such as being able to physically meet them, you do not have to use a local accountant. Some of the best accountants will be nowhere near you! The key aspect to finding a good accountant is how well you get on with them. If you can’t make sense of what your accountant is saying or you just don’t click with them then they are not the accountant for you. You will also find that having an accountant who is not local to you means that they are, usually, more active in helping you and your business and also keeping up to date with software – this is crucial in the ever-changing digital world.
Can I afford an accountant?
A common issue is that a lot of businesses, especially small or new businesses, assume accountancy fees are high and unaffordable. If you go to a large firm of accountants then yes you could end up paying thousands for simple work. However, if you find a smaller firm or even a one-man band, the services can not only be much cheaper but also more personal. You should also look at how much you value your own time – spending hours each day/week/month on bookkeeping, payroll, VAT, tax etc. is valuable time you could spend on your business. The right accountant is an asset to your business, not an expense.
Leaving it to the experts
If you have any accountancy questions or are looking for a new accountant why not reach out to Kieran. You can contact him via his website or by clicking here.
Whilst we cannot give you accountancy advice we can help in certain areas of finance. We regularly undertake work such as invoicing, credit control and legal proceedings for non-payments. So if this is an area you need help with please do reach out to us.