Your Accounting Responsibilities as a Small Business Owner in the UK
If you鈥檙e a small business owner in the UK, you鈥檒l need to understand your accounting responsibilities. If you鈥檝e formed a limited company, you鈥檙e required to submit annual accounts to the Inland Revenue. You might want to consider hiring an experienced accountant to handle this task.
Why Hire an Accountant Early On?
Many small business owners hesitate to hire an accountant initially. However, a competent accountant can save you time, money, and reduce stress. Managing piles of paperwork, receipts, and navigating complex tax structures can be overwhelming. If you鈥檙e a sole trader with experience in bookkeeping, you might manage. But for LLPs and limited companies, the process is more complex, and errors can lead to severe penalties.
Accounting for Limited Companies
When you form a limited company, you need an accurate record of all income, expenses, liabilities, and assets. You must maintain these records for at least six years from the end of the associated accounting period. These records aid in preparing annual accounts, filing tax returns, and calculating corporation tax. If your annual income exceeds 拢85,000, you must file a VAT return and pay quarterly VAT bills.
Filing Statutory Accounts
Even inactive companies must submit annual accounts. These accounts must be filed at Companies House within nine months of the accounting reference date. Statutory accounts must follow International Financial Reporting Standards. Smaller companies can file shortened accounts for Companies House but must provide full statutory accounts to Inland Revenue and shareholders.
Corporation Tax and Company Tax Returns
Your company鈥檚 tax return must be filed, and corporate tax paid within twelve months of your financial year鈥檚 end. Filing is done online and includes form CT600, statutory accounts, and tax calculations.
Penalties for Late Filing
The deadline for corporation tax is nine months plus one day after the financial year end, but the tax payment must be made before filing the tax return. Fines for late filing can be substantial, and persistent delays can lead to personal prosecution.
Finding the Right Accountant
Given the complexities and potential penalties, finding the right accountant is crucial. Large accountancy firms may not be suitable or cost-effective for small businesses. Consider independent accountants with good client reviews who come recommended by other small business owners.
Qualifications and Initial Appointment
Choose an accountant who is a member of a recognized association for Chartered/Management accountants. If you need an audit, ensure they are officially listed as auditors. Research potential accountants, ask for quotes, and consider their fee structures. Prepare questions and bring relevant documents for your first meeting. If you don’t feel a good connection with the accountant, it’s okay to interview others.
Final Thoughts
Keep in mind that requirements change over time. Stay updated through official guides and resources to ensure compliance.
