FAQs
Do I need to register for VAT?
There are two main concerns, when deciding whether or not you need to register for VAT. The first, is whether your business is actually allowed to register for VAT. Some businesses cannot register, specifically, those that offer exempt services or supplies. If you are allowed to register, then you will need to monitor your company's turnover. If this has increased above the lower limit of £60,000 in any running 12 month period, then you should register immediately. This also applies if you expect to achieve a turnover above this limit. Failure to register can mean incurring penalties and fines.
What is the difference between a partnership and a Limited Company?
A partnership is a group of people who collectively trade under a single trading name. Partnerships can contain unlimited numbers of partners, although obviously the minimum number is two.
A partnership is not in itself a single entity, but there are a number of rules, which must be considered before entering or forming a partnership. Arguably, the most important is the fact that regardless of your share in the partnership, in the event of liquidation, the entire debt could be requested from yourself.
A second point is that you are accountable for any losses the partnership makes, and thus any of your own personal finances, including your property could be used should the partnership run into financial difficulty.
A Limited company works in a much different way. Again, there are a number of people, who trade together under a single company name (which must be registered with Companies House).
A Limited Company has shareholders, each of which will hold a number of shares in the company. These shares 'limit' the person's (or businesses) liability to the initial value of the share when purchased. The persons who have shareholdings are entitled (at the company's discretion) to receive 'dividends' (rather than profits), and the directors of the company must take a salary, rather than drawings. Limited companies are taxed much differently from partnerships, and in most cases, the total tax payable will be lower than that of a partnership.
Many partnerships convert to Limited Companies for the above reasons. This is known as Incorporation, and can be an extremely difficult and arduous task, which is best left to an experienced and qualified accountant who can assess and maximise the tax benefits available.
How does PAYE affect me?
P.A.Y.E. stands for Pay As You Earn and is a government scheme to collect tax from UK taxpayers.
With P.A.Y.E. the onus is put directly onto the employer to administer the deduction of the correct amounts, and failure to do so can result in fines and penalties.
In many cases, if tax is mis-calculated, the shortfall is requested directly from the business or business owner, and not the individual employee.
The tax itself is calculated on whatever basis the employee is paid, i.e. Weekly or Monthly, and a basic allowance is given to each individual in each tax year (6 April - 5 April). Once this allowance is used up, tax is paid on the remaining amount at a given percentage as set by the government.
This percentage is on a sliding scale, and is often described as lower rate, basic rate and higher rate tax. Those who pay higher rate tax can often make better use of the tax breaks given to pension contributions and other allowances, and it often makes good financial sense to discuss your situation with a tax expert.
Which version of Sage is right for my business?
There are many versions of Sage that provide differing levels of ability, and choosing the right version is often the hardest part of the process of moving to a computerised accounting system.
Luckily, Haines Watts have a quick system than enables you to quickly find out which version will most suit your needs. To access this quick system, Click Here.
How do I go about creating a web site?
Setting up a website can be done by anyone with a little time and patience. Software is readily available that will provide you with a basic website, and all versions of windows come will the tools needed to create a website, if you know HTML (the language of the web)...
Web design is a closely guarded secret, and for good reason. Designing a good website involves technical knowledge, design skills, graphical expertise and a lot of patience, and unless you have, or know someone who has these skills, it is best left to an expert.
Professional websites are usually easy to spot, as they have a crisp layout with easy navigation and a simplistic yet informative feel. Many 'home grown' websites do not have this feel, and are often tacky and badly designed. Your website is a part of your business, and should be taken as seriously as any other form of advertising.
To create a website, you need to make some initial decisions, including:
- Do I want or need e-commerce facilities
- What do I want to achieve with my website
- What are my key products or services
- How do my customers view my business
This list is obviously not exhaustive, but covers the main points that you will need to think about before anything else. Without answering these questions, you may, at best, end up with a poor site, and at worst, you may need a total re-write.
What is an audit, and do I need one?
An audit is often required by larger companies who's turnover or assets exceed a pre-defined limit. Companies that fall beneath this limit are not required by law to have an audit, although there are a number of very important reasons why an audit can be very useful to a small business.
Larger companies must have a statutory audit, and this consists (very basically) of pre-determined tests and system reviews to ensure that the accounting records and financial statements form a true and fair view of the companies affairs.
I'm being investigated. What should I do?
First of all, don't panic. An investigation can often be solved by simply answering the Inland Revenue's enquiries in a professional manner. If you are at all worried, contact us immediately and we will be more than happy to help out.
Haines Watts have a team of highly skilled tax experts at our disposal, and we try to smooth the path for the Inland Revenue when investigations are instigated. This way, the work required is often minimal, and the Revenue get the answers they require.
In the mean time, we recommend that you speak to a qualified tax specialist as soon as possible. The sooner this is done, the sooner the investigation can be finished!
Can I obtain insurance against investigations?
Investigation Insurance is available for clients of HW Chartered Accountants and is extremely good value. Many investigations involve extensive work, and in these circumstances, it is not unheard of for fees to be in excess of two thousand pounds or more.
For more information on Investigation Insurance, please contact your local office.
What is IR35 and will it affect me?
If you are a director of a company providing a service to a third party, then yes, you will be affected. IR35 is the tax man's new method of calculating tax liabilities on your companies turnover, and is designed to ensure that those individuals who are borderline in employment and trading company status, pay the correct tax.
This is an extremely complex area, and requires the help of specialist tax advisers, who will be able to help you deal with this tricky and potentially costly area. Haines Watts have a great deal of experience with IR35, and can advise you on your personal situation.
I need a computer, but I dont know what to buy.
The first question you should ask yourself is what you actually want to do with the computer. There are four main categories that cover most uses...
- Word Processing
- Internet
- Financial
- Design Work
This can give you an idea of the system you need. If you are word processing a lot, a basic computer will be adequate, and will allow you to do most of the work you normally do, with the minimum of fuss.
Internet use requires slightly more equipment in your computer, namely either a modem or a network card. An internet ready computer will often be able to manage word processing and other sundry tasks as well.
Financial software often requires more processing power, and a high performance processor will improve usability and speed up the data processing. Without a powerful processor, the software could run extremely slowly.
Finally, we reach the design work level, which will have a powerful all round setup, and will be able to quickly and efficiently perform almost any task you throw at it. This machine will be powerful, quick and will have a very strong subsystem of fast hard disks and high performance graphics system.
Another very important consideration is whether or not you need a computer that is easily upgraded. Often, this is overlooked, but is one of the major decisions you will be asked to make. Many high street providers often use 'integrated components' in their computers. This simply means that the parts are 'welded' into the computer and CANNOT be upgraded. A very effective cost cutting plan, that can be an expensive mistake if not considered when purchasing!
This often results in woes after a year or two, when the computer needs additional equipment or improvements, as some components cannot be changed or upgraded. Often, components such as graphics adapters, sound cards, video cards, network cards and modems are embedded in the system, and this is more common with 'micro' systems where the case is quite small and space is limited.
Should I incorporate my business?
Incorporating your business can provide many benefits for growing businesses. These include the possibility of reducing the amount of tax payable on profits, and the ability to reduce your persional liability. It is wise to request advice from Haines Watts when considering incorporation for your business.
Haines Watts provide an on-line Incorporation Calculator to get you started.
I want to start in business. What should I do?
There are many things required to start up in business, but the most obvious is raising finance. Many businesses approach banks and financial institutes to request finance, and this often requires accurate projections to be presented.
Once finance is in place, there are a number of government organisations you may need to register with, including the Inland Revenue, HM Customs and Excise and Companies House. All these will require advice from your accountant to ensure your start up goes as smoothly as possible. Haines Watts can help you with this, and you can contact us specifically about this using our 'Set up a Business' contact form.
How do I value my business?
Valuing your business, whether it is a limited company or a sole trader/partnership, is difficult. There are many factors which influence your business valuation, including market forces, timing, profitability and previous performance. Haines Watts provide a basic business valuation calculator to get you started, however, we highly recommend that you talk to your accountant before making any decisions, with the tax implications of selling your business a complex and high risk situation.
I require a business loan. What should I do?
Business loans are usually required in order to start up in business, or provide additional facilities in order to purchase equipment for your business. There are alternatives to business loans, and in certain circumstances, it may be prudent to choose another method, such as factoring or simple overdraft facilities.
Haines Watts can help you to make such decisions, using our knowledge of business and corporate finance.
Should we provide company cars to our employees?
This is a difficult area, and should be treated with the greatest of care. Providing company cars for employees affects the tax payable by the business and the employee, and, if you are considering paying for business fuel, then further complication is added.
It is recommended that you speak to your accountant before making any decision, however, Haines Watts can help you on-line using our calculators for Business Company Cars and Company Cars vs Fixed Profit Car Scheme.
I don't understand my pension.
This isn't surprising, as pensions are clouded in a language of their own. Haines Watts can help you by providing independant, honest advice, using the minimum of technical wording. Contact your local office to arrange a free consultation with your local Financial Adviser.
I need help completing my Tax Return
Tax returns can be highly complex, especially when your circumstances are anything but basic. Even the receipt of bank interest can complicate matters, and making mistakes can prove costly, with penalties payable, together with interest where applicable.
You can get help and advice, including a full Tax Return completion service from your local office.
How do I recover from a disaster?
The key to recovering from a business disaster is realising the need for professional advice. Call your local office immediately, and we may be able to help you with your situation. If the problem is left or dealt with poorly, there may not be time to recover!
I am looking to employ staff. What should I do?
When employing any staff, you must register with the Inland Revenue for a PAYE scheme to be set up. Haines Watts can help you with this. You will also need to understand the legislation and rules in force for employment, including employment law, taxation and your legal responsibilities to your employees and the Inland Revenue. Talk to your local office for more help and advice.
Do I need to pay Capital Gaines Tax? (CGT)
This is entirely dependant on the property or items being disposed of, who they are being given to, and what value they are being disposed at. Other considerations include the amount of tax you should pay, and Haines Watts can help to minimise this liability using our knowledge of CGT legislation. Talk to your local office today for more advice.
How much corporation tax will we pay?
This is dependent on the profits made by your company, and the period that those profits were made. You can use our on-line budget archive to review the allowances and tax percentages in place for your business, or talk to your local office to find out more.
I need to know more about Benefits in Kind
Benefits in Kind is a specialist area, and offices can help you with your specific query. Call your local office for more advice.
Is there a budget summary with the tax tables available?
Yes. Haines Watts provide a free up-to-date budget summary, together with a detailed pre-budget report and a fully indexed budget archive to help you find the information you need. If you need any further advice, contact your local office.
I have lost the password to an excel file.
We can help. Haines Watts have software capable of rescuing many password protected excel files from certain loss. You can use our on-line Excel Password Recovery System, which we provide free of charge.
I would like to register a domain name.
Domain names are your passport to a web site and professional lookin e-mail facilities. Haines Watts can provide a full purchasing, management and registration service, and you can look up any domain's availability via our on-line Domain Checker utility and registration facility.
My office computers need to be networked.
Networking computers provides an enormous range of benefits, including the ability to share almost any resource. Networking can be an effective solution to many problems, and can help to reduce the risk of data loss. Haines Watts can help you with this, and you should contact your local office to arrange a consultation.
How can I keep track of all the filing dates and deadlines?
Haines Watts provide a useful Diary Dates system for keeping track of deadlines, thus helping to reduce the risk of penalties, fines and interest charges.
What is Stamp Duty, and do I need to pay it?
Stamp duty is payable on property transactions, whether land or buildings, together with share transfers and some other transactions. Whether you need to pay it depends on the exact circumstances, and recently invoked legislation has changed this considerably. Contact your local office to arrange a meeting to discuss your situation.
How do I go about selling my business?
Before selling your business, you will need to consider the tax implications, your business worth, and many other factors. You can gain a ball park figure for the value of your business using our Business Valuation Calculator. Before making any decisions, we recommend that you talk to an adviser at your local office.
Some of the more commonly asked questions can be found in the list below. Please take a look at these questions if you are in need of advice, and if the answers are not available, please use the search facility on the right hand side of the site to perform a key-word search.
Alternatively, you can telephone your local office with any questions you may have.