Small businesses face a number of challenges, especially in the early days. These include taxation issues, keeping business records and remaining compliant with regulations. Although some business owners may view outsourcing to an accountant as an extra expense, you could maximise resources with the help of a reputable accountancy practice. There are some steps which you can take to keep your company compliant, while maximising revenues.
Communication with HMRC
Although dealing with the tax man may seem daunting, it is crucial that you remain in contact with HMRC, especially when it comes to paying what you owe. Failure to comply with HMRC will result in penalty charges being issued, along with interest if due. If you are struggling to pay your tax bill, contact HMRC to sort out a payment schedule which is manageable.
During times of economic difficulty, it is especially important to maximise revenue. Make sure that you are claiming all expenses, allowances and tax reliefs which you may be eligible for. Claiming for expenditure or allowances will reduce the amount of profit which is taxable, legitimately reducing your tax bill. If your profit has dropped during the last year, you may want to contact HMRC and ask for payments on account to be reduced accordingly. However, be aware that if you reduce payments on account but profits increase, you may be charged a penalty.
You should register for VAT if your turnover reaches a specified annual amount. However, for some companies, it may be beneficial to register for VAT on a voluntary basis. This is a complex subject and you may wish to seek professional advice before making a decision.
You may also wish to consider the VAT Cash Accounting Scheme which means you only pay VAT on the amount of cash which you collect from clients. This is useful for those companies which have more credit sales than cash-based.
Outsourcing to a professional
It is imperative that the business records are maintained accurately as HMRC will carry out random checks and issue penalties for any records which are not accurate or up to date. It’s easy to fall behind and make errors when maintaining the books, which is why it is sometimes preferable to outsource to a professional. Keeping accurate records in a timely manner will also help you plan and forecast for your company in the long term. Don’t miss filing deadlines as you will incur charges which increase if your tax return remains outstanding.
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We work very closely with our expert accountants to bring you the latest factually correct tax and accounting news. We also enjoy writing about small business news that we hope you find useful!