Accounting
for businesses

If you are a new business, we hope you will have read the DNS small business start up kit. If you are an existing business operating as a sole trader, we hope this table will help you see the benefits of working through a limited company.

Below are the average returns you can expect to see working as a sole trader or through a limited company.

The benefits of working through a limited company are obvious.

• File accurate accounts with HMRC and Companies House

  The director of a company is required by law to produce accounts and file them with HMRC and Companies House. DNS will take care of the preparation and the filing of your accounts on time so that you’re never charged a penalty for late filing

• Keep accurate accounting records

  Proper records must be maintained as defined by the Companies Act and HMRC. DNS will guide you on how to keep and maintain your records, and ensure that you’re always on the right side of the law.

• File your Annual Return

  A director of a company is responsible for filing the company’s Annual Return to Companies House. An Annual Return is a list of officers of the company and the shareholders of the company as of a particular date. Non-compliance results in the company’s name being struck off from the Companies’ Register. DNS will ensure that your Annual Returns are always filed on time.

• You MUST make regular payments to the following:
  • Monthly: PAYE to the Inland Revenue
  • Quarterly: VAT to HMRC
  • Annual Corporation Tax to HMRC
  • Annual Self Assessment Tax Return to HMRC

  DNS will ensure that you never miss a payment by reminding you when it is due. We encourage all our clients to use the DNS online accounting portal, which will be available for small businesses very soon. Meanwhile your account manager at DNS will remind you of all your due dates and tell you how much you owe and when.

  Late payments and late filing of statutory paperwork results in penalties and so, obviously, a responsible and organised approach to your business is desirable; it is also important that you set aside the funds in the company account to pay your tax bills.

  With DNS everything is taken care off without fail: yes, by everything, DNS means everything, and no hidden surprises.

VAT Registration is optional if your turnover is less than £85,000. If your Turnover exceeds £85,000 then VAT registration is mandatory. The key to whether you should register or not lies in your customer base: if your customers are mainly businesses and VAT registered you should go for VAT registration, but if your customers are mainly VAT registered customers, you may lose clients to competition.

Example 1 – Registering for VAT can be advantageous

John started his plumbing business and supplies services mainly to industrial customers that are all VAT registered. John should register for VAT and recover his Input VAT (VAT on supplies). Even better, John has the option to register for the VAT Flat Rate scheme.

Small businesses with a turnover of less than £150,000 can join the VAT Flat Rate scheme. This means that you can collect VAT at the full standard rate, while paying at a lesser rate.

For Example if you make sales of £10,000 and collect VAT of £2,000, you could save around £300 to £400 depending on your trade classification. Go to the HMRC Ready Reckoner to check what rate you would pay.

Example 2 – Registering for VAT can be disadvantageous

John decides to expand his business to include household customers. He goes to Mrs Jones’ house to quote for a job and submits a quote to her for £100 plus 20% VAT. Mrs Jones had requested quotes from two of John’s competitors, one of whom does not charge VAT and, therefore, quoted £100. Mrs Jones went for the quote for £100 as, because she’s not VAT registered she can’t recover the VAT. For household customers, Input VAT is an irrecoverable cost.

So John lost out on the job because he was VAT registered, and if you’re VAT registered, you MUST charge VAT.

Registering for VAT is compulsory if your turnover exceeds £85K. However, if your business is turning over £85K it will have a sufficient customer base, financial rigour and inbuilt efficiency to compete with non-VAT registered businesses. So VAT registration can be advantageous and save you some money. BUT be warned if you register too early and you’re client base is mainly domestic, it may work against you, so make sure you get it right.

Our main aim at dns Associates is to provide a proactive service to our clients, whilst ensuring that they are making the most of any potential accountancy savings and tax relief. We also work closely with our clients to help them maximise their profits and business growth, by offering the following benefits:

• Free advice on how to maximise profits and enhance business growth
• Provision of specialist financial accounting software (FINAC)
• Regular engagement, advice and support from your full-time dedicated Account Manager
• Weekly, monthly and quarterly reports on profit & loss
• A highly experienced team of professionals, on-hand to help with any financial queries
• dns a open are on Saturdays, making it easier to communicate at a convenient time for you
• You are not liable to pay any penalties in the unlikely event of DNS making a mistake on your behalf

We take great pride in the work we carry out for our clients, as we always strive to build a strong relationship and provide the most pro-active service. Find out what our clients are saying about us here.

We offer a free consultation to any business or individual who feels that they may be missing out on potential savings, or paying too much for their accountancy, outsourcing or tax advisory services.

The decision of changing an accountant is a critical one and should be taken with utmost care. If you believe that you are not getting value for money from your accountant, it’s the right time to choose a new accountant. DNS provides you experienced, trusted and dedicated professional accountants who not only manages your accounts in compliance with tax legislation but also helps you in finding tax saving opportunities. Our accountants will cater to each and every need of yours and provide you with cloud accounting solution. DNS accountants help small businesses in over achieving the goals which they are desired of.

At the meeting, discuss your requirements and any business issues or concerns you may have. Don’t hold back.

Once you have decided to switch, your new accountants need your permission in writing to obtain a copy of your accounting and tax records. This is done by signing a simple authorisation letter, which they should be able to provide. They will then do what is necessary to obtain your records.

Your new accountants will write to your current accountant notifying them of your intention to change. They will also provide you with a letter of engagement setting out your requirements and their duties as your new accountant. Make sure that all fees and charges are clearly spelled out in your agreement, too, to protect you from unpleasant surprises.

For any questions, clarifications or further information don’t hesitate to get in touch. Contact us or schedule an appointment at your convenience.