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The profit calculations you receive reset back to zero once you reach your company’s year end, this is to reflect your company’s profits during each year. Your annual accounts will show the total profit available at the end of your company’s year. Therefore, if a dividend is declared after your company’s year end based on the previous year’s profit it will show a loss on your monthly profit calculation sheet. However, this does not mean that your company is running at a loss, it is simply a reporting process.
There are a number of options available to you when it comes to investing any surplus money you may have in your company, such as: using high interest accounts/bonds, taking a loan from the company (generally not advisable), making company pension contributions, investing in shares or commodities. Please make sure you are aware of how much money needs to be retained in the company to pay various liabilities as they become due. Please see our Cash Surplus page for further information.
This is a possibility, however, it is not advised unless you are able to ensure that the funds required to pay your various tax liabilities are available when necessary i.e. transferring to a separate company high interest savings account where the money is easily transferred back.
Your confirmation statement that is required to be filed at Companies House on a yearly basis is totally separate from your confirmation statement that we prepare. It is simply a snapshot of your company information on a particular date and contains the following; the name of the company, the registered number, the type of company, the date to which the annual return is made-up, the registered office address of the company, the details of the company secretary (if applicable) and directors and the principal business activity of the company.
Yes, included in the service we provide to you is the provision of different types of reference, including information requested as part of a mortgage application. Please confirm to your accountant the details of what you require and we can prepare this for you.
The Employers’ Liability (Compulsory Insurance) Act 1969 ensures that you have at least a minimum level of insurance cover against any claims made by your employees.
Employers are responsible for the health and safety of their employees while they are at work. Your employees may be injured at work or they, or your former employees, may become ill as a result of their work while in your employment. They may try to claim compensation from you if they believe you are responsible.
The majority of the additional employees for small limited companies are for general bookkeeping or administration work. For the expense of an additional employee to be allowable for corporation tax purposes it must be ‘wholly and exclusively’ for business use which basically means that the remuneration package as a whole must be at a reasonable market level for the work that is being completed. As a general guide, you should ensure you would be happy proving that the remuneration package is at a general market level.
Items that would form a remuneration package are as follows:
On the whole, there is generally not much bookkeeping or administration work to be done, maybe only a couple of hours a month. So, at say £10 per hour this would equate to just £20 per month (£240 annually) so is it really worth the effort of taking on the extra employee, especially when the possible extra costs of employers liability insurance are taken into account.
You should not only consider the cost of salary for the employee but also additional employers NIC that may be liable, i.e. an employee who receives a £12,000 annual salary would have additional employers NIC liability to your company of around £465 per year. Therefore the actual cost to the business is £12,465, plus the cost of the employers’ liability insurance.
If having the new employee will result in additional invoices and or expenses being raised through your company then our monthly accountancy fee would increase (currently by £25 + VAT per month) to reflect the additional work.
In order to add a new employee to the payroll of your company we will need the following information:
The annual accounts are a summary of the financial transactions of your company throughout the accounting period (normally covering 12 months). These will be prepared based on the financial information you have supplied to us (invoices, expenses, bank statements etc.) along with any other information we hold that may be relevant (salaries and dividends mainly).
The annual accounts are due to be submitted to HMRC along with a corresponding CT600 12 months after the accounting reference date (normally the yearend date but may be earlier in the first year or extended accounting periods). However, the corporation tax is due for payment 3 months before this date i.e. 9 months after the accounting reference date.
You also have to submit abbreviated accounts to Companies House and these are due for submission 9 months after the accounting reference date.
Included within the accounts are the following pages:
This is a standard report that details the period the accounts are being prepared for and that the director is presenting these in accordance with the relevant acts in force regarding this accounting period. It also details down who the directors were during the year. The principal activity of the company is also detailed here; this will be a very brief description so if you feel you would like an alternative description please contact the person who is completing your accounts.
This is a standard report that covers the fact that you (the director) have requested us to complete the accounts and we have done so based on the information you have provided to us.
This is a report of the company’s trading figures throughout the year for the period being reported on. You would expect (or at least hope) that this will be showing a profit for the period, however, a loss could be shown here. The following headers will normally be shown in the profit and loss report:
This is a report of the company’s assets, liabilities and equity strictly at the balance sheet date i.e. it is a snapshot of the company at the year end. The following headers will normally be shown on balance sheet:
This is where various figures from the profit and loss account and balance sheet are shown in more detail; a number next to the category on the face of these pages indicates it is covered by a note.
The main notes to be shown are as follows:
When you receive your draft accounts from us you should review the covering letter as this will detail any queries/question we may have, please respond to these in a timely manner so we can clear them up and finalise the accounts for you in plenty of time of the necessary deadlines.
Once all the queries from our side are concluded (assuming there are some) we will send you an updated copy of the draft accounts by email for approval, you then need to review the figures to ensure they match your records. Once this is done and you are happy with the accounts you need to sign and return the approval letter (scanned copy via email is fine) and we can finalise the accounts for you.
The director’s account and the cash in your bank are two separate things. The director’s account is an account within the accounts system where all the transactions between the company and the director are recorded i.e. salary, expenses and dividends due along with the amounts paid to the director in respect of these. If you take more than is owed to you then this will cause your director’s account to become overdrawn which is a situation you want to avoid because it may create further tax liabilities and/or cash flow issues for the company. Any overdrawn director’s account must be repaid to the company within 9 months of the accounting reference date or else a tax surcharge of 32.5% will apply under s455 CTA 2010.
This may be because you are on the Flat Rate VAT Scheme. When calculating your turnover we effectively include the gross value of the invoice and deduct from this the VAT payable under the Flat Rate Scheme. For example, you invoice for £1,200 gross and are on 16.5% Flat Rate percentage we would include £1,002 in the accounts being £1,200 less £198 (£1,200 X 16.5%).
Your director’s account is overdrawn even though you have not taken an official loan because you may have taken more out of the company than was owed to you in salary/expenses/dividends and as such this will cause your director’s account to become overdrawn. To avoid this happening you should only withdraw from the company the next pay per your payslip, the value of the expenses incurred personally per the expense form (sometimes included within the net pay on the payslip) and the net dividend declared per the dividend certificate.
This is shown in your accounts, however, it is not shown as an expense in the profit and loss account because it has been capitalised. As a general rule, if you purchase equipment totalling £500 or more it will be treated as an asset in the accounts, this means it will be shown on the balance sheet, the asset is then systematically depreciated (charged to profit and loss) over its useful economic life. Depreciation is shown as an expense in the accounts but it is not deductible for corporation tax, instead capital allowances are claimed so that you get the benefit of tax relief on the full cost of the equipment in the year of purchase.