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Your first year as a limited company director is bound to be busy, and you’re going to be learning on the job. Alongside your work, there’s now the added responsibility of managing your company’s finances. During this busy and sometimes overwhelming time, Nixon Williams will be on hand to offer support and advice where you need it.
We’ve put together a quick and easy reference to help get you started and help steer you for your first tax year.
As a limited company director, your financial responsibilities each year are as follows:
Your year end, also known as your accounting reference date, is the completion of your accounting period. This will not necessarily align with the start of the new tax year. Your yearend accounts will be prepared to your accounting reference date and will need to be submitted within nine months of your company’s yearend.
At the end of your company’s first year, you will need to submit the following information:
Your annual accounts, or ‘financial accounts’ are used to provide a report of your company’s financial activity throughout the tax year.
As a contractor it is likely that you will be regarded as a micro entity and therefore will be permitted to file filleted accounts. A company will be a micro-entity if it has any 2 of the following:
As a micro entity your annual accounts must include:
However, micro-entities do not have to deliver a copy of the directors’ report or the profit and loss account to Companies House.
Your first annual accounts will normally cover more than 12 months because they will start on the day that your company was incorporated.
Your Company Tax return (CT600) will include details of your company’s income, and expenses that are allowable for Corporation Tax relief. The remaining taxable profit will be used to calculate the amount of Corporation Tax you are required to pay. Remember, there are certain expenses that whilst allowed in your company accounts will not qualify for corporation tax relief, this includes client entertainment expenses.
As a limited company director, you will need to submit a Self-Assessment Tax Return. Your Nixon Williams accountant can take care of this for you.
If you’ve never completed a Self-Assessment Tax Return previously, you will need to register with HMRC. You will need to register before 5th October. This can be done online, by phone or by post and you will need to supply the following information:
Once you have registered, you will be issued with a Unique Taxpayer Reference (UTR). Remember to keep this safe, you’ll need it later.
A Self-Assessment tax return will require you to enter details of your worldwide income and any tax suffered already. You will need to complete sections of your tax return which relates to the following:
If you’re submitting your tax return online, HMRC will automatically calculate how much tax you are required to pay.
If you are required to pay more than £1,000 on your first tax return, you will need to pay towards your next year’s tax liability in advance on the assumption that you will earn the same amount in the next tax year. This means that you will need to pay tax in advance on top of on income already earned.
The deadline for completing your Self-Assessment Tax Return is the 31st October for paper returns and 31st January for online returns. Your tax liability must also be paid by 31st January.
There are a number of different ways to withdraw money from your limited company, but most directors choose to pay themselves a combination of salary and dividends.
Your Nixon Williams accountant can help you define the most efficient way of paying yourself.
As a new director, having the right support by your side to help you weather the storm is paramount. When you enlist the help of Nixon Williams, they will be on hand to support you with your new financial responsibilities and to offer guidance whenever you need it.