Statutory Accounts & Abbreviated Accounts

Under The Companies Act 2006 limited companies and limited partnerships (LLPs) are required to prepare statutory accounts for their members, shareholders or partners in accordance with the appropriate Accounting Standards.  For all companies we deal with, this is the Financial Reporting Standard for Small Entities (FRSSE).  'Small' in this case means less than 50 employees, turnover less than £6.5m, or a balance sheet total of less than £3.26m.  All my clients are small!

The statutory accounts are not normally the same set of accounts as those filed at Companies House.  For this, we prepare 'abbreviated accounts' which contain just a director's report and balance sheet.  Anything filed at Companies House is a matter of public record and available for others to view.  By filing abbreviated accounts, only a minimal amount of information is available for others to see.  A profit and loss account is not required.

We can prepare both your statutory accounts and abbreviated accounts and file them online at Companies House

Annual Return

Limited companies and limited partnerships (LLPs) have to file Annual Returns online with Companies House.  The Annual Return is a snapshot of the company's structure, shareholdings, directors etc.  We track the due dates of these forms and will prepare them for your review before filing them online at Companies House.

Management Accounts

Depending on your business and what we agree, we can prepare monthly, quarterly or annual management accounts to help you track and control your business.  In most cases, we can benchmark your business against your peers to see where improvements or cost savings might be made.

We can also prepare ad hoc management accounts where necessary, for example where a bank needs to see how the business is performing.

Corporation Tax, Business Tax and Personal Tax

We can do all your tax compliance work, including making sure deadlines are met, dealing directly with HMRC on your behalf and preparing and filing all relevant tax computations.

Needless to say we will be working for you to try and save you tax where possible and to suggest ways of structuring your business activities to minimise tax.

VAT

VAT can be one of the more complex areas of busines taxation and one where problems crop up from time to time, not just at year end.  This is where fixed fees come into their own.  You can call us direct and we can resolve the problem without you having to worry about how much time is racking up and how much it's going to cost.

There are various VAT schemes available to choose from, aimed at smaller businesses.  I can help you decide which VAT scheme is right for you: standard scheme, flat rate scheme, cash scheme or the second hand margin scheme.

If you're not yet VAT registered you need to track your turnover to ensure you don't go above the £70,000 / 12 month threshhold at which point you have to register for VAT within 30 days.  We can help you with the registration process.  Even if your turnover is nowhere near £70,000, it can sometimes be of benefit to register, especially if your clients are all VAT registered themselves.

Payroll

We can provide all the neccessary payroll functions for your business including monthly calculations, issuing payslips (paper based or pdf), and file your in-year returns with HMRC.  We can also prepare BACS files for your employees' net pay for sending directly to your bank saving you time and minimising the chances of error in this critical process.

We will also prepare all your end of year forms and returns including: P35, P14, P11D and P60.

Dividends

Dividends can be the most efficient way for owner managers to take cash out of their business but they can only be paid if a company has sufficient retained earnings (Companies Act 2006).  Businesses can get into trouble if the process is not managed carefully with appropriate board meettings and minutes to signify the payment of a dividend and possibly management accounts (see above) to demonstrate the company does indeed have sufficient retained earnings to declare a dividend.

Many businesses fail to do this and often no problems occur.  But it's a dangerous practice and the consequences could be severe.

Let's say the owner(s) take cash out of the business on a monthly basis assuming the company is profitable - as it always has been in the past - and thinking that a dividend will be declared at the end of the year to clear the amounts taken out.  If sales dip - as has happened to many recently - the owners may find that the company doesn't actually have sufficient retained profits so that a dividend cannot legally be declared.  This means the money taken out of the business is taxable as salary/earnings and consequently there will be a liability to HMRC for tax and National Insurance.  This tax, if there's money available to pay it, is likely to be paid late so penalties may also be incurred.  The amount owed to HMRC can rack up quickly and may be enough to push the company into insolvency.  End of company.  End of (true) story!

IR35 and Personal Service Companies

It's common to find financial consultants, IT consultants and others offering their services through a limited company.  They'll probably be the only director and the only shareholder.  The company invoices the client and the owner/manager takes a small salary from the business with the balance being taken as dividends.  There are good practical and commercial reasons for working in this way which suits many and they can also lead to considerable tax savings compared to working as a direct employee of a company.

HMRC is not mad on these arrangements however, and where the relationship between the working director and the end client is actually deemed to fall under the IR35 rules, a significantly larger tax bill may arise.  The regulations concerning these rules are often referred to as 'IR35' as they were put out in the 35th press release of that year (1999).  Visit HMRC's website for more information.

We can guide you as to how you should structure the relationship with your client and what terms to include in your contract so that the arrangements fall outside the scope of IR35 and the earnings will be taxed as desired.  We can also review current contracts to see whether there is an IR35 risk, what the consequences might be, and how to minimise this risk.

Company Formation

If you appoint A Shaw & Co. as your accountants, the incorporation and registration of your company at Companies House will be free of charge.  You'll get all the paperwork including Incorporation Certificate, Memorandum and Articles of Association and register of members, directors, etc.

You can do this online yourself pretty easily and cheaply these days but, if you do, make sure you've considered the appropriate share split for optimising your tax liabilities and make sure the Articles of Association which govern how the company is run, are appropriate for your particular circumstances.

Director's Loan Account and Interest

There are rules in the Companies Act 2006 placing restrictions on the availability and legality of director's loans.  There are also tax consequences.

Where the director's account is overdrawn, i.e. the director has taken money out of the company, unless the director pays a commercial rate of interest, a benefit in kind arises and this should be entered on the annual P11D and taxed.

On the other hand, any interest paid to directors where the company owes the directors money must be declared quarterly on a form CT61 and tax withheld and paid to HMRC.  The director will need to declare the interest income on his self assessment tax return and pay any further tax due.  Needless to say we can handle all this for you.

Company Secretarial and Registered Office

These days most companies are not required to appoint a company secretary.  If you do want or need one, we can perform this role for you.

Every limited company or LLP must have a registered office.  We can act as your registered office if you're uncomfortable having your own address being a matter of public record (it's available for yhe public to see at Companies House).  For most this is not an issue and they're happy to use their home or business address but for others this may not be appropriate.

Business Plans and Raising Finance

I've raised around $500m of finance over the years.  We can build a business plan for your business, formulate a strategy to approach the banks and work with you to try and raise any financing you need.  In the current economic climate and with the banks being rather reluctant to let go of their cash, there can be no guarantees, but giving the banks what they want will give you your best chance.

Buying New Equipment? Lease or Buy?

I spent 15 years in the Ciity financing ships, aircraft and films, for the likes of British Airways, Qantas, Shell, P&O, Disney, Miramax and others so I know a thing or two about this topic.  I can help you approach the financial institutions, have contacts in most, and can help evaluate their offering for cost, tax efficiency and suitability.

Bookkeeping

This is not the glamorous end of the business but it's the building block on which everything else is based.  Get the basics right and the rest should be a breeze!  Get it wrong though and life can get very complicated.  Limited Companies and LLP's are obliged to keep proper books and records under The Companies Act 2006.  HMRC will expect to see them for sole traders too.  We can show you how to keep your own, or we can do the bookkeeping for you.

Insure Against HMRC Investigations

A Shaw & Co. Ltd is covered for HMRC investigations and enquiries into any client's affairs up to £75,000.  This means that any extra time spent dealing with such matters is not payable by the client.

For even more peace of mind, it is also possible for clients to insure against the specific risk of falling foul of IR35 (see above).

Both these forms of insurance are provided by Taxwise.