We are seeing lots of examples of companies being set up incorrectly.
Incorporation agents and companies house let you set up your company without many checks and balances.
Here are 8 things you need to know:
Business Records Checks are coming to the South East after Christmas. Happy New Year!
Business Records Checks need not cause SMEs many problems, but there are some pertinent points to know:
In summary, keep your accountant or agent informed, and if you present a clear picture of how you keep your records to make sure all income and appropriate costs are recorded, Business Records Checks shouldn't be something to cause you undue concern.
Today's Budget certainly had a strong business emphasis to encourage and incentivise business growth. On the other hand, artificial transactions set up simply to avoid tax would not be tolerated.
A very important message for business is the introduction of more simplification. HMRC are merging parts of their online screens so it's easier to check your tax due and paid. PAYE and NIC administration is being merged possibly followed by a merger of the rates. If your turnover is less than £77,000 you can opt to prepare your accounts on a cash basis. Helpfully, this is the same as the VAT threshold so you needn't worry about VAT either.
Therefore you may find the navigation of the tax system that bit easier. I also suspect this means small businesses won't be subject to the new business records checks so often as the risk of an error must be much lower and it can't be worth an Inspector's time.
Any of your staff earning less than £8,105 this tax year and £9,205 next tax year, often part time employees, will pay no income tax and little national insurance. However, this seems to mean the PAYE system must still be operated and this will allow your staff to achieve their state pension credits. Importantly, it may help in the recruitment and retention of part time staff, as they will have a higher take home pay. Always something useful to know when hiring staff.
Profits up to £300,000 are taxed at 20% and profits over £1.5m are taxed at 24% from April 2012. Profits in between £300,000 to £1,500,000 suffer a higher marginal rate than the 24%. With the continual reductions to the main corporation tax rate, it looks as though the Chancellor wants all companies to eventually pay the lowest 20%. This is very welcome as it means companies don’t have to worry about crossing the £300,000 threshold which does cause successful companies some issues.
Now we've just finished the usual flurry of last minute income tax returns, it's a good time to remind ourselves why we should submit our income tax and corporation tax returns early.
When I suggest this to people, about a quarter of them query it as a bad idea because it means the tax is due earlier.
This isn't true for any tax payments. Tax due dates are fixed according to accounts and tax year ends.