Need a Limited Company? Questions you may be asking yourself

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Need a Limited Company: Questions you may be asking yourself

“What are the main differences between being self-employed and running a limited company?”

“What are the advantages and disadvantages of having a private limited company?”

The major difference between running a private limited company and being self-employed are the administrative requirements you are required to do by law & although the volume is more, the data contained within those returns are pretty similar to being a sole trader.

A limited company will:

  • need to keep company records
  • report any changes to Companies House & HMRC
  • need to file an annual company tax return along with the company’s accounts, giving an undistorted view of its finances.

So why go through the extra cost and resources of having a Limited Company?

In forming a limited company, you are limiting your personal liability.  What this means is that the Limited Company becomes a legal entity of its own.  Think of it as another being, that you work for.  However, it is important to keep in mind that you cannot abuse your power with the limited liability, to take selfish and unnecessary risks.  As a director, you are ethically and morally responsible for the business decisions and transactions the company makes.

As a director of a private limited company you will:

  • make decisions that benefit the company rather than your own
  • abide by the rules and regulations outlined by the company Articles of Association, which are written rules about running the company agreed by the shareholders or guarantors, directors and the company secretary
  • notify any shareholders if you might benefit personally from a company transaction
  • always act with the intention of making the company successful.

Having a Limited company can also add professionalism to your business.  This can help your business become even more successful because customers, clients, and B2B companies will be more inclined to trust you and buy your products or services if you are a limited company rather than a sole trader. It is quite common for B2B companies only to trade with another limited company as a general rule.

A final benefit is, if you have a profitable Limited Company, how you distribute salaries and dividends can have income tax savings, especially once your Read more

HMRC now see payments you receive via credit card!

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On September 1st 2013 new legislation kicked in which allows HMRC automatic access to data showing payments made to businesses via credit card, going back as long as 4 years. HMRC will receive this information direct from the companies who process credit card payments on behalf of businesses (‘merchant acquirers’).

No personal data identifying the card owners, nor the credit card numbers, will be supplied as part of the data — it will primarily show the quantity of transactions and values credited to any particular business via credit card. On its own this may reap £50 million per annum in otherwise ‘lost’ tax revenue and the exercise will be helped by HMRC’s ‘Connect’ system which compares data coming in from various sources and cross-refers for consistency. The scheme’s implementation has been aided by a £1 billion budget given to HMRC aimed at tackling tax evasion and fraud.

The new legislation is part of the Finance Act 2013 and is part of a major crackdown on tax evasion which overall costs the taxpayer £9 billion a year Read more

New brochure available for download

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Taxfile's BrochureHave you ever wondered what other services the Taxfile group can help you with? Well, find all the answers in the new downloadable brochure, which outlines services undertaken at the various different offices in both South London and Exeter, Devon. From accountancy and bookkeeping for SMBs to simple tax returns for individuals and right through to the most complex of complicated tax issues – we’re here to help and the new brochure gives you all the contact details for each office including address, email, telephone, Skype ID, how to book appointments on-line and, finally, what discounts are available – both to new and existing customers – it’s all there … or rather I should say … it’s all here! (A4 PDF format, less than 1MB).

Brussels wants to impose VAT on food & children’s clothes

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The European Commission is trying to harmonise VAT rates across its member countries. In so doing it wants the UK to fall in line with a rate of at least 5% on food and children’s clothing.

When it joined the EU in 1973 the UK had fought very hard not to have to charge VAT on such items (as well as the printed word, e.g. newspapers) and, as a concession to Brussels it had agreed to impose a ‘zero rated’ level of VAT. That way, VAT was effectively levied but at a valueless rate. Now Brussels wants the zero rate to be scrapped and replaced by a rate of 5% minimum, for certain products including nappies, for example.

The labour Government will fight to retain the zero rate and can use its veto if required. If successful, UK families will save a staggering £28 billion each year.

Taxfile, a walk-in “tax advice shop” based in South London, can help with all VAT matters including VAT returns and registering for VAT as well as book keeping, general accounting, tax advice and so on.