income & expenditure Archives

Setting Up for Making Tax Digital

February 22, 2024/in Accountancy, Bookkeeping, Making Tax Digital, Tax returns, VAT/by Taxfile

by Sue at Taxfile.

Whether you’re new to self-employment and have just started to run your own business, or have been doing it for a while – the fact is: Making Tax Digital (‘MTD’) is coming and it would be best to get set up in the right way, now.

Record-Keeping for Making Tax Digital

Keeping your personal life & your business completely separate is the best policy. It keeps things streamlined and will also save you money when your tax agent comes to do your bookkeeping & tax returns. So:

Set up a separate bank account just for your business;
Pay for your expenses from this account;
Pay income from your sales into it;
Keep an ongoing file for each tax year, where you put all your expenses, receipts & invoices;
Include copies of your sales invoices in that file too;
Keep the file in monthly order, so that accountants/tax advisors like Taxfile can easily cross-check the invoices to the bank statements and analyse your costs accurately.

Setting Up Digitally

Making Tax Digital means that you must run your business through a digital traceable source. The best way to do this is to allow us, if we are your tax agent/accountant, to set up your bank statements to feed automatically into accounting software like ‘Xero’. Alternatively, we can accept bank statements downloaded in CSV format, which we would then transfer to Excel spreadsheets.

Cash & Card Sales

If you are making cash & card sales, set up an app on your smartphone like ‘Sum Up’ or ‘Square’ so that you will be complying with MTD – your bank can also supply you with a PDQ card reader to accept your cash/card sales. We can upload your sales reports from these services and include them in your sales figures.

Accurate record-keeping is the cornerstone of every successful business

Moving to Quarterly Reporting

Here at Taxfile, we can currently run your bookkeeping for you quarterly or annually. However, when HMRC implement MTD fully in 2026, tax returns will need to be submitted each quarter — no longer just once a year. We’re therefore recommending that everyone gets used to sending in their bookkeeping records quarterly.

Quarterly bookkeeping also allows us to monitor your sales turnover and alert you at the appropriate time if you are approaching the level of sales that would require you to get registered for VAT. Finding out at the end of the year that you have already gone over the threshold — and should have been charging VAT at an earlier date — can be very costly.

Contact Taxfile – for All Your Tax & Accounting Needs

We’re Tax Advisors & Accountants in Tulse Hill, Dulwich, South London & the South West

Come and chat with one of our friendly team in the Tulse Hill office about getting things set up & ready in good time. Or call for a telephone appointment to discuss what will be best suited to your particular business operations.

Whether you are a sole trader with no staff or subcontractors for a larger concern, we are here to help every size of business get set up on the right path — for getting MTD-ready.

020 8761 8000 Book Appointment Contact Us

Taxfile is a tax advisor and accountant with offices in Tulse Hill, and Dulwich in South London, and Devon & Cornwall in the South West of England.

Need a Limited Company? Questions you may be asking yourself

October 20, 2020/in 2020, Accountancy, Accountants, Accounts, Book keeping, Bookkeeping, Capital assets, Corporation tax, Dividends, HMRC, Income & Expenditure, Limited companies, Limited company, P11D, PAYE, Payroll, Tax, Tax calculation, Value Added Tax, VAT/by Taxfile

“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

Making Tax Digital for Income Tax Self Assessment (MTDfITSA). Are you ready?

September 1, 2020/in Buy to let, HM Revenue and Customs, HMRC, Income & Expenditure, Income tax, Landlords, Making Tax Digital, MTD, Self-assessment, Self-employed, Software packages, Sole traders, Tax return, Tax returns, Taxes, Taxfile/by Taxfile

The Government has now pencilled in what they regard as a firm date to implement MTD for ITSA, for all landlords and business owners that have an income above £10,000.

The next accounting period starting on or after 06/04/2023 that meet the above mentioned criteria will need to be compiled & submitted via MTD-compatible software.

If you are self-employed or a landlord with a turnover greater than £10k, how will MTD affect you?

1. You will need to submit a quarterly summary of your businesses income & expenses to HMRC using MTD-compliant software. Yes, you read that correctly. No longer can you do your tax return in one go, with a lot of our customers leaving it to December or even January before they come to see us. As your tax agents, we would need your business transactions every 3 months, to compile, compute, and submit through to HMRC.

The timing of the quarterly updates is determined by the accounting period of the business but typically the 4 quarters will be:

6 April to 5 July
6 July to 5 October
6 October to 5 January
6 January to 5 April

2. All your income and expenses will need to be individually logged electronically. The technical term used is that every business transaction will have an ‘electronic signature’. These signatures will then be submitted to HMRC every 3 months and you will receive an estimated tax projection for the year based on the information provided.

3. At the end of the year, any non-business information, foreign income, other income, etc is added to finalise your tax affairs and submitted using the MTD-compatible software. This replaces the need for a Self Assessment tax return. You will then have Read more

Big Changes Coming to the Tax System

November 21, 2016/in 2016, 2018, Accountants, Accounts, Bookkeeping, Buy to let, Cash basis, Digital tax accounts, HMRC, Income & Expenditure, Landlords, Limited company, London, Pay as you go, Records, Self-assessment, Self-employed, Sole traders, Tax advice, Tax returns, Taxfile/by Mark

Starting on 1 April 2018, a brand new tax system, one that will affect most business owners in the UK, will begin to roll out. Whether you’re a landlord, are working for yourself as a sole trader or have a limited company, the changes will affect you.

So what’s happening?

Instead of a once-a-year tax return, HMRC will require quarterly profit and loss information. So, that’s four times a year. For Taxfile clients, that means we’ll need to know all your income and expenses during every quarter so that we can make the necessary financial data available, on your behalf, to HMRC. As well as your bank statements, we’ll need to see receipts for the expenses, whether they’re provided physically or via a suitable electronic medium (there are plenty of apps and software packages for this purpose). Once we have everything for the quarter in question, we will be able to make sure that you’re claiming for all the allowable expenses that you are eligible for and aren’t claiming for things that you shouldn’t, so that your figures are absolutely correct.

If you don’t file in time there could be an HMRC penalty, so letting Taxfile handle your quarterly reporting will help to keep you on track seamlessly when the new changes come into force. We’ll be able to confirm our own pricing nearer the time but it’s likely to be circa just £75 per quarter, excluding VAT.

A ‘cash basis’ system

The new tax system will be known as a ‘Cash Basis’ system and will also allow tax to be paid to HMRC on a pay-as-you-go (PAYG) basis. Essentially, it means that businesses need only calculate their profits based on receipts and payments, which is far more straight forward than the more complex system that currently exists. When integrated into the Government’s new ‘digital tax accounts’, the system will really help to simplify tax, make budgeting and cash-flow easier through near real-time reporting and eventually remove the need for the traditional tax return at the end of the year — that’ll eventually be the case for virtually everyone. As an added bonus it’ll also mean that business owners keep more on top of their bookkeeping and thereby avoid a last minute scramble to update records. Taxpayers will also be able to see a complete financial picture of their tax affairs in the one place — their digital account — and all their liabilities and entitlements will be clear to see and manage more effectively than ever.

Taxfile

Nearer the time the changes come into place, Taxfile will be there to help its customers adapt to the new system and between us we’ll make sure that it’s easy and hassle-free. We’ll be able to Read more

Get Sage One Cashbook (online accounts package) FREE!

December 23, 2014/in Accountancy, Accountants, Bookkeeping, Cash flow, expenditure, expenses, Income & Expenditure, Payroll, RTI, Sage, Software packages, Special Offers, Tax accountant, Tax accountants, Taxfile/by Mark

[UPDATE: Please note that this offer has now expired]. Get Sage One Cashbook FREE, only with Taxfile. If you are a Taxfile customer you can currently get this excellent online accounting and cashflow package totally free of charge. This is better than any special offer you’ll find online for the same product and an additional benefit is that it allows us, your accountants and tax advisors, to collaborate with you within the package (with your permission of course), making managing your income, expenditure, tax accounting and bookkeeping absolute child’s play. You can stop at any time; it’ll cost you nothing either way.

Features & Benefits of Sage One Cashbook online include:

It allows you to record income & expenditure for your business quickly and easily;
Access your records from anywhere with an internet connection, any time;
No accountancy experience is necessary – it’s simple;
Perfect for small businesses, sole traders, etc;
It allows you to Read more

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