Accounts review and service going forward

[magneto]

Hi there guys,

I'm a contractor and have worked for the past year. When I first started I formed a limited company, did some reading, believe I am outside of IR35 and decided I would try to do the accounts myself.

My tax year ended 30/11/10 and I am now nearing my dates for paying corporation tax and submitting my accounts.

My accounts are actually rather simple and there is very minimal invoicing going on and I have only paid myself in dividends.

Whilst I believe I am mostly on top of it, I would really like someone with experience to go over them and check all is ok and perhaps suggest where I could do better. Also realising what a pain it is and wanting to fully optimise my tax efficiency, I am keen to take on an accountant from now on...

I was wondering if there are any accountants out there that offer such a service? I am not particularly keen on paying 12 x monthly fee for what I believe would be a relatively simple review.

Any suggestions would be very much appreciated!

Cheers,
Magneto

[Wodewick]

Any suggestions would be very much appreciated!

If you can't do it yourself (which is implicit) Ask an accountant.

Seriously - Ask a local accountant what he would charge.

I would recommend don't go to a charge by the month accountant anyway but thats my preference.

[northernladuk]

If you can't do it yourself (which is implicit) Ask an accountant.

Totally agree.

I would recommend don't go to a charge by the month accountant anyway but thats my preference.

Kind of agree here but I went with SJD with a plan to doing a year or two with them to get the in's and out's nailed and then I will consider doing them myself. After reading all the things people want to put through their books and can't on here I am happy to use them for advise to get the max I can legally and above all safely from the accounts. I think in the first year they probably paid for themselves with the stuff I found I could put through and warnings against what I can't. As much as I read up on it there was something else to consider and the speedy response to my questions was very useful.

Can you be absolutely sure you have claimed everything you can? (xmas do is often missed), are you sure your phone is in company name and so on and so on. You say you have only paid yourself in dividends? Why haven't you paid yourself the minimum wage (which opinions vary on greatly) to maximise the tax benefit?

Just for peace of mind I found it worthwhile. I would say use a proper accountant from day 1 until you are absolutely sure you have a firm grasp of your company accounts and then go by yourself. It is a small price to pay in the long run.

I used a local guy that wasn't pay monthly for a short time and he was terrible so happy to fly the flag of the pay monthlies but that is my experience.

[Taxless]

"My accounts are actually rather simple" - If only I had a £ for every time I had been told that!

There may be a little more to this than you envisage. If you can provide the following details I would be happy to provide two or three no obligation fixed fee proposals, based on what services you may require.

A look at what you have produced as accounts would also be helpful.

I accept that you would not want to provide this sort of information in a public forum and I can assure you it will be treated in the strictest confidence.

Anyway, I assume that you know that your Company Tax Return must now be submitted to HMRC online and the tax computations and accounts that go with that return must be in iXBRL (Inline eXtensible Business Reporting Language) format.

The accounts also have to go to Companies House (CH).

An accountant will take care of all of this or you could try and use HMRC's software for "simple" accounts and good luck with that.

I appreciate that paying for a compliance service that has to be undertaken is not a very exciting prospect but hopefully an accountant will be able to bring some "value" to the work he does.

One very valuable piece of work will be ensuring what gets submitted is correct and on time, thus avoiding costly penalties and ensuring that you are in a strong position in the event of an HMRC enquiry.

Fixed monthly fees are designed to help client cash flow as much as anything else. We often do 10 monthly direct debits, but also offer one-off fixed fees.

I assume you will require the accounts figures to be transferred into the proper format for HMRC/CH filing, have the CT return and CT computations prepared and submitted to HMRC?

Are there any P11D reportable benefits and/or expenses payments and if so will you deal with this?

Will you be preparing your personal Self Assessment tax return or will the accountant be expected to do this? If the latter, what other sources of UK inome do you have, if any?

What is your turnover and how many invoices do you raise annually?

[Wanderer]

My accounts are actually rather simple and there is very minimal invoicing going on and I have only paid myself in dividends.

That may be an expensive mistake - you can take a salary of £6.5-7.5k virtually tax free whereas dividends are taxed at 20-21%. You should get some professional advice straight away.

[Taxless]

The point on salary will depend to some extent on what other income may be available. You can save 20% CT on the salary but it may be self cancelling with a 20% IT tax charge if other income is already utilising the Personal Tax Allowance.

You could of course be "buying" a state pension entitlement with a low salary but again that may be taken care of through other income sources.

[v8gaz]

Get an accountant. Any decent accointant will save you their own costs at the very least. Plus you get that comfort factor that you will never get from doing it yourself. Who are you going to palm HMRC off to when they come calling?

[ratewhore]

That may be an expensive mistake - you can take a salary of £6.5-7.5k virtually tax free whereas dividends are taxed at 20-21%. You should get some professional advice straight away.

What's the difference between no salary + divvies up to higher rate limit and £7k salary + divvies up to higher rate limit?

[JamJarST]

What's the difference between no salary + divvies up to higher rate limit and £7k salary + divvies up to higher rate limit?

The salary comes out of the the companies pre tax profits and the dividend is post tax. In other words you save the CT on £7K.

[ratewhore]

The salary comes out of the the companies pre tax profits and the dividend is post tax. In other words you save the CT on £7K.

Ah yes, you're quite right. I was looking at it from a personal tax pov...