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Frequently asked questions

Explore our FAQ page for quick answers to your questions

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What’s the difference between a sole trader and a limited company?


The quickest way to get started in business is as a sole trader. You just need to register for self-assessment with HMRC and complete an annual self-assessment tax return. Operating as a limited company or Ltd for short, requires you to register the company name with Companies House and register with HMRC for corporation tax. A limited company is a separate entity to you as a person, so all the cash, assets and liabilities belong to the company. Check out our blog for greater detail.




What is Making Tax Digital?


Making Tax Digital or MTD for short, is a government initiative to create s digital tax system. The idea being it will be easier for individuals and businesses to get tax right and keep up to date with their affairs. Individuals and businesses already gave access to a digital tax account. This government project is continually developing, but April 2019 is the currently the key date for VAT registered businesses.




Is it difficult to change accountant?


Not at all. We make the process as painless and quick as possible through our Easy Switch Service.




I want to set up my own business as a self-employed. What should I do?


If you want to start working as self-employed, you must register with HM Revenue & Customs, but first make sure you have a National Insurance Number. After the registration, you will receive your Unique Taxpayer Reference (UTR) and HMRC will set up the right tax and National Insurance contributions records. You should keep your UTR safe because you will need it when completing your Self-Assessment tax return.




When should I register for VAT?


You may need to register for VAT if you are doing business in the UK as an individual, a partnership, a company, an association, a charity, a local authority or any other organisation or group of people acting together under a specific name. Registration for VAT is compulsory if your annual turnover exceeds £79,000 or you expect the turnover to be higher than that amount in the next 30 days. However, it may happen that your turnover has exceeded the registration threshold temporarily. In that case, you may apply for exception from registration. This applies for entrepreneurs supplying goods or services within the UK. If you take over a VAT registered business, your VAT taxable turnover over the last 12 months must be added to the turnover of the business you are taking over when checking if the registration threshold has been exceeded. And if you have received goods from other countries in the EU, registration for VAT is compulsory if the total value of the goods acquired has gone over £79,000 in the current year since 1 January.




What is a Company Tax Return?


A Company Tax Return is a document which is filed for each accounting period by companies liable for Corporation Tax. A company has to file a return each month, even if it has not made any profit.




How detailed does my Business Plan have to be?


Your business plan will help you flesh out your idea and get a better feeling of whether you are ready to go ahead. Taking time to complete a thorough business plan before you start your business will reduce the risk of you missing something. A plan will also be required by your bank and other lenders before they offer you credit, business loans or overdraft facilities. It is important to outline all of the main points to give you and others a clear snapshot of your business idea, or where your business is heading. Completing the plan will help you think methodically and sharpen your ideas about your business concept. The plan will also enable a stranger to grasp your business idea without getting bogged down in unnecessary details. Templates are available on various websites. The following is not exhaustive but a thorough business plan will normally include the following:
Executive Summary Business Overview comprising brief history of your business or why you have decided to start one, purpose of the business, products and services. Your current position, competitive advantages, strengths and weaknesses of your competitors, a brief overview of your plans to grow the business. Business Strategy for the next year/3/5 years, your specific objectives and goals, tactics, steps you need to take, resources you will need. Outline strategic threats or opportunities in the short to medium term and outline the business core values. Marketing – market research undertaken and marketing plans, how you will reach your customers, how you will use technology, how you will actually promote your business to clients, your marketing budget and how you will build credibility. Team and management – structure and experience, external advisors, management systems. Financial budgets and forecasts – Cash flow forecast, profit & loss forecast, balance sheet forecast, capital expenditure budget




Do I have to set up a Limited company?


If you wish to trade and do not use a limited company you will be personally liable for the debt of your business. If you have assets or savings they are vulnerable to a claim made against you. By trading through a limited company you are literally placing a limit on your liability. That limit is the value of the company, including any money you may have invested in, loaned to or are owing to the company. The company has a separate legal identity from its owners and directors and unless they sign a personal guarantee for its debts they are not liable for these There are a number of advantages in becoming a limited company, such as :- You can give a share of the business to others eg family.

It may be easier to attract people to invest money in your business.

Obtaining bank loans may be easier.

There is no higher rate tax bands.

In the event of a partner leaving or somebody dying it is easier to continue the business.

It is easier to sell the business.

You have better standing in the public eye.

It can assist in the protection of a name. People have more confidence in your business as they can check up on your company on the public records at Companies House.

Subcontractors and agency workers will find it easier to obtain work.




I want to close my business, what should I do?


If you need to close your business you should plan it carefully. First of all, it is important that you inform HMRC of your intent. Only then will you be able to settle matters related to tax and National Insurance. In some circumstances it is possible to extend the deadlines for payments or even to claim back some tax or National Insurance.





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MF Accounting

Pixel Building, 110 Brooker Road, Waltham Abbey, Essex, EN9 1JH

 

www.mfaccounting.co.uk

info@mfaccounting.co.uk

+44 07440614466

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