Some Important Questions and Answers

Q Why should I use an accounting firm?

If you are a small business owner, assistance from Small Business Accountants can stay focused on your core constituencies without worrying about financial minutia and an accounting firm makes the whole process easier and more efficient for you. Here, your main goal is mostly focused towards growing your business and sustaining it, so unless you have a skilled accountant on board, with the help of an accountancy firm you can both save time and money, and stay focused on your business growth.

If you are an individual dealing with your taxes, it would be a lot easier for you to deal with the financial regulations and tax codes through an accounting firm rather than dealing on your own.

Q What's the difference between a bookkeeper and an accountant in the UK?

The initial process of accounting is Bookkeeping, which is a direct record of all sales and purchases that your business conducts, while accounting is more of a subjective look at what that data means for your business. Bookkeeping works with recording and organising financial data, while accounting focuses on the interpretation and presentation of that data.

Q What are the best ways to separate my business and personal finances?

In case of small-business, it is very commonly seen to mix business and personal finances, which is also a major concern. With this problem, concerns rise at tax time and it makes it harder to track profitability of your company. More alarmingly, you may end up audited by the IRS and get major fines. the best ways to separate my business and personal finances:

  • Get a business bank account
  • Get a business credit card
  • Use accounting software
  • Pay yourself a salary
  • Separate receipts

Keeping these two parts of your money life separate is important in order to preserve your sanity and to ensure you have a sustainable business model.

Q How long do I have before I register with HMRC once I start trading?

You ought to notify HMRC within 3 months to avoid a £100 penalty. Contact us if you are approaching this deadline. We will help you get the form in on time.

Q Should I be prepared in case HMRC want to investigate my accounting records?

HMRC may want to inspect your accounting records at any time, therefore your records should remain ready. Lately, the number of investigations has increased dramatically since there has been the need to claw back more income tax receipts, and HMRC have the power to interrogate your accounts going back over a number of years. You should be keeping your business accounts and tax records for at least 5 years, and the more organised they are the better.

Q How long should I keep my financial records?

Generally, you must keep your records for at least 5 years after the 31 January submission deadline of the relevant tax year. However, the IRS gives a number of different guidelines for keeping financial information which this information varies depending on whether you are an individual or a business.

General rules for individuals:
  • Keep bank statements for 1 year
  • Keep loan documents, credit card statements, and other contacts until fulfilled
  • Keep annual investment statements until sold
  • Keep tax records for 7 years from filing date
  • Keep receipts for large purchases, real estate deeds, vehicle titles for as long as you own the property
General rules for small businesses and entrepreneurs (The rule of thumb is to keep all items for at least 3 years):
  • If you have not yet paid taxes on income that you should report, keep documents for 6 years
  • If you claim a credit or refund after you file a return, keep records for 3 years from the date you filed the return
  • If you file a claim for securities or bad debt deduction, keep records for 7 years
  • Keep all employment records for 4 years from the date that the tax is paid

Q What should I do if I can’t pay the taxes that I owe?

In case if you can’t pay off the full amount due, you should still file your return. Also you need to pay what you can by the deadline in order to avoid interest and penalties. Contact the IRS to discuss payment options where in some cases, the IRS can offer a short-term extension to pay, a payment installation agreement, or waive your penalties.

Q I made a mistake on my tax return. What should I do?

First of all, you do not need to panic. Now, you have to act based on the type of the mistake that you have made.

  • If you have missed out on a certain piece of information, it’s likely that the IRS will contact you to request the specific piece of information. So, in this case you will only need to provide that particular information correctly.
  • If a mistake is made in your calculations, the IRS will find it out. The IRS checking is very thorough, thus many small mathematical errors will be discovered as the IRS processes the return. Usually, you will not have to correct errors of a small caliber.
  • If you forgot to claim a credit or deduction or if forgot to report some of your income then you will need to file an amended tax return using a 1040X Form. You can find these forms on the IRS website.
Feel free to contact us if you have further queries or concerns regarding an error on your tax return, or if you need help filing an amended tax return.

Q How much will your service cost me?

That depends on the services that you are looking for and on your business. So basically, the costs are determined by the size of your business and your accounting needs. In any case, we can assure you that our service is cost-effective.

Q Do you bill by the hour for your accountancy services?

No, we do not. We provide you services using fixed fees which will be determined before the work is undertaken. You can discuss with us regarding our prices for company accounts, tax returns and we like to agree these fees upfront before the work is started.

Q Are you able to take on the whole accounting function of my business?

Yes, we can do the whole lot, including bookkeeping, payroll, VAT returns and year end compliance. We are also able to provide management accounts and business consultancy as per your need.

Q How do you transfer paperwork and information?

The transfer paperwork and information which is the process of getting discharge approval from one accountant to go to another accountant, depends on your requirement and location. The clearance letters are sent both via email and post, but the most effective and fast method is by email rather than posting the documents to another accountant.

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