Tag: ltdcompany

start-up rocket ship

Understanding Your Tax Obligations as a Start-Up: A Beginner’s Guide

Posted on | by Jade Donno

Understanding Your Tax Obligations as a Start-Up: A Beginner’s Guide

Starting a new business is an exciting journey filled with opportunities and challenges. One of the most critical aspects to get right from the outset is understanding your tax obligations. This beginner’s guide aims to help you navigate the UK tax system and ensure your start-up complies with all necessary regulations.

1. Registering Your Business

The first step in fulfilling your tax obligations is registering your business with HM Revenue and Customs (HMRC). Depending on your business structure, the registration process will differ:

  • Sole Trader: Register as self-employed with HMRC.
  • Partnership: Register the partnership and each partner must register as self-employed.
  • Limited Company: Register with Companies House and HMRC.

2. Keeping Accurate Records

Maintaining accurate and detailed financial records is crucial for any business. This includes keeping track of all income, expenses, and receipts. Good record-keeping helps in preparing your tax returns and ensures you can provide evidence if HMRC requests it.

3. Understanding Different Taxes

As a start-up, you will encounter various types of taxes. Here’s a brief overview of the main ones:

  • Income Tax: If you are a sole trader or in a partnership, you will pay income tax on your profits. Ensure you set aside money throughout the year to cover this.
  • Corporation Tax: Limited companies must pay corporation tax on their profits. This is due nine months and one day after the end of your accounting period.
  • National Insurance Contributions (NICs): Sole traders, partners, and employers must pay NICs. The amount depends on your earnings and business structure.
  • Value Added Tax (VAT): If your turnover exceeds the VAT threshold (currently £90,000), you must register for VAT and charge it on your sales.
  • PAYE (Pay As You Earn): If you employ staff, you need to operate PAYE as part of your payroll. This system collects income tax and NICs from your employees’ wages.

4. Filing Tax Returns

  • Self-Assessment Tax Return: Sole traders and partners must file an annual self-assessment tax return, usually due by 31 January following the end of the tax year.
  • Corporation Tax Return: Limited companies must file a corporation tax return (CT600) within 12 months of the end of the accounting period.
  • VAT Returns: If registered for VAT, you must submit VAT returns, usually quarterly, and pay any VAT due.

5. Claiming Allowable Expenses

To reduce your taxable profit, you can claim allowable business expenses. These include costs like office supplies, travel expenses, and utility bills. Ensure you keep all receipts and records of these expenses.

6. Seeking Professional Help

Navigating tax obligations can be complex, especially for start-ups. Consider seeking advice from a professional accountant or tax advisor. They can help ensure you meet all your obligations, claim all possible deductions, and avoid any penalties.

7. Staying Informed

Tax laws and regulations can change, so it’s essential to stay informed about any updates that may affect your business. Regularly check HMRC’s website or subscribe to their newsletters for the latest information.

Conclusion

Understanding your tax obligations is a fundamental part of running a successful start-up. By registering your business correctly, keeping accurate records, understanding different taxes, and filing timely returns, you can ensure compliance with HMRC regulations. Don’t hesitate to seek professional advice to navigate this complex area confidently. Remember, getting your tax obligations right from the beginning can save you time, money, and stress in the long run.

For more information and professional assistance, visit 1Accounts. We’re here to support you on your entrepreneurial journey.

succession planning family photo

Common Pitfalls in Succession Planning and How to Avoid Them?

Posted on | by Jade Donno

What Are the Common Pitfalls in Succession Planning and How to Avoid Them?

Succession planning is a critical process for ensuring the long-term sustainability and success of any business. However, it is fraught with potential pitfalls that can undermine even the best-laid plans. At 1 Accounts, we understand the intricacies involved in succession planning and are here to help you navigate these challenges. In this blog, we will explore the common pitfalls in succession planning and offer strategies to avoid them.

1. Lack of a Formal Plan

Pitfall: Many businesses fail to create a formal, written succession plan. Relying on informal or verbal agreements can lead to confusion and conflict when it’s time to implement the plan.

Solution: Develop a comprehensive, documented succession plan. This plan should outline the roles and responsibilities of successors, timelines, and the processes for transition. Regularly review and update this plan to ensure it remains relevant.

2. Ignoring Key Roles

Pitfall: Succession planning often focuses only on top leadership roles, neglecting other critical positions within the organisation. This oversight can lead to gaps in essential functions.

Solution: Conduct a thorough assessment to identify all key roles within your organisation. Ensure your succession plan includes strategies for developing and retaining talent for these positions, not just the top-tier leadership.

3. Inadequate Training and Development

Pitfall: Assuming that potential successors will naturally acquire the necessary skills and knowledge can be a costly mistake. Without proper training and development, successors may be ill-prepared to take on their new roles.

Solution: Implement a robust training and development programme tailored to the needs of potential successors. Provide opportunities for them to gain hands-on experience, mentoring, and leadership training.

4. Failing to Engage Stakeholders

Pitfall: Excluding key stakeholders from the succession planning process can lead to resistance and lack of buy-in, which can derail the transition.

Solution: Engage stakeholders early and throughout the succession planning process. Communicate openly about the plans and seek their input and feedback. This inclusive approach can help build support and ensure a smoother transition.

5. Overlooking External Factors

Pitfall: Focusing solely on internal factors and ignoring external influences such as market conditions, industry trends, and regulatory changes can render a succession plan ineffective.

Solution: Regularly conduct external environment scans to identify potential impacts on your business. Incorporate flexibility into your succession plan to adapt to these external changes.

6. Succession Planning as a One-Time Event

Pitfall: Treating succession planning as a one-time event rather than an ongoing process can leave your organisation vulnerable to unforeseen changes and challenges.

Solution: Establish succession planning as a continuous process. Regularly review and update your plan to reflect changes in the organisation and its environment. This ongoing approach ensures that you are always prepared for transitions.

7. Not Considering Cultural Fit

Pitfall: Choosing successors based solely on their skills and experience without considering cultural fit can lead to leadership that is misaligned with the company’s values and vision.

Solution: Evaluate potential successors not only for their technical capabilities but also for their alignment with the company’s culture and values. This holistic approach helps ensure that new leaders will continue to drive the company forward in a manner consistent with its identity.

8. Ignoring Financial Implications

Pitfall: Neglecting the financial aspects of succession planning, such as the costs associated with training, transition, and potential changes in compensation, can strain the organisation’s resources.

Solution: Develop a financial plan that accounts for all aspects of the succession process. This should include budgeting for training and development, transition costs, and any adjustments in compensation for new leaders.

Conclusion

Succession planning is vital for the continuity and success of your business. By recognising and addressing these common pitfalls, you can create a more effective and resilient succession plan. At 1 Accounts, we are committed to helping you navigate this complex process, ensuring your business remains robust and prepared for the future.

family for succession planning

What is Succession Planning?

Posted on | by Jade Donno | Leave a Comment on What is Succession Planning?

What is Succession Planning?

Succession planning is a vital strategy for businesses of all sizes, ensuring long-term stability and growth by preparing for future leadership transitions. At 1 Accounts, we understand the importance of a well-thought-out succession plan. In this blog, we’ll delve into the key aspects of succession planning, its benefits, and how you can implement an effective plan for your organisation.

Understanding Succession Planning

It is the process of identifying and developing new leaders to replace existing leaders when they leave, retire, or pass away. This proactive approach ensures that the organisation continues to operate smoothly without disruptions. A comprehensive succession plan includes identifying critical roles, selecting potential successors, and providing them with the necessary training and development to prepare them for their future responsibilities.

Benefits

  1. Continuity and Stability: Succession planning ensures that there is no leadership vacuum, thereby maintaining business continuity and stability.
  2. Employee Development: It encourages the growth and development of employees, providing them with career advancement opportunities.
  3. Knowledge Retention: By preparing successors internally, businesses can retain valuable institutional knowledge and expertise.
  4. Increased Morale: Employees are motivated when they see a clear path for their career progression within the company.
  5. Risk Management: It helps in mitigating risks associated with unexpected departures of key personnel.

Steps to Effective Succession Planning

  1. Identify Key Positions: Determine which roles are critical to the success of your business and need a succession plan.
  2. Assess Potential Successors: Evaluate your current employees to identify those with the potential to step into these critical roles.
  3. Develop Talent: Invest in training and development programs to prepare your potential successors for future leadership roles.
  4. Create a Transition Plan: Develop a clear plan for how the transition will occur, including timelines and responsibilities.
  5. Regular Review: Succession planning is not a one-time event. Regularly review and update your plan to reflect changes in the business environment and employee development.

Challenges

  1. Identifying Potential Leaders: Finding employees with the right skills, experience, and leadership qualities can be challenging.
  2. Training and Development: Developing a robust training program requires time, effort, and resources.
  3. Resistance to Change: Employees may resist changes, especially if they feel threatened by new leaders.
  4. Balancing Internal and External Hiring: While promoting from within is beneficial, sometimes external hires bring new perspectives and skills.

Conclusion

Succession planning is essential for ensuring the longevity and success of any business. At 1 Accounts, we advocate for proactive succession planning to help businesses navigate leadership transitions smoothly. By understanding the importance and implementing a well-structured plan, you can secure your company’s future and foster a culture of continuous growth and development.

For more insights and assistance with succession planning, feel free to contact us at 1 Accounts. Our team of experts is here to guide you through every step of the process.

House sale resulting in capital gains tax

Capital Gains Tax: Understanding the Latest Changes and Updates

Posted on | by Jade Donno

Capital Gains Tax: Understanding the Latest Changes and Updates

Are you looking for comprehensive guidance on Capital Gains Tax (CGT)? Understanding the latest changes and updates is crucial for effective tax planning and compliance. In this blog, we’ll break down the recent developments in CGT to help you stay informed and make smart financial decisions.

What is Capital Gains Tax (CGT)?

Capital Gains Tax (CGT) is a tax on the profit when you sell an asset that has increased in value. It’s the gain that is taxed, not the total amount of money received. Common assets that may incur CGT include property, shares, and other investments.

Key Changes to Capital Gains Tax in 2024/2025

Staying updated on the latest CGT changes is essential for accurate tax filing and maximising your financial benefits. Here are the key updates for 2024/2025:

  1. Exemptions and Thresholds:
    • The annual CGT exemption amount has been adjusted. For individuals, the new threshold is £3,000, down from £6,000.
  2. Adjustments to CGT Rates:
    • The CGT rates have been revised. For higher-rate taxpayers, the rate on gains from residential property is now 24%, while gains from other assets are taxed at 20%.
  3. Reporting and Payment Deadlines:
    • The deadline for reporting and paying CGT on residential property sales is 60 days from the completion date.  Ensure you comply to avoid penalties.

How to Calculate Your Capital Gains Tax

Understanding how to calculate your CGT liability can save you from overpaying. Follow these steps:

  1. Determine the Gain:
    • Subtract the purchase price and any allowable expenses (such as legal fees, and improvement costs) from the selling price.
  2. Apply Exemptions:
    • Deduct your annual CGT exemption amount from the gain.
  3. Apply the Appropriate Tax Rate:
    • Depending on your total taxable income and the type of asset, apply the relevant CGT rate.

Tips to Minimise Your Capital Gains Tax

  1. Utilise Tax-Free Allowances:
    • Make the most of your annual CGT exemption by strategically planning your asset sales.
  2. Claim All Allowable Expenses:
    • Keep detailed records of all costs associated with acquiring and improving your assets.
  3. Consider Timing:
    • If possible, plan your asset sales to fall within different tax years to maximise the use of your allowances and reliefs.

Seeking Professional Help

Navigating CGT can be complex, and professional advice can be invaluable. A tax advisor can help you understand the latest changes, optimise your tax position, and ensure compliance.

Conclusion

Staying informed about the latest changes and updates to Capital Gains Tax is crucial for effective tax planning. By understanding the new thresholds, rates, and reliefs, you can make more informed decisions and potentially reduce your tax liability. If you need personalised assistance, don’t hesitate to seek professional help.

For more detailed information and expert advice on Capital Gains Tax, contact us at www.1accounts.co.uk.

jade and paul in a meeting

Are You in the Crosshairs of the Associated Company Tax Rates?

Posted on | by Jade Donno

We’re back with another blog post and this time we’re diving into a topic that isn’t everyone’s cup of tea – taxes. But don’t worry, we’re here to make it as enjoyable and straightforward as possible. Strap in and let’s demystify the new corporation tax rules together.

What are the changes?

As of April 1st, 2023 (and no, it wasn’t an April Fool’s prank), there have been some significant changes in the corporation tax laws. Here’s the lowdown:

  1. Companies with profits that are playing a bit of hide and seek and total less than £50k will continue to be taxed at the friendly rate of 19%.
  2. Those with profits feeling a bit more confident, between £50k and £250k, will be greeted by a still reasonable tax rate of 26.5%.
  3. And for those brave souls whose profits exceed £250k, they’re looking at a flat rate of 25%.

Now, you might be wondering about this £50k threshold we mentioned. It’s not as roomy as it first appears. Much like sharing a dessert, this threshold needs to be split between your company and any other associated companies. The effect? Well, your slice of the pie could be smaller than you initially thought.

Fear not, your trusted accounting partners, should be on the case and we’re here to guide you through this labyrinth. Your accountant will need to know about any other companies you’re involved with, either as a shareholder or director. The same goes for any companies your family members are involved with. This isn’t us accountants just being nosy, promise! It’s all to ascertain whether the associated company rules apply to you and potentially other connected businesses.

We understand that these changes may feel a bit like navigating uncharted waters. If this is going to cause any tax-related stress, rest assured that we’re prepared to assist. We can work with you to plan the most tax-efficient course.

So, let’s sail through these tax changes together. As always, we are committed to lightening the load of tax law changes and making the journey as smooth and pleasant as possible.

Stay tuned for more updates and remember to keep those smiles on. After all, nothing is as certain as change… and taxes!

Why we ask for your ID

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As part of our onboarding process we ask all of our clients for two pieces of ID. You might be wondering why we need this and what we do with it afterwards? We explain it all here.

Why we need your ID

As we are a regulated accountant, we are required by our regulatory body (AAT) to hold two pieces of identification for all clients for whom we act. This is so that we can complete anti money laundering checks on all of our clients and ensure that all of our clients are who they say they are.

What ID do we need

We need two pieces of ID from you:

  • Photo ID – such as driving licence or passport
  • Proof of Address – Such as bank statements, credit card bills, council tax bills, utility bills or driving licence.

All ID must be in date and display your current name.

Note – you can use your driving licence for either piece of ID, but not both. If you are giving us your driving licence please also submit an additional piece of ID so that we can still have two pieces of ID for you.

How do we use your ID

We request your ID using our Karbon client portal. This is the most secure way of getting your ID to us and is preferred to email which is not as safe.

Once in our possession, we upload it to our secure cloud storage system, Sharepoint. It is never saved onto individual computers.

We will use your ID to confirm your identity during our anti-money laundering checks. If we have not met you face to face we may arrange a zoom call with you to make sure you are the same person as in your ID.

All of our systems are GDPR compliant.

When we’ll need you to update your ID

If you have changed your name for any reason, we will need an updated copy of your photo ID and proof of address with your new name. If you haven’t arranged for updated ID yet we can accept your marriage certificate or deadpoll document until you can obtain your updated ID.

If you move address, we will need updated Proof of Address ID. We understand that these can take a while to come through but if you can get them to us as soon as you have something, in these cases often bills are the first thing to come through, then we can get started on updating our systems.

We will check your ID once a year when we update your anti-money laundering check. If we find your ID to be out of date we will simply request that you send us an updated copy as soon as possible.

Why we love Xero!

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It’s no secret that we love Xero! It is the accounting software that we recommend to absolutely all of our clients. This is because we truly believe that it offers better features and useability than its competitors. Here are just some of the reasons why we love Xero!

1) Easy to use

Xero has made its interface very user-friendly and we find it easy to use on our end as well. This also makes it easy for us to teach you how to use it, to make sure that you get the best out of it and make sure your data is always accurate and up to date! We offer Xero training sessions to all of our clients at the onboarding stage so we can make sure you start off with it well, especially if you have never used it before.  Multiple users can be added who can all access the software at the same time.  You can also have different access levels for different team members so individuals can access or be restricted from certain parts of the software as appropriate.

2) Up to date reports

Using Xero means you will be able to access up-to-date reports that make it easy to understand how your business is doing. These are also able to be tailored to your specific needs for your company.

3) Cloud accounting

As with the majority of the other products that we love, Xero is cloud based! This means there is no need to save your documents to your PC and your data is backed up automatically and securely so you will never lose it. This also means that it can be accessed anywhere at any time, either via the web browser or the app.

4) Automatically brings in bank feeds

Xero can be set up so that it automatically brings in bank feeds from your business bank accounts and credit cards so your transactions are automatically bought into the software daily.  This limits the need for manual entries and means your figures are up to date in real time. This makes it easy for our bookkeepers as well as we won’t have to ask you for statements!

For a list of available bank feeds please see here.

We can help you set up your bank feed if you need, please just get in touch.

5) Integrations with other software

Xero also has over 1000 different apps, add-ons and integrations with software such as Dext, GoCardless, Stripe, Vend, Square, PayPal and more. Many of these apps can be set up to automate time-consuming tasks to make your admin easier!

If you need any help with setting up apps and integrations with Xero please get in touch.

6) Ahead of the crowd

Xero is typically always one step ahead of its closest competitors.  This can be in terms of reporting or keeping up with change in statutory requirements and legislation such as Making Tax Digital, Domestic Reverse Charge and even the Covid Furlough Scheme. It is constantly evolving and adding new features, particularly based on customer feedback on what features users would like to see implemented or ways existing features can be improved.

If you would like to find out more about Xero, transfer over from your existing software or try a free trial or demo please contact us so we can discuss!

How to use Karbon’s Client Portal

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Welcome to the 1 Accounts client portal! This portal is an online management system that allows you to easily and safely send, receive and store all of your accounting and tax information online.

What does this mean for you?

The client portal allows you to review and approve your accounting and tax information with the click of a button. It also allows you to view open and closed requests and any current requests we’ve sent to you.

Why are we doing this?

It’s a safer and more efficient way to handle your accounting and tax. It simplifies the process for you and allows us to serve your individual needs better. It also provides you with more flexibility, you can comment and ask questions directly in the portal. Your accountant is immediately notified and can take action. This eliminates the need for email and keeps it all together in one place, so you can review it at any time.

Review Tasks

You will receive an email with your tasks. Click on ‘manage checklist’ to access the tasks you need to complete.

You will automatically see all the tasks assigned to you for completion.

Please note: if you open this link on one device, and you’d like to access it on a different device, click the link again and it will ask you to “Send Access Link”. This will send another link to the originally sent email that will allow you to access it from the computer.

Comment, ask questions and upload files

You’ll be able to comment, ask questions and upload files on each of the tasks, which your accountant is immediately notified of and can take action.

Click Comment to comment or ask questions on a task or click upload files to attach files to a task. To add files to a comment click on the paperclip icon on a comment while composing.

Log in

By logging in, you’ll have access to all your open and closed requests, including current client requests that haven’t been completed. You’ll also have copies of documents you have uploaded, so you can keep track and easily find what’s been sent.

  • If you have a login, follow the instructions and log in (example A)
  • If you don’t have a login click the ‘create account’ button and it will ask you to create an account (example B).
  • If you forgot your password, click the forgot password link and follow the instructions (example C)
Example A
Example B
Example C

Once you have created an account, you can access the client portal at any time. Once you are signed in, you will be taken directly to the client portal which looks like this.

Magic Link

The main way you will access the client portal

Spend money to make money

While you can save a couple of hundred pounds doing your own books, you won’t save as much with an accountant and you could actually end up losing a lot more. With an accountant on your team, you can save both time and money while having the reassurance and peace of mind that you’re making sound business decisions for your future.

If you would like to learn more click here to get in touch.

Or feel free to use our chat box —>

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Starting your own business after redundancy

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Facing redundancy can be incredibly challenging, but it could also be the perfect time to start a brand new career based on your interests, your lifestyle and your aspirations.
Does this sound too good to be true?
With these five steps, we can help you transform your redundancy package into your very own startup:

1) Take advantage of your notice period

Typically, you’ll need to work a notice period. Instead of worrying about what comes next, use this time to start planning your new venture!
Dive into research, enrol in training and network as much as possible. The sooner you can start, the better! After all, wouldn’t you prefer to plan for your future whilst you’re still on the payroll?

2) Develop a business plan

Success is all about strategy, so it is important to develop a business plan.
Every business plan will look slightly different, but the main areas you want to focus on are the:

  • Executive summary – create a brief overview of your business detailing what services you offer and what you intend to achieve.
  • Management bio – this is your opportunity to introduce yourself, your values and your professional experience.
  • Marketing plan – identify your target audience, USP and market competitors before explaining how you intend to attract your desired audience.
  • Financial plan – because you’re just starting out, your financial plan will be primarily made up of projections (sales projections, expensive projections, cash flow projections etc.). Make sure you’re thorough with your research if you intend to achieve accurate estimates.

Your business plan will become the blueprint for your company, so the more information you can include, the better – particularly if you want to attract investors!

3) Address any legalities

To establish a legitimate business, you need to fulfil certain legal requirements. Now, these requirements may vary depending on your business model and industry, so it’s always worth checking whether you need to obtain a specific type of permit or insurance.
You can find these answers by visiting the government website or checking with your relevant industry bodies.
It is also worth hiring an accountant early on to advise you on the financial aspect of your business.

4) Open a business bank account

This next point is directed specifically to our sole traders. Although you don’t have to open a business account, we strongly suggest you do. It will make your bookkeeping 10x easier! So unless you want to waste your time separating your expenses and risk receiving a penalty, you should seriously consider setting up a business bank account.
If you are starting a limited company this is also something you will need to do, however it is essential rather than it just being strongly advised.

5) Set yourself boundaries

Starting a business is an exciting endeavour. However, it can become all-consuming. So for our final point we wanted to discuss the importance of setting yourself boundaries and practising self-care.
Firstly, give yourself some grace. Redundancy is incredibly difficult to navigate, so try not to be too hard on yourself – especially during those early days.
And secondly, start as you mean to go on. Give yourself lunch breaks, take time off and allow yourself opportunities to relax. Only then can you avoid burnout and achieve sustainable growth.

When life hands you lemons, make lemonade


No one wants to be made redundant – but that doesn’t mean it has to be all doom and gloom. Instead, this could be the start of your exciting adventure into entrepreneurship! So take the chance, pursue your passion and totally transform your career. You may just find redundancy works in your favour.

Hiring an accountant could save your business!

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A lot of new businesses fail. A lot of old businesses fail. A lot of previously successful businesses fail. Why? Usually, it comes down to issues around finances.

If you’re starting a new business, or if you’ve been in business for years and are trying to grow your team and scale your company, hiring an accountant can help. Here’s how.

1) They help you become more tax-efficient

Tax isn’t easy. Legislation changes all the time and any delays or mistakes could be costly. With an accountant filing your taxes for you, you can have the peace of mind that it is all being done correctly and on time. Not only that, but it saves you a lot of time and resources AND it saves you money. Accountants can reduce your tax burden by identifying opportunities for deductions, and they can help you avoid any government fines.

2) They mitigate the risk of financial mistakes

Accountants know how to identify financial risks and avoid them before they become major problems. What this means for you is that you’ll never spend money you don’t have, you will save money in all the areas you can, and you’ll be more aware and better equipped to stick to a proper budget. Fewer to no financial mistakes means minimal losses and more profit!

3) They actively help you to grow your business

If you get an accountant on board in the early stages of your business, they will help you to develop a plan for growing your business in the right way. Not only that, but they will also ensure that your finances are handled correctly from the beginning so that it doesn’t take over everything else in the future. As your business grows, they will start to provide advice in other areas such as budgeting and financing; payroll and recruitment, cashflow forecasting and investments, and business strategy. They will work with you to ensure you have the financial capabilities and processes needed to work towards your business goals.

Survive and thrive!

Most new businesses fail because of financial issues, so don’t make the same mistake. Hire an accountant as early as possible and get the guidance and expertise needed to take your business to the next level. They will not only help you save money, but they can help you make money as your business grows too.