If you run a limited company, you’re required by law to prepare annual accounts and corporation tax returns based on what sales and expenses your business has had during the year.
The accounts show how much profit your business has made after deducting all the expenses from your sales, and the corporation tax calculates how much tax is due on those profits, so it’s important to get these right.
Knowing what you can and can’t claim as expenses for your business is just one element of the accounts and corporation tax return, and is often done incorrectly by businesses.
As an expert corporation tax accountant, we have extensive experience with accounts and corporation tax, including registering your business as a limited company with Companies House and the HMRC. If you’re struggling to understand what is best, and when to do it – get in touch and we’ll help!
It can be appealing to manage everything in your business, but a simple mistake could be costly for your business.
It’s best to start from the very beginning as this will help everything else run smoothly. This starts with bookkeeping. All our clients use Xero and Hubdoc together for their bookkeeping, and we manage that for you so that you know everything is correct and your taxes are right.
What you can and can’t claim against your profits can change often. Staying on top of the legislative changes and ensuring you’re claiming what you are entitled to can be a headache.
Once you’ve got a smooth bookkeeping process, we are able to concentrate on other aspects of your accounts and help your business to flourish, as well as complete the statutory year end accounts and corporation tax return.
What are accounts?
Simply put, your accounts are the official documents showing exactly how well your business is performing in financial terms.
Every business, from the smallest sole trader to the biggest limited company, must keep accounts and accounting records (the data that makes up the accounts).
Although sole traders don’t have a legal requirement to submit their accounts to Companies House, unlike limited companies, it’s important to still have them to back up the tax return figures.
What year end should I choose?
The tax year runs from 6 April to 5 April and most businesses use this system for their accounting year too, but some people may find it convenient to use 31 March as the end date for their business year.
When you form your limited company, the month you form it in will determine the first financial year end, but you can change this to a date that suits your business.
You can extend your financial year up to 18 months long once every 5 years, but you can shorten it by a minimum of 1 day more frequently.
What is profit?
Profit is the excess earnings after you deduct the business expenses from the income, and differ from the cash coming in and going out.
What is included in a set of accounts?
A set of accounts will include statutory reports, such as a profit and loss account, a balance sheet, notes regarding what makes up the figures in those reports, and a report from the directors.
Depending on how your business is structured determines which elements of a set of accounts are required by law e.g. a limited company has to produce accounts in a set format and this is where you may need help from a corporation tax accountant.
How is corporation tax calculated?
Corporation tax is the tax that UK companies pay on their taxable profits.
Taxable profits, and the profits you see in your accounts don’t always correspond, as there are some expenses that may not be allowed for tax, or if you’ve invested in some equipment that won’t directly impact profits.
Corporation tax is charged at 19% (rising to a maximum of 25% in 2023 for larger businesses)
If a company makes a taxable loss but had made a profit in the previous year, it may be able to use that loss against previous years taxable profits and get some tax refunded.
Why choose us as your corporation tax accountant?
As a business owner, you want to know what the bottom line looks like. Have you made a profit, and if not, why.
Not only that, you want to know what the corporation tax is going to be too, so you can plan to pay it on time.
At Freedom in Numbers, we’re here as your corporation tax accountant to support your business, and take away the stress of the administrative side of business, giving you your freedom back.
We offer a monthly fixed fee service that it tailored to your business and will include all the services you’ll need to get started, including dealing with the HMRC on your behalf!
We will save you time and money.
We’re confident that you’ll love our brilliant customer service and have an excellent experience working with us.