Do I need an accountant?

You might think that a start-up or small business isn’t big enough to warrant an accountant.

But unless you’re an expert in tax and finance – or in short, an accountant yourself – this simply isn’t the case. An accountant provides your business with a great deal of essential support.

If you are just starting a business, your accountant will take the form of another business adviser. They will be able to give advice on your business plan and the tax issues of registering a new business.

Some accountants offer book-keeping services, but if they don’t or if you wish to handle this yourself, you can get help with setting up manual or computerised book-keeping systems. And most importantly, you need an accountant to assist on things like whether it is necessary to register for VAT or PAYE and the procedures involved.

As your business grows

An accountant isn’t just there to help you manage your money. Whether you are starting up or a growing business, they can advise you on the best way to arrange additional finance without putting your business at risk.

Once you have the finance in place there needs to be some control to ensure growth of your business is handled in the right way. Many of your concerns will be financial – adequate working capital, good stock control, invoicing and so on – an experienced accountant’s advice will be invaluable in such matters.

And can you honestly say that you are on top of all the essential business tax issues? Well probably not – but that’s an accountant’s job. Taxation is a large business expense and an accountant can effectively minimise these costs.

Finding a competitive professional chartered accountant

Omni Chartered Accountants, Wolverhampton, offer a highly competitive and professional service to clients across the UK. We pride ourselves in giving advice on a one-to-one basis and we are very happy to provide you with a free initial consultation – you can request a free of charge call back from our website or call 01902 837 408 – alternatively, click here to contact us online and we will come straight back to you!

HMRC eases stance on late PAYE filings

UK businesses with less than 50 employees will now be allowed three days’ leeway by HMRC before being penalised for late filing of PAYE submissions.

HM Revenue & Customs has confirmed that late payment penalties will carry on being reviewed on a “risk-assessed” basis as opposed to being issued automatically.

No change to PAYE filing deadlines

HMRC have confirmed that there will be no change to the actual filing deadlines, which usually means that businesses need to file them actually on or before each payment due date.

HMRC will be closing close to 15,000 PAYE schemes in March 2015 in a bid to prevent unnecessary penalties being issued, for companies that have not filed a PAYE report since April 2013, and as a result, look to appear to have ceased trading.

These company schemes will be written to, advising them about the planned closure and what they should do if they are - or should be - operating PAYE.

Employers with less than 50 employees are also reminded that late filing PAYE penalties will apply from 6 March.

A discussion document has been published by HMRC in order to gauge views by the deadline of 11th May 2015. Suggestions concerning potential improvements to the way in which penalties apply for PAYE payment failure or to meet deadlines for registration or returns will be considered.

How to run your PAYE smoothly and avoid penalties

Of course, it is not always easy running a business and PAYE is something that a good accountant like Omni Chartered Accountants can help you with.

Seeking help with your PAYE affairs may work out more cost-effectively than you may think, especially when you consider the time saving and potential problems that your company could face if deadlines and payments are not made by the dates as set out by HMRC.

For more information, contact us now by clicking here or request a free of charge call back from our website by clicking on the link at the top of this page. 

A guide to auto enrolment for SMEs

Top of FormA guide to auto enrolment for SMEs

In order to enhance personal pension funding, the government has drastically changed the laws and regulations around pension provisions supplied by employers. 

Employer responsibilities

This article will give you a basic outline of these changes and your responsibilities as an employer.  The government has changed details from the point of first considering auto enrolment until now so it is important that you keep up to date with any changes in legislation going forward.

Ensuring you have the most suitable pension scheme in place is paramount in order to offer a quality benefit to your employees while reducing the costs and time associated with administering the scheme.

The duties of an employer pre-auto enrolment

If you employ less than five members of staff you currently do not have any responsibility or obligation to offer your staff pension benefits. 

If you employ five or more staff the minimum requirement is that you have to provide access to a stakeholder pension scheme.  There is no obligation to make contributions either as an employer or an employee.

The Government’s aim

Due to employees having to opt in to the pension scheme and there typically being no employer contribution the current schemes meeting the minimum requirements have very poor take up. 

In order to improve take up and therefore increase private pension funding, the government are taking away these two main barriers by bringing in auto enrolment and compulsory employer funding.  This means that instead of employees choosing to enter the pension scheme they will be automatically enrolled into the scheme and contributions taken.

Your staging date

The date by which you have to be compliant is governed by your number of employees on the 1 April 2012 and your PAYE reference number.  The earliest date was 1 October 2012 for employers with 120,000 or more employees gradually working through companies with less employees with the earliest start date for a company employing 30 or less employees will be 1 June 2015.

There is a comprehensive list of staging dates available from the Pensions Regulator.

Employers’ responsibilities

From their prospective staging date, any employer employing at least one person will be legally obliged to

•             Set up and register a pension scheme suitable for auto enrolment
•             Assess all staff eligibility at every pay period
•             Automatically enrol and make contributions for all eligible jobholders
•             Enrol and make contributions for non-eligible jobholders who wish to join
•             Manage the auto enrolment: including the joining and opt-out process
•             Keep records on how they have fulfilled their responsibilities

Scheme contributions

In order for the scheme to be classed as qualifying it must meet minimum contribution levels. There are different methods of assessing qualifying contributions but below is the simplest and is based on percentages of the employees total remuneration. The contribution level is to be bought in over three stages.

October 2012 – September 2017

Minimum Employer contribution = 1%

Minimum Member contribution – 1%

Total minimum contribution = 2%

October 2017 – September 2018

Minimum Employer contribution = 2%

Minimum Member contribution – 3%

Total minimum contribution = 5%

October 2018 onwards

Minimum Employer contribution = 3%

Minimum Member contribution – 4%

Total minimum contribution = 7%

Enforcement

In order to ensure compliance with the employers’ responsibilities, the following three stage process for non-compliance has been put in place by the Pensions Regulator.

Stage 1: compliance/ unpaid contribution notice

This will detail the breach and detail the timescale over which the employer has to put it right. Interest may be required on unpaid contributions.

Stage 2: fixed penalty notice

If the breach has not been rectified by the given time a fixed penalty of £400 will be applied.

Stage 3: escalating penalty

If employer continues to fail to comply with the first and second notice, then a daily penalty will be payable based on the number of employees.

Ensuring you have the most suitable pension scheme in place is paramount in order to offer a quality benefit to your employees while reducing the costs and time associated with administering the scheme.

These changes are likely to have great implications on business planning so be sure to understand the effect it will have on your business over the coming years.

For more information and impartial advice, you can be sure to count on Omni Chartered Accountants, who are here to advise you at every stage of your business journey. Request a free of charge call-back from this website or click here to find out more today.

Can I switch from being a limited company to sole trader?

Here’s a typical question…

“I bought and took over a small business back in 2010, which was a limited company. Turnover has diminished so a lot less admin is needed. Is it possible to change a limited company to sole trader?”

Here’s the answer!

Can I switch from being a limited company to sole trader?

1.    Striking off a limited company from the Company Register

A limited company can cease trading at any time but as it has a separate legal entity it has to be removed from (or 'struck off') the Register of Companies.

Before that can happen, financial reports up to the date of cessation must be prepared and filed and any outstanding corporation tax paid. If there are any unrelieved corporation tax losses (losses accumulated not yet offset against taxable profits), these will be lost.

2.    Asset disposal and liability settlement

In addition, any remaining assets must be disposed of and liabilities must be paid. Assets can be 'sold back' to you. This includes items such as a website and email address.

3.    Dealing with the VAT and PAYE

If the company is VAT registered you should check if it is possible for the registration to be transferred to the Sole trader. As you purchased a business there may be some goodwill remaining which will have to be written off. Any PAYE scheme must be closed.

4.    Closing company bank account

After the final payments of tax and other liabilities, etc. the bank account must be closed. It is possible to apply to HMRC that any distributions (usually the bank account balance) can be treated as a capital gain subject to capital gains tax instead of income tax. Generally there is a tax saving on this.

However this can be complicated so you should talk to your accountant for the best advice. In any case, this can only be done when the company is closing down and not at any other time.

5.    Notify HMRC and other parties

If the business is transferred to a sole trader you will need to notify the existence of the new business to various agencies such as HMRC. Arrangements to have insurances transferred to the sole trader business will also have to be made.

The payments on account regime for Income Tax for sole traders is particularly onerous in the first year or two of trading, so you will have to put by a percentage of income (approximately 20 per cent) to make the payments when they fall due.

Seeking advice makes this whole process easier!

Of course, this whole process can seem quite a daunting one, so it makes sense to seek professional advice if you can.

Omni Chartered Accountants are experts in all areas of small business accounting and taxation advice, and can offer free of charge advice to help you make the right decision and also offer a cost-effective solution to dealing with the stages that are required to make the transition from Limited Company to Sole Trader.

Call 01902 837408 today or request a free of charge call-back from our website for an initial consultation – alternatively, click here to contact us via our dedicated client contact form.