Get VAT Advice to Keep a Clean Record

VAT is the most complex tax regime that is applied to businesses, and many enterprises overpay or underpay the tax on a regular basis. However, there are still many tax planning opportunities that can help a business save on their VAT and pay only what is legitimate and required.

If any business has overpaid or underpaid the VAT, going back up to 4 years because of mistakes or negligence, then it can be rectified, and the concerned VAT account can be brought back in order. It is always better if businesses can identify errors by themselves or else the HMRC (Her Majesty’s Revenue and Customs) has to pick it up, and they may levy interest or penalty on the amount of underreported VAT.

The businesses have to keep a track of their VAT accounts and trends. They should keep proper documentation of the submitted VAT and make pertinent disclosures at applicable times so that they can avoid situations where HMRC can raise the VAT inquiry on their affairs.

However, there are certain VAT schemes offered by financial advisors that can help a business to properly evaluate and submit the tax on the basis of several factors such as goods sold, the amount of VAT as the input cost, credit period given by / to customers or suppliers, and much more. Some schemes mentioned here can help a business to get registered under laws.

Cash Accounting: In this scheme, the client has to pay the VAT only after it has been paid by the customer. The client takes the input credit for the purchase only when he has paid his supplier. It offers a cash-flow advantage and this is why it has become highly popular with start-up businesses.

Flat Rate Scheme: Under this scheme, the client has to pay the tax under a fixed reduced rate set by HMRC for the sold products or services. The business charges the VAT according to a set standard but does not take credit of VAT on purchases. It is a suitable scheme for business owners who want to keep their VAT affairs simple and straightforward, and there are not too many input costs that have to be incurred.

Annual Accounting: With it, the client agrees to an annual VAT liability. The liability is based on the previous year’s figures, and the client has 9 months to pay the liability. It is suitable for businesses which do not have many resources to sort their books quarterly and just want to pay the tax annually.

Retailers Schemes: It is an appropriate scheme for retailers who undertake a large number of small transactions. Here they record and finalise the transactions for each working day, and separate the VAT at the end of the day based on a suitable VAT fraction.

Three Reasons Your Company Might Be Paying Too Much Tax

It is highly important for a business to have proper tax planning done at the beginning of every financial year. This helps the business owners to understand the tax structure specifically for their company and optimise their finances to pay only the minimum tax required.

There are many reasons that may make your business pay more taxes than it should. Some of them are mentioned below so your firm can avoid paying more taxes than necessary and instead use the money to focus on its operations.

You have not selected the right structure for your business:

There are four major ways in which a business can be set up. The business can be a sole trader, in partnership, a limited company, or a limited liability partnership. The structure plays a key role in the tax your organisation will have to pay. The tax structure for each type of business is categorised by law and the tax payable is calculated under specified guidelines that are laid down under these statutes. Choosing and developing a business structure makes a great impact on tax payments. A smart business should start by entering the minimum payable tax category, develop the business and in time change its structure for larger operations that attract more tax. This gives them an opportunity to make profits and raise capital for further investments.

No classification of shares:

Businesses have different classes of shares in their company and they have the right to control the dividend. They can choose to pay a dividend to a particular class or not to do so. If they are not doing it efficiently then they might have to pay more tax than necessary. Paying dividends in a well-managed manner allows a business to extract more profit and have better tax management practices.

No involvement of shareholders:

New business owners often do not use their right to authorise shareholders in their family. With increased number of shareholders, the dividend will also increase and you can save more money from becoming eligible for tax. Business owners can employ their families and pay them a salary up to their personal allowance. This will also utilise their unused personal allowance and reduce tax for the business at the same time.

How to Find a Good Accountant in Your City

Choosing the right accountant is extremely important, especially for a small business. A good one will help your company grow while a bad one will cost you a lot of money. But with thousands to choose from, how do you find a good accountant in your city? Here are some tips to keep in mind when searching for the right fit.

1. Ask what financial services they provide.

Do you simply need basic bookkeeping and payroll, or are you buying property or exporting globally? It’s important that you work with an accountant that can provide the financial services and advice you need. Hiring an accounting firm often makes sense because they can offer a one-stop shop.

2. Hire accountants that looking at the big picture.

The best accountants take time to understand your business. They see it as a system where marketing, sales, finance and human resources are interconnected. This allows them to go beyond just basic accounting and provide truly meaningful financial insight and advice.

3. Do they put your interests first?

You want an accountant that will truly tell you what’s good for you—even if it means losing their fees. They should take personal responsibility for their advice as well as actions. Some of the best accounting firms bear the costs of any financial loss caused by their advice or services.

4. Good accountants talk to you in your language.

Accounting jargon can be confusing for those who don’t have backgrounds in finance. To prevent misunderstandings and miscommunication, good accountants will speak in terms that you understand. Should you need clarification, they are always happy to sit down with you and explain things.

5. They take time to understand you and your business.

By taking into consideration the objectives of your business, your values, and even your attitude towards risk, the best accountants can dispense high quality, actionable advice. They are there to give you an insight so you can make smarter financial decisions.

6. They offer simple, fair, and fixed pricing.

They are transparent about their fixed price structure so you know what you’re going to get for what price. Some of the best accounting firms even have a satisfaction guarantee. They will not charge you if you are not happy with their service. That’s how you know that they are true professionals. Your calls are always returned on the same day and you are always updated the progress of any project.