filing tool limited companies sole traders

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1 filing tool limited companies sole traders associates ltd

2 Limited Companies What are my filing regulations for a LTD company? The simplest way of dealing with your company filing is to appoint an accountant. You are legally responsible for your company filing. Failure to file your company documents correctly and on time can result in hefty fines, interest charges and prosecutions. As well as dealing with all your filing a good accountant will be committed to making your company as tax efficient as possible and offer excellent advice. The cost of an accountant is also tax deductible! Dealing with your own accounts can cost you a significant amount of time. If you are thinking of dealing with your own accounts you will need to put in place accounting systems to deal with the following: Companies House filing You can submit documents to Companies House using their webfiling service. Any changes to the company (changing director details, appointing shareholders, change of company address) as well as filing annual returns and accounts can be done online. Most filing is free of charge. Accounting Period This is the period of time that a company prepares its statutory accounts. Financial years are determined by the accounting referencing period. You can prepare your accounts the day after your financial year has ended. Choosing your accounting period is one of the first tasks a new company must decide. Unless notified Companies House will fix this date one year from the last day in the month the company was incorporated. There are a number of reasons why a company might change this date so it s important to seek advice before completing it. Annual return This is a snapshot of the current status of your company (e.g. shareholders, directors, etc). This is often confused with the accounts, but it s very different. This must be filed at Companies House with a fee of 15 if filed electronically or 30 if on paper. Non trading companies must also file this document. You are required to file your annual return 12 months after the company incorporation date. Annual accounts (statutory accounts) Companies House only requires small companies (annual turnover must be 2,800,000 or less and have fewer than 50 employees) to file an abbreviated set of accounts. This must be presented in the standard way and they must reach Companies House within 9 months following your accounting period end. Non trading companies must also still file a set of dormant company accounts (DCA). HMRC requires a full set of accounts, including a detailed profit and loss account and director s report. Companies House and HMRC are different government departments so you will need to file all documentation separately. HMRC filing CT41 G This is the form that HMRC require you to fill in when you incorporate a company. It is so that they know what your business does, when it started doing it and when you plan to have your company year end. If you have incorporated your company with the view that it will remain dormant then you should let HMRC know on this form. It s important to complete these forms accurately, not only to avoid a penalty but because HMRC uses the information you provide to work out your Corporation Tax paying and filing deadlines. 2

3 CT 600 Corporation Tax return & full set of accounts Along with your accounts, HMRC will require a CT600 to be completed. A company is subject to tax on its profits. Profit is what is left over when you deduct all allowable expenses incurred to produce sales. Expenses can include purchase of materials, rent, insurances, wages, advertising etc. Depreciation of the value of your assets can also be considered. There are a range of tax rates typically between 20 30% depending on the band of profit your company makes. It is therefore important to ensure you are claiming all the necessary expenses. Annual self-assessment Regardless of how much they earn, each company director may have to complete a self-assessment showing all of their income not just that received from the company. If you want to complete your self assessment on paper forms the deadline is 31st of October. If you do it online you have until the 31st of January to submit the information. 31st October paper forms 31st January online forms Annual employer returns There are numerous forms in the PAYE system but there are certain core forms which are used by all employers, the most common of which are as follows: Pay slips These are your own forms you supply to your employees to show how their pay has been calculated and the deductions made. P45 new employees with a previous job give you a copy of this from their previous employer and you provide employees who leave your employment with one. It includes details such as: their tax code and PAYE reference number their leaving date their current wages for tax year - 6 April to the following 5 April how much tax was deducted from their wages There are four parts to this form. You will send one to HMRC and give the other three to the employee. When a new employee starts they will give you 2 parts and retain part 1A for their records. P11 Deductions working sheet - this may be manual or computerised but records all the salary and NIC payments made. P14 & P60 This is the end of year summary which is given to the employee and copies to HMRC. P35 This is the Employer s Annual Return which summarises all deductions made from employees in the year to 5th April. P11D This is used at the end of each tax year to provide details of benefits and expenses paid to employees who earn over 8,500 and all directors. P46 If the employee does not have a form P45, you and the employee should complete a form P46 in order to get a tax code. In the meantime you must use the tax code indicated in section 2 of the form P46. Quarterly VAT returns Any business whose turnover exceeds 73,000 in the previous 12 months must be VAT registered. The need to register relates to the previous 12 months, and not the accounting period, from the current date. VAT returns are submitted quarterly. This is due at the end of the month following the quarter-end date. 3

4 CIS If you are a contractor in the construction industry there are additional filing rules. You will need to file a monthly return with HMRC telling them about the subcontractors you have paid. Your return must not reach HMRC any later than the 19th of each month. You must still file a nil return even if you have not paid any subcontractors. You will also need to verify each contractor you work with at HMRC to confirm what level of tax to deduct from their invoices and issue them with monthly statement and deduction documents. All contractors need to be familiar with the strict IR35 rules when working under a LTD company. 19th each month CIS return Company Records Book keeping Book keeping is keeping records of your company transactions. LTD companies must use double entry book keeping. In this method you record the company debit and credit. Debit is property or cash owned or owed to the company. Credit is who the company owes money to. The accounting system of a company must record: Sales made by the company Amounts owed to the company Payments and receipts through the bank account Assets owned by the company Purchases made by the company Wages, Taxes & VAT The legislation for record keeping is to ensure you can prepare accounts at the end of the year. Management Accounts Management accounts should be prepared monthly and give you information about the financial performance of the company. They will detail the sales, cost of sales, profit and loss for the month. This information is valuable in managing your business. As well as dealing with all your filing a good accountant will be committed to making your company as tax efficient as possible and offer excellent advice. The cost of an accountant is also tax deductible! 4

5 Sole Traders What are my filing regulations for a sole trader? Trading as a sole trader is the simplest business structure. There are fewer formalities as you do not have to provide information to Companies House. However dealing with HMRC is still very important and getting things wrong can be costly. You are legally responsible for your company filing. Failure to file your company documents correctly and on time can result in hefty fines, interest charges and prosecutions. The simplest way of dealing with your company filing is to appoint an accountant. As well as dealing with all your filing a good accountant will be committed to making your company as tax efficient as possible and offer excellent advice. The cost of an accountant is also tax deductible. Dealing with your own accounts can take a significant amount of time. If you are thinking of dealing with your own accounts you will need to put in place accounting systems to deal with the following: HMRC You will need to register with HMRC so they can set up the right tax records for you. You must register by the 5th of October. A tax year runs from 6th April 5th of April the following year. Therefore to pay tax on your profits for you will need to register by Oct Accounting Period Your accounting period begins the day you start trading and can end on a date that suits your business. It s a good idea to get advice on this date. Then it will usually run every 12 months from the last accounting date. This means that your first accounting period can be shorter or longer than 12 months. However taxable profits will usually be based on a twelve month period regardless of the length of your first accounting period. Annual self-assessment (income tax) Every company owner will have to complete a self-assessment showing all of their income not just that received from the business. If you want to complete your self assessment on paper forms the deadline is 31st of October. If you do it online you have until the 31st of January to submit the information. 31st October paper forms 31st January online forms National Insurance contributions Class 2 National Insurance contributions is the compulsory rate paid by the self employed. You are exempt if your earnings are below a certain level. If your annual profits are over a certain amount you also pay Class 4 contributions. Annual employer returns There are numerous forms in the PAYE system but there are certain core forms which are used by all employers, the most common of which are as follows: Pay slips These are your own forms you supply to your employees to show how their pay has been calculated and the deductions made. P45 new employees with a previous job give you a copy of this from their previous employer and you provide employees who leave your employment with one. It includes details such as: their tax code and PAYE reference number their leaving date their current wages for tax year - 6 April to the following 5 April how much tax was deducted from their wages There are four parts to this form. You will send one to HMRC and give the other three to the employee. When a new employee starts they will give you 2 parts and retain part 1A for their records. 5

6 P11 Deductions working sheet - this may be manual or computerised but records all the salary and NIC payments made. P14 & P60 This is the end of year summary which is given to the employee and copies to HMRC. P35 This is the Employer s Annual Return which summarises all deductions made from employees in the year to 5th April. P11D This is used at the end of each tax year to provide details of benefits and expenses paid to employees who earn over 8,500 and all directors. P46 If the employee does not have a form P45, you and the employee should complete a form P46 in order to get a tax code. In the meantime you must use the tax code indicated in section 2 of the form P46. Quarterly VAT returns Any business whose turnover exceeds 73,000 in the previous 12 months must be VAT registered. The need to register relates to the previous 12 months, and not the accounting period, from the current date. VAT returns are submitted quarterly. This is due at the end of the month following the quarter-end date. CIS If you are a contractor in the construction industry there are additional filing rules. You will need to file a monthly return with HMRC telling them about the subcontractors you have paid. Your return must not reach HMRC any later than the 19th of each month. You must still file a nil return even if you have not paid any subcontractors. You will also need to verify each contractor you work with at HMRC to confirm what level of tax to deduct from their invoices and issue them with monthly statement and deduction documents. 19th each month CIS return Company Records Book keeping Book keeping is keeping records of your company transactions. You will need to show that your figures for your self assessment are correct. You must keep at least: bank statements invoices for sales and purchases receipts The legislation for record keeping is to ensure you can prepare accounts at the end of the year. Management Accounts Management accounts should be prepared monthly and give you information about the financial performance of the company. They will detail the sales, cost of sales, profit and loss for the month. This information is valuable in managing your business. 6