Business Start Ups and High Growth

If your business is expected to turnover £85,000 of VATable turnover in the next 12 month period, you will need to register for VAT and start charging VAT on your supplies. You can reclaim VAT incurred on relevant expenditure and you pay the balance of VAT collected and recovered over to HMRC.

If your sales are standard rated for VAT, you will be charging an additional 20% of VAT on top of the invoice value. For customers who are not VAT registered themselves, this will make your invoices 20% higher. If your customers are VAT registered themselves (i.e. other businesses) they will be recovering the VAT themselves so your charges will not be higher.

If all or the majority of your customers are VAT registered, you may wish to voluntarily register for VAT even if your turnover is less than £85,000. You would then be able to recover VAT in your expenditure and as your customers recover any VAT you charge them, your invoices are effectively no more expensive.

Get in touch to discuss these options with one of our VAT specialists or local accountants.

When setting up in business, the structure you adopt is important. Limited companies are common but add a level of compliance to affairs which many small business owners can do without at the start of their business journey. In basic terms there are three things to consider and discuss with your accountant or adviser:

1. Cost - A limited company is a separate legal entity which has to prepare accounts and file a corporation tax return each year. As a sole trader your only compliance obligation is to prepare and file a personal tax return each year. As such, administering a limited company is likely to add cost to your overheads.

2. Tax - Limited companies pay tax on profits at 19%, extraction of profit can be done by salary, dividend or a mix. With the correct strategy there can be savings compared to a sole trader structure where tax and national insurance are payable on profits.

3. Risk - Limited companies provide a layer of protection as they are a separate legal entity. Whilst there are provisions to target Directors who behave recklessly, generally speaking the 'veil of incorporation' can offer legal protection to Director / Shareholders compared to unincorporated business structures.

Whether to incorporate will be a decision based on a balance of these three factors. Speak to one of our experts to discuss the best solution for you.

It is generally very straightforward to move to Lovewell Blake from another accountant. We will write to your previous adviser for professional clearance and also obtain copies of selected historic information such as last years accounts and tax references. We will then issue a letter of engagement and register as your tax agent direct with HMRC.

Over the past few years we have seen the Cloud Accounting marketplace expand significantly and there are now numerous options to choose from. Popular names like Xero and Quickbooks have been around for a while now and are constantly being refined to reflect business need and consumer demand. SME's should definitely take a look at Xero which is extremely user friendly and simple to learn how to use.

For larger businesses with higher volumes of transactions and more complex functionality required, some of the established brands such as Sage are still leading the way. Our sector specialists can also help explain sector specific software options which may work better for your business if your accounts don't follow typical norms.

Our Cloud Accounting teams regularly run Masterclasses for those new to Xero or wanting to learn more about popular aspects. Check out our events for more information.