All businesses need to prepare annual accounts and self assessment tax returns. Accounts are needed to provide the figures for their tax returns, and also to monitor trading and operating results.
The exact nature of your accounts will depend on whether you’re a sole trader, partnership or limited company. Most businesses and all limited companies are required to prepare accounts under Accounting Standards, meaning that provision must be made for unpaid invoices, stock-holdings, work in progress, accruals, prepayments and other provisions. Normally, annual accounts will comprise a profit and loss account and a balance sheet with supporting notes.
For smaller sole traders and partnerships, there is an option to prepare annual accounts on a “cash basis” – i.e. income and expenditure account which don’t need to incorporate outstanding invoices nor accruals, prepayments, stocks, etc. Whilst this seems an easy option, it can often lead to higher tax bills and such simpler accounts may not be adequate for your lenders (if you need a loan or mortgage) or for prospective buyers if you wish to sell your business. Loss relief options and planning timing of tax relief on equipment purchases are also extremely limited if using the simplified cash basis. We can help you understand your options and prepare your accounts on the most suitable basis according to your circumstances.
Self Assessment Tax Returns
All business have to prepare and submit Self Assessment Tax Returns (SA returns). Sole traders have to complete a personal SA return, whereas partnerships have to complete a partnership SA return and individual partners must complete personal SA returns. Limited companies have to complete a corporation tax SA return and directors/shareholders may have to complete personal SA returns. So if you run a business, however small, at least one self assessment tax return is required each year. HMRC charge penalties for late submission of returns and for inaccurate returns.
Let us look after your obligations to help you sleep easy at night and avoid penalties.