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Cheaper Accountant Blog

An accounting insight

Home Office Costs: Proportional Basis

During an earlier blog posting we introduced the flat rates available to those who work from home but there is another method available. This alternative method calculates the cost of operating a home office through a proportional calculation.

If you work from home during the running of your limited company or sole trader business you will be able to claim the costs of the following as a tax deductible expense:

1. Heating costs
2. Electricity charges
3. Council Tax
4. Mortgage interest
5. Rent
6. Internet charges
7. Telephone charges (this could mobile and/or land line)

HMRC asks that you use a reasonable method for allocating such costs to result in a total charge for your home office.

Reasonable Method - Proportional Basis

An acceptable and reasonable method of allocating total household costs such as those listed above is to divide the total cost by the number of rooms used for business purposes or to divide the total cost by the number of hours spent working at home.

For example, if you run your business from one room within a three bedroom property then you can simply divide the total costs by three. A rent bill of £300 would in this example result in a business expense of £100 (£300 divided by 3).

If you have any further questions about home office costs and how these can be used to reduce profits and in turn reduce your tax bill email one of our accountants at www.cheaperaccountant.co.uk

Posted 5 hours ago

Who are the typical clients of a Cheaper Accountant?

We have been operating under the trading name of Cheaper Accountant and from the website www.cheaperaccountant.co.uk for a number of years now and we have provided a highly valued and affordable accounting service to all of our clients over this period. We have a diverse range of clients from around the UK who operate within a number of industries.

The typical Cheaper Accountant client is:
1. Operates a small business (turnover under £750,000) within the UK
2. Online sales
3. High street store owner
4. Taxi company owner
5. Cleaning company owner
6. Construction company
7. Printed media
8. Sale of apps
9. Financial advisor
10. IT contractors
11. Telecommunications contractors
12. Finance contractors
13. Professional services
14. Website design
15. Furniture sales
17. Video productions
18. Manufacturing
19. Legal services
20. Tattoo parlour
21. Logistics operators
22. SEO companies
23. International clients
24. Children’s entertainment
25. Tool hire

We work with a large variety of companies and we have the experience that small businesses need. So regardless of what your business does or sells you can rely on us for all of your accounting needs.

Posted 2 days ago

Free Accounting Software: Why we love Wave Accounting

We are genuine fans of the online accounting software provided by Wave and we have decided to share our enthusiasm and explain why we love Wave Accounting.

The Wave Accounting software is our accounting software of choice and this is the software that we recommend to our clients as we believe that the software is unique and the company behind the software is a great match for Cheaper Accountant.

So what is Wave Accounting?

Wave Accounting is a cloud based online accounting software created for small businesses and is provided completely free of charge. Wave places discreet adverts on its website rather than charging subscription fees like other online accounting software providers.

Benefits of using Wave Accounting:
1. Free of charge forever
2. Ideal for small businesses
3. Perfect for use in the UK
4. Easy access for your accountant
5. Seamless upload from business bank account
6. Simply exceptional innovation
7. Excellent free iPhone apps such as the invoice creation app
8. Reliable user support
9. Simple to use and highly effective
10. Outstanding user reviews

So if you’re considering using accountancy software for your company bookkeeping activities take a look at www.waveapps.com

Posted 3 days ago
Posted 4 days ago
Posted 4 days ago

When am I considered to be Self Employed?

Here at cheaper accountant we often find clients can get a little confused about the real meaning of being self employed and what this means in relation to income tax.

We have completed self assessment tax returns for clients and made corrections to returns already started by clients due to this confusion.

From our experience limited company directors often put themselves within the self employed category but this isn’t necessarily correct when it comes to income tax.

For income tax purposes, a limited company director (this can be the single shareholder or owner) who receives salary and dividend payments from a limited company under his or her control is considered to be an employee of the limited company as well as a shareholder in the limited company. This means that the employment pages of the self assessment tax return need to be completed.

A sole trader who operates outside of a limited company is generally classed to be self employed from an income tax perspective. This is what we tend to mean when we reference being self employed. In this case it is correct to complete the self employment pages of the self assessment tax return.

It is very important get this distinction correct as you could end up overpaying income tax and national insurance contributions if a mistake is made.

Posted 6 days ago

What is a Qualified UK Accountant?

The accountant that completes your accountancy work when you accept a quote from Cheaper Accountant will be a fully qualified UK accountant but what does this actually mean to you and your business?

We define a Qualified UK Accountant as:

1. A full member of a UK accountancy body.

2. A person who has passed all of their professional accountancy exams.

3. A person who has obtained the practical experience required to join a UK accountancy body.

How this benefits you and your company:

1. The experience and expertise you need.

2. A proven ability to complete the accountancy work you need to be completed.

3. A proven ability to give you and your business the advice and guidance you need.

4. A regulated expert.

5. Trust, confidence and piece of mind.

Interested to know more about who we are and what we have to offer? Then take a look at our website: CheaperAccountant.co.uk

Posted 1 week ago

Dividend Tax Credits Explained

Here at Cheaper Accountant we are often asked about the dividend tax credit and what it is and what it means. So we decided to write a blog post to demystify the dividend tax credit.

All dividend payments receive a tax credit equal to 10%. This effectively equates to a 10% reduction in tax on dividends. This means that basic rate tax payers pay 0% income tax on dividend income.

The tax credit applies to any individual who receives dividend income from the shares they hold in a company.

It really is as simple as that. We won’t go into how to create a dividend voucher and how to calculate the dividend tax credit as that really is another topic in itself. We also believe that this is best left to your accountant. If you’re looking for Cheaper Accounting then check out our website and send us an email for a free quote.

Posted 1 week ago
Posted 1 week ago

Does the Minimum Wage Apply to Company Directors?

The UK National Minimum Wage is set to increase by £0.20 an hour from an hourly rate of £6.50 to £6.70 during October 2015.

With this in mind it is quite timely to address the question of the Minimum Wage in relation to Company Directors.

We are often asked how the minimum wage regulations affect limited company directors and we answer this question now.

The following people are exempt from the application of the minimum wage:

1. Company Directors
2. Self employed individuals running their own business

Therefore the simple answer is: company directors and those who are self employed don’t need to consider the minimum wage when paying themselves.

If you need any further accounting advice or accountancy work needing to be completed then contact CheaperAccountant.co.uk for an affordable accountant.

Posted 2 weeks ago
Posted 2 weeks ago

How to Switch Accountant: A Simple Process

It really is very easy and straightforward to switch your accountant and we can even handle this for you. Here at CheaperAccountant.co.uk we have assisted a large number of clients in changing their accountant and we make it an easy and simple process for everyone.

We do the following:
1. Send an email to your existing accountant requesting your company and personal details, such as HMRC and Companies House codes as well as copies of recent accounts and returns.

Then we’re ready to go and it really is as simple as that!

Furthermore, if your existing accountant is a member of a professional accounting body they are expected to comply with this request within a reasonable period of time.

What we need from you:
1. We may need you to email your existing accountant and authorise them to release your information to us.

We couldn’t make the processing any easier than that!

So why not switch today and save on your accountancy fees.

Posted 2 weeks ago

Limited Company Registered Address Service

We are often asked if we provide an affordable registered address service and the answer is no we don’t but we can recommend a UK service provider who does. Our recommended provider offers this service for an annual fee of only £29.99 and we couldn’t do better than that!

CheaperAccountant.co.uk believes in sticking to providing affordable and efficient accountancy services to small businesses across the UK. We leave the handling of mail to the mail guys and we strongly recommend that you take a look at CityAddress.co.uk for your registered office address needs.

This is a very reputable company who can be relied on to handle your mail and to provide you with a respectable company address. In addition to this, we haven’t found any providers who offer this service for less within the UK.

Cheaper Accountant is always working hard to deliver affordable services and establish value for money relationships for the benefit of our clients. We will provide you and your business with a cheaper accountancy service and City Address will provide you with a cheaper registered address.

Posted 2 weeks ago

Limited Company Fines: What could I be charged?

If you are a limited company director you should be aware of what documents need to submitted to Companies House and HMRC and when rash year to avoid being fined.

Our previous blog post covered the details on what needs to be submitted and by when so we won’t repeat those details here.

There are a couple of avenues where fines can be generated in relation to the late submission of key returns for your limited company. These are discussed in detail below.

Companies House - Company Accounts

You will receive a late submission fine from Companies House if your accounts are received late by only one day. The fine levied escalates as per the following table:

Days Late | Penalty
Up to one month | £150
Between one month and three months | £375
Between three months and six months | £750
More than six months | £1,500

The good news is that there is no fine levied for the late submission of an annual return to Companies House.

HMRC - Company Tax Return

HMRC also levy fines for late company tax returns and this can also apply when the return is late by one day only. See the table below:

Days Late | Penalty
1 day late | £100
3 months late | a further £100
6 months late | 10% of unpaid tax
12 months late | a further 10% of unpaid tax

An accountant from CheaperAccountant.co.uk can help you avoid fees and to submit your accounts and other returns on time.

Posted 3 weeks ago

I've started my Limited Company - What Next?

Registering and starting your own limited company is the first step towards operating a successful business. Post incorporation, there are a number of documents which need to be submitted each year to meet your legal duties. This short blog will give a quick run down of what needs to submitted to who and by when.

1. Annual Return
This is a return which contains information about company shareholders and the number of shares issued as well a brief description of what the company does.

This is not the annual company accounts.

An Annual Return must be submitted to Companies House 12 months after incorporation and on each subsequent anniversary.

2. Annual Company Accounts
The Annual Company Accounts comprises a Profit and Loss Account and Balance Sheet and must be submitted to Companies House within approximately nine months following the end of the companies accounting period. The accounting period generally approximates to the subsequent 12 months post incorporation.

A fine is levied by Companies House if the accounts are submitted late.

3. Annual Corporation Tax Return (CT600)
The Annual Corporation Tax Return accompanies the submission of the accounts to HMRC and details the calculations behind the amount of Corporation Tax payable by a limited company.

This is required to be submitted within the 12 months following the end of the company’s accounting period.

One of our accountants can complete all of this work for you and the starting price is only £100 for your annual accounts and submissions (see 2 and 3 above). Contact CheaperAccountant.co.uk today for a free quote.

Posted 3 weeks ago

What is an Online Accountant?

Cheaper Accountant can be categorised under the banner of an online accountant, but what is an online accountant and what does it mean to you and your business?

The typical characteristics of an online accountant are as follows:

1. Operate a website rather than a traditional high street premises
2. Provide quotes via email or other electronic methods
3. Active on social media
4. Conduct business communications via email and other electronic methods
5. A focus on online advertising and promotion
6. Responsive to your needs through the use faster, modern communication networks
7. Low cost due to the maximum use of modern technology
8. Complete all submissions to HMRC and Companies House online

What does this mean for you and your business?

1. A cheaper price for your accountancy work
2. A more personalised service
3. Quicker response times when addressing questions and queries
4. No expensive hourly rates or unexpected bills
5. A modern and efficient accountancy service

If you’re new to the concept of an online accountant then ask CheaperAccountant.co.uk for a free quote and feel free to ask any questions to one of our qualified UK accountants.

Posted 3 weeks ago

Cheaper Accountant: How do we keep our prices so low?

CheaperAccountant.co.uk was launched a number of years ago to provide a more affordable alternative to small businesses across the UK. We offer the same quality services that any other qualified accountant does in the UK but for a much reduced fee. In fact our prices are often found to be 75% less than our competitors.

Our mission is simple: to offer cheaper accountancy work to all small business nationwide. We firmly believe that it can be enough of a challenge to succeed in business without accountancy fees eating into your company profits.

We differentiate ourselves from a traditional accountant by:

1. Removing the expensive high street office
2. Removing the polite receptionist
3. Removing expensive newspaper based advertising
4. Removing expensive rents and rates

Instead we:

1. Offer a cost effective online accountancy service
2. Advertise for free through social media channels
3. Communicate to clients through electronic channels such as email
4. Operate a simple and cost effective website rather than an expensive high street store

So that is how we keep our prices so low compared to a traditional accountant.

The best part is that we completed the same exams, joined the same professional bodies and share the same professional standing and expertise as any other accountant. All we do differently is charge you less.

Posted 3 weeks ago
Posted 3 weeks ago

Picking up the Pieces! We are not “The Cheap Accountant” at thecheapaccountant co uk

We are always disappointed when we here stories about unhappy customers of other accountants. Such complaints have significantly ramped up over the last month and we are hearing more and more stories about clients who have paid The Cheap Accountant and received nothing in return. This is simply unacceptable behaviour.

If you have been on the receiving end of such poor service from this chap then don’t stress any further as we are very capable of picking up the pieces and resolving all outstanding accountancy issues. We have a solid reputation for quality and timely small business accounting and we have completed small business company accounts within one or two working days to meet deadlines due to the poor performance of The Cheap Accountant.

We’re not in the business of letting you down and do our up-most to ensure all of our clients remain confident in and very happy with the services we provide.

We are Cheaper Accountants who offer an excellent, valued, expert accounting service to all small businesses across the UK. We are an online accountant who saves costs to pass on to you via vastly reduced fees.

Forget the other guy and contact CheaperAccountant.co.uk for a free quote.

Posted 3 weeks ago

Benefits of the VAT Flat Rate Scheme

The Flat Rate Scheme is a simplified method for calculating the VAT due to HMRC. It reduces some the administration effort involved with calculating VAT due for payment when compared to the normal method of accounting for VAT received from customers less VAT incurred on business purchases.

The flat rate method simply applies a % to your business turnover to calculate the VAT due to HMRC. The best part is that you then retain the VAT income received which is over and above the payment to HMRC.

This can be a nice little windfall for a number of businesses. Especially when you charge VAT at 20% and then pay over only 10% to HMRC.

To join the scheme your VAT turnover must be less than £150,000 per annum.

The flat rate scheme is perfect for most contractors and effectively allows you to supplement your contract income.

We have helped a vast number of businesses with their VAT registration and quarterly VAT returns, so if this is something that interests you then contact CheaperAccountant.co.uk

Posted 3 weeks ago

Mileage Rates 2015 - Are You Claiming?

If you use your own vehicle for business you should take note of the following allowable expenses that can be used to reduce the amount of tax you pay.

The method for claiming the expense associated with the use of your own vehicle is simple. You need to record your business mileage each time you use the vehicle for business purposes and then multiply the total business mileage for the accounting year by the approved mileage rate.

The current HMRC approved mileage rates for cars and vans are as follows:

First 10,000 business miles - £0.45
Each business mile over 10,000 - £0.25

The mileage rates are fairly generous and incorporate an allowance for fuel and wear and tear of the vehicle.

The resulting expense is then fully claimable as a legitimate business expense.

Posted 3 weeks ago

Home Office Costs: Are You Aware of the Simplified Expenses Method?

If you work from home you may already be aware that you can claim the cost of doing so. However, are you aware of the Simplified Expenses Flat Rate method?

This method is simple and easy to use and significantly reduces the administrative burden of claiming home office costs and the associated documentation. This method removes the need to separate private and business use, which can often be quite difficult in practice.

The method allows you to calculate your allowable expenses through the use of a flat rate based on the number of hours you actually work from home each month.

The following table stipulates the allowable expense associated with each category of hours worked:

Hours worked Monthly Rate
25 to 50 £10
51 to 100 £18
101 and more £26

Restrictions:
1. You can only use the Simplified Expenses Method if you work from home for 25 hours or more.

2. The flat rate doesn’t include telephone or internet expenses and these must be claimed by separating and removing any private use.

Posted 4 weeks ago

Spare room to rent? Make money tax free!

Do you have a spare room in your house that you could rent out to an individual? Well if you do the “rent a room scheme” could be highly beneficial to you.

The rent a room scheme is a HMRC approved tax incentive allowing would be landlords to rent a room within their main residence and to receive the rental income free of tax.

You can benefit from up to £4,250 tax free rental income per annum, which isn’t to be sniffed at. This is regardless of income earned from other sources such as income from employment.

You may be required to submit a self assessment tax return if you earn more than the threshold and then opt for the above income to be tax free. A Cheaper Accountant can certainly help you with this.

Posted 4 weeks ago
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Posted 4 weeks ago
Posted 4 weeks ago

Benefits of operating a Limited Company

There are a number of benefits of registering and operating a limited company. Some of the main benefits and advantages are listed below:

1. Paying less tax - you may take home as much as 75% to 80% of contract income. All natures of business can benefit from paying a low salary and then extracting income via company dividends. These are substantial tax reductions when compared to operating as a self employed sole trader.

2. Limited liability - should something go wrong there is no risk to your personal assets. Only the limited company is liable for company liabilities, not you. Great protection for you.

3. Enhanced credibility - customers, clients and suppliers are often more confident dealing with a limited company due to a perceived enhanced professional image.

4. Sale of the business - a limited company provides a convenient exit route should you decide to build your business and then cash in from the sale of the company.

5. Potential investors - investors often put their money into a limited company rather than a sole trader. Equity shares in a limited company can be sold to potential investors.

These are genuine benefits that anyone who opens a limited company can benefit from.

All limited companies must submit accounts and company returns to Companies House and HMRC but that’s where we can help and we won’t charge you an arm and a leg for the privilege.

Here at CheaperAccountant.co.uk we can set up a limited company for you and complete all of your accountancy work for a low annual fee.

Posted 4 weeks ago
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Posted 4 weeks ago

Very Small Business Rate!

Annual turnover below £1,000? We will complete your annual limited company accounts and corporation tax return as well as completing all submissions to HMRC and Companies House for a one-off fee of £100 (fully inclusive).

We have designed our fee structure with small businesses in mind. You will only be charged a low annual one-off fee rather than monthly fees that mount up.

The best part of our service is the speed at which we respond to your accounting needs. We more often than not turnaround annual accounts within a couple of days.

Posted 4 weeks ago
Posted 4 weeks ago

Maximise your VAT claim

A number of businesses find themselves needing to register for VAT after trading for some time. This is likely to be due to sales exceeding the VAT registration threshold.

If your business does fall into this category then you shouldn’t forget to consider the option of reclaiming VAT paid on goods and services purchased prior to your VAT registration date.

You will have the option of reclaiming the VAT paid on goods purchased no more than four years prior to the registration date, providing the following criteria is met:

1. The goods were bought by the entity which has registered for VAT
2. The goods relate to your VAT taxable supplies, this could be goods or services
3. The goods are still held

You cannot reclaim the VAT associated with the following:

1. Goods consumed prior to registration
2. Goods sold or supplied prior to registration
3. Goods relating to supplies that are exempt from VAT

Goods = held for resale as well as equipment, fixtures and fittings.

The VAT paid in relation to services bought during the six months prior to registration can be reclaimed providing:

1. The services were bought by the entity just registered for VAT
2. The services relate to VAT taxable supplies

You cannot reclaim the VAT associated with the following:

1. Services relating to goods sold prior to registration
2. Services relating to supplies that are exempt from VAT

Posted 5 weeks ago

What is the Director's Loan Account?

A director’s loan account arises from cash injected into a limited company by a company director or when a director extracts cash from a limited company that is neither of the following:

1. Salary payment
2. Dividend payment
3. Repayment of expenses
4. Money previously paid into the company

A positive balance on the director’s loan accountant means that cash is owed to the director by the company. This cash can be extracted by the director at any time without incurring a tax charge (income tax or corporation tax).

An overdrawn balance on the director’s loan account means that cash is owed to the limited company by the director. This can result in a tax charge and should be avoided. The tax charge may be as follows:

1. 25% of the original loan to the director as corporation tax
2. Class 1 national insurance contributions
3. Income tax on a ‘benefit in kind’

It is sensible to avoid an overdrawn position due to the tax ramifications associated with this. Speak to one of our Cheaper Accountants for further advice.

Posted 5 weeks ago

Don't forget to claim the Trading Loss

Trading losses can be common during the early years following company formation. If you do incur a loss when trading through a limited company all is not lost. There are ways you can use this loss to your advantage.

A trading loss can be used to reduce the amount of Corporation Tax payable by your limited company. This can be achieved in a couple of ways:

1. By carrying the loss forward to offset against the profits made in future accounting periods.

2. By carrying the loss back to the preceding 12 month period.

The loss can be carried forward until it has been fully offset against future profits, allowing you to receive the full available tax benefit.

There a couple of other conditions that apply but an accountant here at CheaperAccountant.co.uk can manage this process on your behalf. This way you will ensure that you never overpay your Corporation Tax.

We are often asked if a trading loss can include salary paid to a company director and the answer is yes it can. All genuine expenses incurred by a limited company qualify as an expense.

Posted 5 weeks ago
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Posted 5 weeks ago
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Posted 5 weeks ago
<p>Put your feet up and relax with Cheaper Accountant and Wave Accounting. Together we take the stress out of accounting for small businesses.</p>

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Posted 5 weeks ago

Cheaper Accountant is a trading name of Tarpon Limited | Registered Company Number 08213447

Main Office: Advantage Business Centre, 132-134 Great Ancoats Street, Manchester M4 6DE

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