Accountancy FAQs

Should I be a limited company?

It depends.

With the top rate of corporation tax now at 25%, the tax savings of trading through a limited company aren’t what they used to be Historically it used to be that the tax savings compared to the extra National Insurance paid as a sole trader, made it much more appealing.

A better reason for going limited is for the limited liability. Unless a director has acted fraudulently or negligently, if you trade through a limited company, any creditors of the company can’t go after your personal assets. Watch it though if you take too much money out of the company and end up owing the company money.

However limited liability comes at a cost.  Your accounts are filed on public record and cost more to produce than if you were a sole trader.  You will need a PAYE scheme to pay yourself.  The money’s not yours, as it is when you’re a sole trader.

Everyone’s circumstances are different so it is important to seek professional advice.

Should I be VAT registered?

It depends on who you are and who your customers are.

Businesses providing financial services for example, cannot be VAT registered as financial services are an exempt supply. For most other businesses however, once your turnover od taxable supplies reaches the VAT threshold, (currently £85,000) you have to register for VAT. But what about before then? For businesses where customers are VAT registered, it would make sense to be registered for VAT so that their customers can claim the VAT back and they can reclaim the VAT on what they buy.

If the majority of a businesses customers are private individuals and the business has not exceeded the VAT threshold, then you probably would not look to be VAT registered.

For smaller businesses, it is important to look at the impact it would have on your customers and what VAT you are missing out on.

With VAT for the smaller businesses comes compliance costs and you may need to get an accountant or bookkeeper involved, or if you already do, then their fees may rise. If you do it yourself, you have MTD for VAT to deal with and have to submit your VAT returns via compliant software 

Everyone’s circumstances are different so it is important to seek professional advice.

Do I need software?

As mentioned earlier, Making Tax Digital for VAT requires you to submit your VAT returns using MTD compliant software.  Even though Making Tax Digital for Income Tax and Self Assessment has been pushed back to April 2026, we are still encouraging new businesses to set up on software, to provide more meaningful and timely financial information than spreadsheets.

One of the main statutory responsibilities falling on directors is the preparation of the accounts and the report of the directors. It is the responsibility of the directors to ensure that the company maintains full and accurate accounting records. A company director can be held personally liable for losses incurred by a business which are proven to be the result of board decisions, or a failure act properly. Without adequate accounting records, it can be argued that the directors don’t have the information available to make financial decisions.

If you maintain good accounting records, on software, our fees are likely to be less than if we’re presented with a spreadsheet or no records!!

Everyone’s circumstances are different so it is important to seek professional advice.

Should I have a separate business bank account?

Yes, definitely.

If you’re a limited company, the company’s funds have to be kept separate from your personal account.

Even as a sole trader we recommend keeping a separate business bank account.

If HMRC enquire into your accounts, they can ask for bank statements for any bank account that contains business transactions.  If you use your personal account, then you will have to give HMRC your personal bank statements.

Do you know what every transaction is that goes through your personal account?  Can you confirm and verify every amount paid into your account, even the non-business items?

One of the great things about using online accounting software is the ability to import your bank transactions, so you don’t have to manually enter them.  If your business transactions are mixed in with your personal transactions, either you, your bookkeeper or your accountant will have to spend time separating the private and business transactions

Everyone’s circumstances are different so it is important to seek professional advice.

What are your charges?

Many accountancy firms charge using packages, Bronze, Silver, Gold or Basic, Essential and Premium, etc, with a list of services included. Two businesses with the same turnover, can be charged the same price, but one has 20 transactions per month and the other 5 transactions. For one it will feel like a bargain and for the other really expensive. For the accountant, by setting a fixed fee there will always be winners and losers. The question is however, do you believe you will get the same level of service if the accountant makes peanuts per hour on your job with 20 transactions compared to what he could make on the business with 5 transactions?

We don’t package our clients. We treat every client as the distinct business they are and provide a tailored fee after discussion with the client about their business and what their requirements are.

How good are your books and records? Do you have an in house book-keeper who meticulously accounts for every penny, or do you hate bookkeeping and want to outsource this service to an accountant?

If there’s something a little more complex to your business or a one-off transaction that needs more senior staff, then our charges will be higher.  Do you need an accountant or a trusted advisor? The preparation of your accounts and tax returns is a legal requirement and this may be all you require. Alternatively, you may want a trusted advisor alongside you to help guide you through the highs and lows of your business venture and to assist with the key decisions to ultimately save you tax and time.

We explain this in more detail here our pricing page

I have sold a property; do I need to pay Capital Gains Tax?

It depends.

Capital Gains Tax is a tax on the profit you earn when you sell an asset that has increased in value. It is payable on property that is not your primary residence, for example, buy-to-let or a second home.

Usually, you will not need to pay Capital Gains Tax if the property you are selling is your main home.

When it comes to property sales, CGT is charged at 18% for standard rate taxpayers and 28% for higher rate taxpayers. This is payable on any profit earned on the property minus your CGT allowance.

Any Capital Gains Tax on UK property must be reported and paid within 60 days of completion.

Everyone’s circumstances are different so it is important to seek professional advice.

Can I do my own bookkeeping?

Yes, you absolutely can.

Bookkeeping is essential for a business of any size, but it can be very time-consuming. By hiring an expert, you can free up your time to build your business, whilst a professional takes care of the numbers.

By outsourcing, you can expect your bookkeeping to be done by someone with the latest knowledge, skills and software. Similarly to a DIY scenario, most of us can change a light bulb, but very few of us can re-wire a house.

If you’ve already started managing your records yourself, you may have missed something, seeking professional advice will ensure your paperwork is in appropriate order so you can spend time focusing on other aspects of your business.

Everyone’s circumstances are different so it is important to seek professional advice.

How do I change accountants?

Changing accountants can be a seamless process. The choice of the provider of your accounting and taxation services is entirely down to you.

If you feel you are not getting the service you deserve, you may be better switching to an accountant who is more suited to you and your business.

You should inform your current accountant that you are leaving and settle any outstanding debts.  It is important to let them know who your new accountant will be, so they know who to expect follow-up contact from.

Your new accountant will then write to your current accountant and request all of the relevant information to enable them to act on your behalf.

I have recently started a business, when should I start looking for an accountant?

Given all of the compliance and regulatory requirements of doing business these days, some entrepreneurs feel more confident having an accountant from the start.

It may even help you to seek the advice of an accountant at the planning stage prior to launch because a good accountant can challenge your assumptions based on their experience.

Having an accountant can free up your time, so you can focus more on your business. As your business grows, your accountant’s input will become more significant.

An accountant can also save you money in many areas by increasing tax efficiency and improving cash flow. They can provide invaluable general support by offering general business advice, discussing your ideas and future growth plans.

If I no longer live in the UK, am I exempt from Inheritance Tax (IHT)?

It depends.

If there are assets situated in the UK, these will always be subject to IHT, no matter where you live or where you are domiciled.

However, for non-domiciles all assets situated outside the UK are generally exempt.

 There is a category known as ‘deemed domicile’, which effectively treats you as UK domiciled for IHT.

If you fall into the non-domicile category, it may be worth considering whether you should dispose of our transfer your UK assets to avoid IHT.

Everyone’s circumstances are different so it is important to seek professional advice.

Book Your Discovery Meeting

If you are a looking for a friendly, approachable and professional accountancy practice, you have come to the right place.

Whether it’s tax planning services, business services, payroll, bookkeeping or management accounts, we have the specialist expertise to meet your needs.

Our friendly team are ready to tailor our services around you to ensure that you focus on the things that really matter, whether you are an individual, sole trader or an owner-managed business.

Contact us to see if we can help.