Business account advice please

Rhino666

Hi

I set up as a fencing contractor a bit over a year ago. I have not drawn any money out personally and all profit from my work is paying for the expense of setting up - tools, etc. I keep a spreadsheet of all income and expenditure.

The company cannot afford to pay accountancy fees and I am intending to produce the relevant figures for my self assessment tax return myself.

Hoping that there are people on the forum who understand my position and can advise me.

Apart from the obvious expenses that can be claimed - materials, tools, wages, fuel, are there any other expenses I can claim to offset tax ? I am thinking of use of home for storage/office, telephone, etc. Any advice in this regard much appreciated.

I will also need to make use of the tax free and 10% personal allowances somehow but any tips on effectively completing my self assessment return would be very well received.

Thanks

Rob

fengirl_2

If you have been keeping accurate records of all your outgoings, then there shouldn't be any more to add. Have you included all your vehicle running costs, not just fuel? You should have been including your telephone bills on your expenditure spreadhseet. Use of home - if you use one room entirely for business, then you can include that proportion of your husehold bills in your accounts, eg if you have 6 rooms and use ine room for business, the amount included would be 1/6th. You will need to make a claim for capital allowances on your vehicle and any large pieces of equipemnt. You will also need to add back on the self assessment any private use of what is included, eg your vehicle and telephone.
The 10% tax band was abolished last year.
You mention the payment of wages - I am assuming you were operating PAYE on these, or that your workers were CIS contractors?

TM1976

I still think you should take professional advice. OK you probably could put something together for a tax return from this but you won't really be able to get enough understanding in a short amount of time to do this correctly.

If you are going to cut costs out of your expenditure I would say that your accountancy fees shouldn't be those costs. You could throw a lot of time at this and still not get it right, your time is probably better spent running your business and getting sales.

Nosht

Don't forget to claim depreciation on your capital expenditure/assets. Much as I abhor using them this is where an accountant can pay for themselves.
Even if you just take your spreadsheet (or email it) to their office to do your Tax Return for the first year then do it yourself thereafter.
Once again, shop about obtain quotes from different firms.

Regards,

N.

Rhino666

Thanks for the replies but these have highlighted the main areas I need advice on.....

1) Depreciation of assets - I have purchased items varying from a few pence to £1500 for my truck. At what price level can an item be offset completely against tax rather than the 25% write down each year ?

2) Use of home - I have an office. Work materials and tools are stored in my double garage and two sheds. My house has six rooms. Can anyone suggest a formula for a fair expense claim.

3) Telephone - Landline and mobile used for business and private use. Do I need to analyse all call charges or is there a rule of thumb here ?

4) Receipts - not always present, especially where cash is paid ie. skip hire, private purchases, etc - is this a problem ?

5) Apart from a profit, or in my case loss, figure for this year on my self assessment what, apart from my spreadsheet is required for the Inland Revenue.


I appreciate the comment about an accountant but in a previous life I was an IT contractor and there is no way that any additional expense suggestions from an accountant will cover the £400+ bill sole trader accounts will cost me. Unlike IT contracting, the fencing is hard work for little profit - I could personally afford to pay for an accountant but the business cannot. Hoping that a little advice from those that know better will help me through this.

Thanks

Rob

TM1976

OK, in answer to your questions:

1) You can't claim anything for depreciation of assets but you can claim capital allowances. Claim 40% for your truck, if you've bought any computers or IT equipment claim 100% on that. There is no rule on the amount you should treat as revenue or capital I would say anything that cost under £500 just treat it as an expense.

2) Use of home, there are many ways you could work this out, easiest to do and to justify is £3 a week, this is HMRC's approved rate.

3) Telephone, if you have a dedicated business line claim it all, if it's your home line just claim for a proportion of the calls. Claim all your mobile costs.

4) You don't necessarily need your reciepts just a record of expenditure but if you are investigated it could make it easier for you if you have them.

5) You need to do a self assessment return. You should have registered with HMRC within 3 months of starting to trade. Did you do this? You should also have been paying Class 2 NIC on a monthly basis.

I take on board what you say about getting an accountant but I still think you should get one though. I worked in practice for many years some time ago dealing with exactly this sort of business and I guarantee there will be stuff you get wrong here. Also to do this properly would take a couple of days work of someone who does this all the time with the software etc. Perhaps you had a poor experience but I would personally have expected to provide a bit more value than a few expense suggestions.