What Level of SE Income Would You Recommend an Accountant?

marie-20

Hi guys,

I started my own online business earlier this year and it's my 1st time being SE so I'm a little unsure about my tax etc.

I currently have an excel spreadsheet that details all of our sales and also our purchases which I'm comfortable with however I am currently running at £12K's worth of sales and £12.5K's worth of spend so at a loss of around £500.

Based on the past 4 months worth of sales I am hoping to finish the year at around £20K's worth of sales and a profit of maybe £1k due to new stock purchases and 'converting' our attic into a stock room so at what level of sales/purchases would you recommend getting an accountant?

TIA

Marie

jimmo

Do you have any other taxable income such as a job?

marie-20

Yes, Carers Allowance @£55 p/w and Income Support of £5 p/w. I was made redundant in July - my employed earnings came to around £8.5k.

adi2402

marie-20 wrote: »

Hi guys,

I started my own online business earlier this year and it's my 1st time being SE so I'm a little unsure about my tax etc.

I currently have an excel spreadsheet that details all of our sales and also our purchases which I'm comfortable with however I am currently running at £12K's worth of sales and £12.5K's worth of spend so at a loss of around £500.

Based on the past 4 months worth of sales I am hoping to finish the year at around £20K's worth of sales and a profit of maybe £1k due to new stock purchases and 'converting' our attic into a stock room so at what level of sales/purchases would you recommend getting an accountant?

TIA

Marie

Hi,

Maybe an accountant would be useful, I see your profit is £1000 but is this just a cash in less cash out type of calculation?

You should factor in the value of closing stock held at your period end which will not be tax deductible in the tax year.

Also the expenses involved in converting your attic. Are you happy that these expenses are of a revenue nature? They sound is if they may be of a capital nature and therefor not deductible for tax?

Also converting a room in your home to a permanent workplace and claiming conversion expenses can potentially have an impact on your Principle Private Residence relief when you come to sell the house and there may be CGT implications at that point.

I would think about having a free initial consultation with an accountant if you can arrange one. You'll probably find an hour chat invaluable.

Hope this helps, I'm sure others will expand and please forgive the typos.

property.advert

If you feel like paying a thousand or two each year to do your books then by all means go to an accountant. It would be good to see one anyway but first get a tighter grip on the allowances and rules etc.

You need to make sure that what you are paying for is what you need. You hardly need someone to punch out a P&L account or balance sheet or file accounts as that is child's play but keeping abreast of ways to mitigate tax is where small business accountants make their money. Some are just crap however.

Have a look here and in the forum http://www.taxationweb.co.uk/

If you really want someone to do it all for you, get a package quote which includes all the regulatory online form filling so as to make sure you do not miss a deadline.

chrismac1

There's no way this sort of client is a thousand or two, more like £400 or so.

adi2402

Id say maybe £750 -1000 in year one with various consultancy and then as chrismac mentions around £4-500.

Pennywise

£750 to £1k is still on the high side for a sole trader. Yes, some firms will charge that kind of money, but if you want a no-frills service, then £400 or even less is possible if you shop around.

marie-20

Well I've spoken to an accountant and I have got my 1st meeting with them on Tuesday as I think that my accounts may be a little messy this year as I've earned on PAYE, received benefits and my own SE income but we will see.

I wasn't aware, however, that I couldn't claim for stock that is remaining at the end of the year as an expense. I still can't seem to find anything relating to it either. As this is the case how on earth do you work it out for the next tax year, say for example I have £5K's worth of stock to hand I persume that I deduct that from my expenses for 2011 - 2012 and then add £5K to my 2012 - 2013 account expenses?

With regards to the house I don't think that it should as it is a rented house and I don't mean a loft convertion persea just some boarding down and lighting just so I have somewhere to store things if that makes sense.

I do currently have a spreadsheet showing all of my expenses and all of the sales and then breakdowns of each sale for my own personal benefit so as it stands I have spent £12,500 and sold approx £12,400 and I expect to have around £2K in stock at the mo so hypertheotically if I did a tax return now I would have made a profit of £1,900 taxable @ 20% due to PAYE earnings & benefit income so tax owed would be £380 ish which is carp since I don't physically 'have' that money as I've reinvested it in more stock.

How on earth do companies that sell phyically sell stock (sole traders, etc without an initial property outlay) actually make a loss other than the obvious of selling for less than the purchase price?

somethingcorporate

All the overheads of a business - lighting, heat, wages, employees, insurance etc.

If you do even some basic accountancy training you quickly learn how manipulable something such as "profit" is, even the valuation of stock can be changed to have a huge impact on how a profit is reported.

marie-20

Ummmmmmmmmmmm interesting!

For example if I have say £1K's worth of Xmas stock (at purchase price rather than sale price) the market value of that in April will be less then I originally paid therefore I could claim a lower 'assest' amount or is my thinking train completely incorrect here?

This is something, I guess, that I could really do with talking to an accountant about however I hardly think that come Tuesday he is going to be willing to disclose all/everything to me that I can do to reduce my tax bill otherwise what would be the point in 'employing' him?!

Even with apportioning part of my household bills over the 9 months it is hardly going to be a large amount - say £5 p/m for each gas and electric but I suppose that I can claim say 1/2 of my mobile line rental as I'm forever on my phone be it with potential customers, suppliers or just to check my emails and say 1/2 again of the landline and broadband so in total coming to a massive £270 lol!