Help regarding accountancy fees

Ariel1982

Prothet_of_Doom wrote: »

How many invoices and sales do you make in a month ?

I typically only have 4 or 5 invoices a month for sales, and almost all my expenditure goes through my business account, so it's not massive ammounts of information.

I set up my own ltd company £35 (2 hours of effort)
Applied for Flat Rate Vat (about 4 hours of researching HMRC website)
Registered as an employee (about 2 hours)
Set up a bank account (4 hours of working out which was best, plus a couple going into branch)
Set up my own accounts system on excel. It's fairly simple as I explained.

On going:

I do my VAT return (an hour every 3 months plus a yearly submission an hour)
I do my own PAYE submission for me and employees (Using HMRC simple software - 35 mins per month, plus P35 submission that takles about an hour once a year)

I Work out what salary and what dividend to pay myself for best outcome (an excel spreadsheet, took about an hour to input all the figures and I played around for a couple of days - an hour in total)
Self assessment ? Did that last night, took an hour.
So that leaves what I pay an accountants staff to do.
I give him a years worth of paperwork and an excel file with a number of tabs, and my estimate of profit, and CT estimate, and he passes it to a bloke in the back office who turns that into abreviated accounts for companies house, and submits that and then submits it to the HMRC. He checks all my figures and payments to HMRC, and then I get charged £450 plus VAT

Thank you this is very useful. I send out around 20 invoices a month. I have very few expenses (apart from, going forward, the accountant!) I pay two freelancers who work for me pretty much full time. They sort their own tax/NI etc. I'm looking at taking on a third as working pretty much to capacity at the moment.

I have an idea for another related business but it's been on the back burned for about a year now. I guess it's the making the next step that I'm worried about and increasing my paperwork and the expense involved. I work really hard to keep myself competitive and keep expenses low, and it's worked so far.

Thank you all for the advice. Very much appreciated. Going to spend some time over the weekend really looking into this further.

notanewuser

Ariel1982 wrote: »

Thank you this is very useful. I send out around 20 invoices a month. I have very few expenses (apart from, going forward, the accountant!) I pay two freelancers who work for me pretty much full time. They sort their own tax/NI etc. I'm looking at taking on a third as working pretty much to capacity at the moment.

I have an idea for another related business but it's been on the back burned for about a year now. I guess it's the making the next step that I'm worried about and increasing my paperwork and the expense involved. I work really hard to keep myself competitive and keep expenses low, and it's worked so far.

Thank you all for the advice. Very much appreciated. Going to spend some time over the weekend really looking into this further.

Are your freelancers truly self employed? I mean by HMRC's definition rather than yours? Could be a nasty future surprise if not.

Ariel1982

What do you mean by this? They are writers. They both work from home, flexibly. They organise their own workloads and pay they're own tax and NI.

Atidi

Ariel1982 wrote: »

Good evening all

I'm looking at taking the huge step of going from a sole trader to a LTD company, and registering for VAT.

I've been given a list of required services and prices from my current accountant, and I'd appreciate if you could look this over for me. The fees seem on the steep side, although I'm assured that doing this will save me money.

Here's what I have - it's long, I'm sorry:

I’ve now had chance to pull together a plan, and calculate the fees, for helping to transfer your sole trader business to a company. Here’s what I’ve got in mind:

· The new company is incorporated ASAP (I have checked and the name is available at the moment)

· The transfer will take place on (this gives us plenty of time)

· We will register you for VAT from the first day, and also help you apply to join the Flat Rate Scheme

· My colleague will help you to set up your accounting system on Xero (the cloud based software that we discussed) and will train you how to use this – please note there is a monthly license fee for the software of between £12 and £19

· We will help you set up a company bank account, advise your customers of the change, and also your suppliers


Following the incorporation process:

1. We will prepare your quarterly VAT returns for you using Xero and we will submit these on your behalf to HMRC

2. We will set up a PAYE scheme from 6 April 2014, to provide you with tax efficient remuneration

3. We will help you decide on a suitable dividend policy to give you the money you need tax efficiently, and we will prepare all documentation to support the dividends

4. We’ll deal with all statutory returns to Companies House

5. We will prepare the company’s accounts and corporation tax returns

6. We will prepare your personal self assessment tax return

7. We’ll provide you with unlimited meetings and telephone calls throughout the year for free


What you should save:

· Based on you making profits of £40k on a turnover of £60k you will save around £2,000 in corporation tax – potentially more

· Utilising the Flat Rate Scheme for VAT you will be approximately £3k better off each year, more in year 1


Our fees:

· Helping you with the incorporation, setting up Xero, dealing with VAT registration and all other matters required to get you up and running - £500 plus VAT

· Preparing the quarterly VAT returns, dealing with all company secretarial matters, preparing the annual accounts and corporation tax returns for the company - £1,500 plus VAT

· Operating a PAYE scheme for you from 6 April 2014 - £150 plus VAT per tax year

· Preparing your personal tax return when you become a director - £70 plus VAT per year

· Preparing your final sole trader accounts to 31 October 2013 - £350 plus VAT


So, the additional fees each year for operating as a company are £1,650, but you save £5,000 or more – a net benefit of £3,350. You will also benefit from enhanced credibility (Limited Companies tend to attract a bit more authority), and importantly you will have limited liability which means your home and personal assets aren’t at risk if something really bad happens.

I know that this is a lot to take in, so if you’d like to meet for a coffee to go through it, or talk through this on the phone, please let me know.



I'm wondering if all of these services are necessary, or are things that I can do myself relatively straightforwardly, for less.

Advice and feedback really appreciated

Thanks
Ariel

You can set up a limited co for about £20 on the web using an agency (of course you won't get any advice or support, but if you know what you want, it's quite straightforward)

You can register for FREE with HMRC for VAT - that's really straightforward to do.

Do you need ongoing secretarial support and/or quarterly VAT returns? If it's a simple business you've run yourself as a sole trader, quarterly VAT returns are not difficult to do.
If you opt for the flat rate scheme, it's dead easy.
You can file the returns yourself for FREE

Do you need your accountant to run the PAYE for you?
Do it yourself for FREE. There's even free software available, either from HMRC for one of commercial ones they recommend, for small companies (up to about a dozen employees)

Did you have the accountant do your personal tax return as a sole trader? Hopefully he can save you the £70+VAT he's going to charge you. If not, do it yourself for FREE.

Well you are going to have to have your final year sole trading accounts made up, so I guess £350+ VAT was what you expected based on previous years costs.

The annual accounts of the limited company should on;y set you back about the same as it cost for a sole trader i.e. about £420+VAT once you've knocked off all the superfluous services.

You should still be able to have the £5k+ savings he's advised

Atidi

Ariel1982 wrote: »

What do you mean by this? They are writers. They both work from home, flexibly. They organise their own workloads and pay they're own tax and NI.

Check the HMRC website about disguised employment.

Ariel1982

Atidi wrote: »

Check the HMRC website about disguised employment.

No the freelancers who work for me would not be classed as employees. They manage their own work load. They are paid per project not per hour or day etc - so can therefore finish a project early. They can refuse work. They are free to work for other people - in fact, one does on a daily basis and the other used to. They work on their own premises with their own equipment. They manage their own time. They don't have to 'request' time off. They can sub-contract their work if they choose, through their own arrangement.

It would be cheaper for me to employ them and pay them as employees, but this arrangement suits us all better in terms of flexibility and work/life balance (we all have young children). Plus they live at the opposite end of the country to me.

Ariel1982

In addition (in case anyone else is reading and interested)

From the Guardian

Yet IR35 has, in reality, only had limited impact on the growth of personal service companies. It was expected to raise around £300m a year in lost national insurance and income tax from disguised employees, but a September 2011 freedom of information request revealed that figure was less than £2m. The Professional Contractors Group, established in protest against IR35, has fought thousands of battles on behalf of freelances against HMRC – and won nearly all. It published figures in 2010 revealing that its legal advisers had won 1,485 cases for members, while HMRC won just eight.

Meanwhile. HMRC has lost its appetite for IR35 challenges. In 2003 it carried out 1,000 "enforcements" of the legislation; that fell to just 23 last year.


I don't think this is something I need to be worried about but thanks for the heads up all the same.

Atidi

Ariel1982 wrote: »

In addition (in case anyone else is reading and interested)

From the Guardian

Yet IR35 has, in reality, only had limited impact on the growth of personal service companies. It was expected to raise around £300m a year in lost national insurance and income tax from disguised employees, but a September 2011 freedom of information request revealed that figure was less than £2m. The Professional Contractors Group, established in protest against IR35, has fought thousands of battles on behalf of freelances against HMRC – and won nearly all. It published figures in 2010 revealing that its legal advisers had won 1,485 cases for members, while HMRC won just eight.

Meanwhile. HMRC has lost its appetite for IR35 challenges. In 2003 it carried out 1,000 "enforcements" of the legislation; that fell to just 23 last year.


I don't think this is something I need to be worried about but thanks for the heads up all the same.

Or maybe the figures just reflect the natural decrease in such cases

When IR35 was first introduced, it was after years & years of people operating personal service companies, and arguably even encouraged in those years just before IR35 started to set them up as a result in changes on corporation tax legislation (the most significant of which has now been reversed, and so such encouragement has similarly been reversed)

If you were one of those 1000 businesses/employees supplying IT services to IBM (or whoever) back in 2003 and decided by HMRC to fall within IR35, if you supplied the same services in 2004 or even 2013, on the same basis to the same supplier, then you'd be a fool to think HMRC wouldn't find likewise today ... so you wouldn't try otherwise. You'd probably also warn all your friends and colleagues you work with as no one would want to inflict an HMRC investigation on even their worst enemy.

I think most people have now also learnt that you can not fall outside of IR35 simply by putting such clause in your supply contract. (or your supplier putting it in their purchase contract)

Atidi

Ariel1982 wrote: »

...It would be cheaper for me to employ them and pay them as employees, but this arrangement suits us all better in terms of flexibility and work/life balance (we all have young children). Plus they live at the opposite end of the country to me.

How would you employing them on a casual basis (often referred to a zero hours contract today) put you at any disadvantage in terms of flexibility? :huh:

If it's cheaper for you, you really should consider it. If it's possible, then chances are they are currently disguised employees, despite your protestations otherwise.

Some busnesses employ people the other side of the world, so being the other end of the country should not present you with any issues

Ariel1982

I have read through the definitions and they are self-employed, not disguised employees.