Failing to manage your finances accurately or efficiently can prove to be catastrophic as the results can vary from losing your best employees, or even closing your business for good.
The fact is that you do not need to be a genius; all you need is a basic understanding of how taxation and accounting work in your respective country.
With this in mind, we have put together a simple and straightforward guide on some of the most important aspects in regards to taxation and accounting that is appropriate for both beginners and even experts.
Do I need a new business bank account?
It's a good idea to open a business bank account if you have just established your own business or if you are a freelancer with a growing number of clients. They can be an effective strategy to keep your business money distinct from your personal finances.
A business bank account is similar to a personal bank account in that it is used purely for business revenue and expenses rather than for personal transactions.
We do advise you to set up a separate business account as it has many benefits. For instance:
- it can improve your credit score and rating for your business;
- your setup will have a more professional look;
- maintain a good relationship with your chosen bank.
How long should I be keeping my accounting records for my business?
Accounting records that are accurate are an important component of running a firm. Failure to maintain track of your finances may cause havoc in your business, as well as major legal consequences if you don't pay the correct amount of tax.
Accounting documents should be kept for a number of years, but how long should you retain accounting records for your company? The answer depends on your business type. For instance, if you own a limited corporation, you must retain records for at least six years after the last financial year ended but you may have to keep these accounting records for longer if the following applies:
- they illustrate a transaction that spans many accounting periods for the firm;
- the business has purchased something that it intends to endure for at least six years, such as equipment or machinery;
- you submitted your Corporation's tax return late;
- your Company Tax Return is now being audited by HMRC.
Additionally, if you are also an employer then you must maintain all PAYE records for a period of three years (in addition to the current year). You are considered an employer if you run your own business and pay yourself (and/or others) a salary. You'll need to keep track of all deductions, benefits, costs, and statutory payments made from employees' compensation.
What is HMRC voluntary?
Your revenue information should be totally transparent when you submit it to HMRC (HM Revenue and Customs). HMRC believes that its customers wish to pay the proper amount of tax; but, mistakes sometimes happen, and corporations and individuals may end up paying less than they owe.
Those who are not paying the proper amount of tax can use voluntary disclosure to update their statement and bring their payments up to date. Individuals and businesses can use the DDS (digital disclosure service) to correct any errors in their income tax, capital gains tax, corporation tax, or national insurance contributions.
Do I need a Business Exit Strategy?
The value of having an exit plan cannot be overstated, and it's critical to think about how you'll quit your company when the time comes.
When it comes to departure plans, there are numerous possibilities available, and the type you pick will be determined by your specific circumstances. Again, no one wants to think about their firm failing, but there are a number of compelling reasons to implement an exit strategy.
We will highlight some of the main reasons as to why you should develop a Business Exit Strategy in the following list:
- You can make better-informed decisions;
- Enhance your current business’ value;
- Allows more room for flexibility;
- restrict and prevent further losses.
We hope you found this guide to be useful and that it clarified any previously complex information. At Persona Finance, we have a team of highly qualified accountants that provide a variety of accounting services, including bookkeeping where we organise your accounting and financial data with accuracy and efficiency. If you require our services, please contact Persona Finance at [enquiries@personafinance.co.uk].
