This week we are going to make sure all of our blog followers know every step you need to take to meet your accounting and tax obligations.
Being compliant with tax is a vital part of running a business and going self-employed. Contrary to popular belief, filing a tax return doesn’t have to be daunting. If you follow our expert advice filing your tax return will be quick, simple and easy.
So far we have covered taxes for both Partnerships and sole traders. Today we are going into the details of Limited companies and tax.
Limited company directors are taxes based on salary, the same way their staff would be. Therefore, as a director you are employed rather than self-employed and your tax is paid through PAYE. However, a limited company must also pay corporation tax on its profits.
VAT is charged on a large range of business transactions, but not all. VAT payments are only required when the business’s turnover exceeds a set threshold.
There are many advantages to registering to pay VAT. Whilst you must charge customers the appropriate VAT rate on any goods or services sold to them (output tax) and pass the charge to the HMRC, you can claim back VAT charged to you (input tax) by suppliers. Therefore, good bookkeeping is a must!
Products fall into one of three VAT categories: zero rate, reduced rate and full rate. VAT returns are filed on a quarterly basis to the HMRC.
Key dates for limited companies
· For companies earning less than £1.5 million per annum, corporation tax is payable nine months and one day after the end of your companies accounting period.
· Corporation tax returns must be filed within 12 months of the end of the limited company’s accounting period.
· Larger companies have to pay their corporation tax in four instalments, based on an estimated tax liability formulated from profits in previous years.