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Category: Small Business

Tax deadlines – Essential tax compliance for limited companies

Posted on by Shaper Accountants
tax compliance for limited companies
Essential tax compliance for limited companies

Managing a limited company requires meticulous attention to regulatory obligations, particularly with regard to tax and accounting. Financial compliance is a series of key deadlines and potential penalties for non-compliance, demanding a proactive and informed approach from company directors.

Here are some of the key deadline you’ll come across as a Director;

Initial setup

 Filing the first accounts with Companies House

The journey of compliance begins shortly after the incorporation of your company. Your first significant deadline is the submission of your initial set of accounts to Companies House, due 21 months from the date of registration.

This extended deadline for the first submission recognises the challenges new businesses face in establishing their operations and sets the stage for regular annual reporting thereafter.

Annual obligations

  •  Annual accounts submission

After the initial submission, your company is required to file annual accounts within nine months following the end of its financial year. These accounts must provide a transparent overview of the company’s financial performance and position, including the profit and loss statement, balance sheet, director’s report and, depending on the company’s size, an auditor’s report.

This documentation ensures stakeholders, including shareholders, creditors and regulatory bodies, have access to accurate information about the company’s financial health.

  • Corporation tax obligations

Parallel to filing annual accounts is the obligation to address corporation tax. Companies must calculate and pay this tax nine months and one day after the conclusion of their financial year. Importantly, this responsibility includes informing HMRC if the company believes it is not liable for any corporation tax, thus avoiding penalties for presumed non-payment.

  • Company tax return

A critical component of tax compliance is the filing of the company tax return with HMRC, which is due 12 months after the end of the accounting period for corporation tax.

This return is comprehensive, detailing the company’s tax liability based on its annual financial report and calculations. It’s a fundamental process for declaring tax obligations to HMRC and requires precision and thoroughness.

Understanding some of the penalties for non-compliance

 Penalties for late filing

The consequences of missing filing deadlines are significant and tiered based on the delay.

For corporation tax, the following applies:

  • 1 day late: £100
  • 3 months: Another £100
  • 6 months: HMRC will estimate your Corporation Tax bill and add a penalty of 10% the unpaid tax
  • 12 months: Another 10% of any unpaid tax

For statutory accounts with Companies House, the following applies:

  • Not more than 1 month: £150 for a private company or LLP (£750 for a public company)
  • More than 1 month but not more than 3 months: £375 for a private company or LLP (£1,500 for a public company)
  • More than 3 months but not more than 6 months: £750 for a private company or LLP (£3,000 for a public company)
  • More than 6 months: £1,500 for a private company or LLP (£7,500 for a public company)

Make sure you and your bookkeeping staff know your key dates and deadlines.

 

Starting a business: should I niche?

Posted on by Shaper Accountants
Business Start Ups - To niche or not to niche?
Business Start Ups – To niche or not to niche?

Stand out from the crowd.

According to data from Companies House, 222,068 new companies were set up in the UK within the first 12 weeks of 2023, a year-on-year rise of 8.2%.

That’s a lot of businesses and a lot of competition.

 It might seem safest to stick to tried and tested methods when you’re starting a new venture, but when you have an abundance of businesses offering the same service, it’s hard to compete. After all, one in five new businesses in the UK close within the first year.

How can you stand out? One option is to target a niche market.

What is a niche business?

As the name suggests, a niche business aims for a specific target audience.  Rather than cater to a generalised audience, niche businesses offer goods and services to specific groups of people with certain values.

Starting a niche business isn’t just for the benefit of prospective customers but also for you as the business owner. This is because it allows you to instil your values in the business. It also gives you a better opportunity to compete and build a loyal brand following.

But, before you start planning on opening your niche business, there are pros and cons to consider.

What are the advantages of running a niche business?

Although starting a niche business comes with a set of challenges, it also has a wealth of advantages.

Less competition

The more specialised your goods or services, the less likely you are to encounter an identical business. While others may have similar ideas, you won’t be up against loads of businesses selling the same product to the same people.

If you’re considering opening a coffee shop appealing to ‘coffee lovers’, you’ll have loads of similar shops around you, but if you were to open a coffee shop focusing on strictly vegan and ethical customers, you might have slightly more edge.

Word of mouth

Due to the nature of niche audiences, word spreads quickly if you’re successful – the smaller the demographic, the more connected they’ll be. If you connect with your audience and they value your services, you’ll gain more credibility over time.

Setting the price

When offering niche goods or services, you have more wiggle room to set the market price. You won’t have the pressure of price matching or staying as competitive. And, if you can connect with your desired customers in the right way, they’ll likely be willing to pay more for a product that’s suited to them.

Cons of marketing to a niche audience

While it’s good to go against the flow sometimes, trying to enter a niche market isn’t as straightforward as you may think.

An unpredictable market

In business, it’s quite rare to have a truly unique idea. That’s why it can be so difficult to penetrate the market. If there is an established business with a similar model to yours, you can find yourself competing for a smaller portion of a much smaller market.

Harder to grow

Only some businesses want to achieve unparalleled growth. You may want that boutique coffee shop in Norwich to stay small and focus on providing the best service possible to a relatively limited clientele.

But a niche business could be challenging if you have ambitions to expand. This is because your market will have a cap in the town you are operating in.

Even if you break into your niche demographic, maintaining that business over time can be the next hurdle. You’ll have to offer a product which cultivates a repeat customer base or at least attracts new people. With a niche, this can be tricky.

How to avoid falling into obscurity

If you decide to start a niche business, you’ll want to do everything you can to ensure it resonates with your target audience. As we said at the start, one in five businesses close within the first year. So, with that in mind, here are some tips:

Identify and understand your niche audience!

There’s little sense in targeting a niche audience without fully understanding their culture and values. Do your research and continue to follow trends in the community. This will keep your business relevant, and help you understand how to market to your audience.

Remember, these days, audiences are far more switched on to marketing ploys and will likely be able to see through the veil if you’re not 100% behind your niche’s values and principles.

Promote your speciality

Whatever your product or service, you want to ensure your niche audience sees its value. You should aim to make yourself the go-to person of your chosen niche – a business that will meet the needs of its specific customers.

Start with your branding

You could have the best niche product in the world. Unfortunately, it won’t mean a thing unless you nail your branding. Not only do you want to be recognisable, but you also want to be the first business someone thinks of when looking for your niche product or service.

Once you build brand loyalty, your product or service will likely gain traction (and, hopefully, staying power). It will also make you more competitive if there are similar businesses on the market.

Starting a niche business allows you to tap into a market that may be overlooked or just not catered to. But to make it a successful venture, you must meticulously plan the business’s delivery and track trends in your chosen demographic.

Remember cash flow is king in the Start Up world.

Get in touch to discuss starting your own niche business.

 

 

Self-assessment tax returns

Posted on by Shaper Accountants
Self-assessment tax returns
Early Tax Returns

Reasons to start your self-assessment tax return now.

With the new year just around the corner and tax season fast-approaching, now’s a good time to get a head start on your self-assessment tax return.

Self-assessment is a system HMRC uses to collect tax on income that wasn’t taxed at source. People who are self-employed, have to file a self-assessment return, along with partners in partnerships and landlords who receive rental income. Directors of limited companies who pay themselves a dividend may also need to file a return.

The deadline for completing your return for the 2021/22 tax year is 31 January 2023, and while HMRC gave taxpayers an extra month to get everything together and filed in 2022, it is unlikely this will be the case this year. Any taxpayers who don’t file their return and pay any tax due by February 2023 will face penalties and interest.

It’s a good idea to submit your return early to avoid incurring any extra costs. To help you get started, we’ve outlined some of the benefits of filing your return early below, along with some common mistakes and how to avoid them.

Why you should submit your return sooner rather than later

Improved cashflow management

The earlier you submit your self-assessment return, the sooner you’ll know how much tax you owe. You don’t need to pay your tax bill at the same time as filing your return, so filing earlier will give you plenty of time to budget and manage your cashflow accordingly before 31 January.

Giving yourself that extra bit of notice enables you to adjust your finances and save up what you need. Even if you end up with a bigger bill than you were expecting, it will be much easier to pay it when you’ve had a month or two to plan ahead.

On the other hand, missing the filing and payment deadline will result in having to pay interest on your tax bill, as well as penalties. Cashflow problems are very common this time of year, so avoiding this extra cost is crucial.

More time for tax planning

Making a head start on your return will give you time to explore the wide range of reliefs and allowances available.

Moreover, filing early can give you more time to seek expert tax advice.

If you work as a sole trader or partner, you may be able to deduct some of your business costs as allowable expenses, which can include money spent on office supplies and travel, as well as the costs of running your business premises.

Other sources of tax relief include claiming on tax-free charitable donations and claiming any pension contributions that you make throughout the year.

Access tax refunds sooner

If you file your return early and you’re owed a refund, there’s a good chance you’ll receive it ahead of the deadline.

HMRC will let you know the amount you’ve overpaid by as soon as you complete your self-assessment form. After that, they’ll be able to process your refund, and you may not have to wait until 31 January to receive it. If you think you’ve overpaid, filing earlier can speed up the process.

Gain peace of mind

A looming tax deadline can make it hard to enjoy the holidays, but completing your forms now may alleviate some unnecessary stress in the coming weeks.