Accounting Terms and Defintions

Technical Accounting Terms Explained

Don’t get tied up by technical jargon... At 1st Contact Accounting we guarantee your understanding through our personal service

Incorporation and Set Up
1st Contact Accounting will assist you with same-day formation of your Limited Company and complete all set up requirements needed to run your company.

Our service-oriented experts will help you in contacting the relevant tax departments to ensure you have registered for the tax schemes required to run your company:

• Applying for your PAYE reference number
• Applying for your Corporation tax number
• Applying for your VAT and Flat Rate VAT registration, if required.

In addition to assisting you with getting your company up and running, 1st Contact Accounting will also help you obtain a company bank account. A consultant is available to assist you with the process of naming and incorporating your Limited Company. They can also direct you to a financial advisor who can assist you in making the most of the tax advantages available to you depending on your specific circumstances.

PAYE Schemes and Salary Calculations
Every company with employees must register for a Pay as You Earn (PAYE) scheme.
PAYE tax and National Insurance Contributions are deducted at source and paid over to HMRC. PAYE contributions are paid over to HMRC quarterly or annually depending on which scheme you register for.

As the employee/director of your own Limited Company you choose how you get paid. Setting your salary at an optimum level and drawing tax free dividends or investing the retained earnings can have a massive impact on how much tax you pay. It is, therefore, a very important aspect of managing your own Limited Company.

In your initial consultation with your accountant, 1st Contact Accounting ensures that you are aware of the options and that the salary levels that you set are best suited to your requirements. We assist with the registration and management of your PAYE scheme, the associated payments to HMRC and Year End returns (P35 and P14 forms), which confirm the salary earned, PAYE and NI contributions made on behalf of the employee(s). The Year End returns are statutory requirements and are the responsibility of the director.

Annual Financial Accounts
Every company registered in England and Wales is required by law to submit Annual Financial Accounts (Income Statement, Balance Sheet etc.) to HM Revenue & Customs and Companies House. These Annual Financial Accounts must comply with the Companies Act 1985 and report on the company’s trading activities, giving details of income, sales, expenses etc.

1st Contact Accounting will help you fulfil this legal obligation as the company Director. We can prepare your Annual Financial Accounts and company tax returns for you, ensure they comply with the legislation and are submitted before the due dates.

Although due dates vary for every company depending on the company’s Accounting Date, the general deadlines are as follows:

HM Revenue & Customs
Annual Financial Accounts	- 12 months after the Accounting Date
Company Tax Return	- 12 months after the Accounting Date
Corporation Tax	- 9 months after the Accounting Date
Companies House
Annual Financial Accounts	- 9 months after the Accounting Date

Let 1st Contact Accounting help you avoid any unwanted interest and penalties by making sure the Annual Financial Accounts are submitted before the due dates.

Bookkeeping
Bookkeeping is fundamental to the running of your Limited Company’s accounts. It entails the monthly allocation of each line of your bank statement to various income or expense categories in a cashbook, as well as keeping track of any discrepancies that may occur in your company’s bank account.

It is vital to have your bookkeeping records and your company cashbook up to date. Without these you would not be able to prepare your Annual Financial Accounts, your VAT Return (if you are VAT registered or intending to be) and your Year End returns (P35, P14 and P11d).

Annual Financial Accounts, Year End Returns, Annual Shuttle Returns and Personal Tax returns are all statutory obligations if you intend to run a Limited Company.

1st Contact Accounting offers a bookkeeping service and takes the hassle of bookkeeping off your hands. We will also be able to identify if you are ever underpaid by a client when we perform our reconciliations. Additionally, if 1st Contact Accounting takes care of your bookkeeping we will be able to respond to reference requests for mortgages, tenancy agreements or if you are applying for your Tier 1 Visa (HSMP).

If you are contracting and earning through a Limited Company it is important that you are able to provide references for any third party that requires verification of your full earnings.

Take advantage of 1st Contact Accounting’s bookkeeping service and you will pay a lower fee for the preparation of your Annual Financial Accounts.

VAT
Registering for VAT and FRV (Flat Rate VAT) could pay for your accounting fees! VAT is a tax that a company is required to charge on the goods and services that it provides to its customers. The current standard VAT rate is 20%.

A company is only required to register for VAT with HM Revenue & Customs when its turnover reaches the VAT threshold in any 12 month rolling period. The VAT threshold for the current tax year (2009/2010) is £77,000.

You can also opt to be VAT registered on a voluntary basis.

Flat Rate VAT (FRV)
To lessen the burden of administration and paperwork, HMRC allows companies in certain industries to pay a reduced percentage (e.g. 12%) of VAT to HM Revenue & Customs, but still claim the full 20% from their clients. Registering for FRV can therefore increase your gross take-home pay.

At 1st Contact Accounting, we recommend registering for VAT and FRV to the majority of our clients. If you invoice £35,000 or more per annum, the additional savings could exceed all of your accounting fees.

1st Contact Accounting can process your registrations for both VAT and FRV, maintain your cashbook, prepare your VAT calculations each quarter, complete your VAT returns and inform you of the amount of VAT that is deemed to have been collected by you on behalf of HMRC, making the whole process simple, seamless and super-easy!

Personal Tax Returns
If you are running your own Limited Company it is one of your statutory obligations as a Director to complete a Personal Tax return by the 31 January every year if submitted online, and 31 October if submitted as a paper return.

Your Personal Tax return is completed as a Self Assessment, which includes information about your gross salary earned, PAYE and NI (National Insurance) paid over the course of the year, as well as any expenses, dividends, rental income, or any additional income, including any capital gain.

1st Contact Accounting has been processing Personal Tax returns since 1996 and offers an extremely efficient and competitive Personal Tax service. In order to process your Personal Tax return we ask you to submit to us the required information via a secure, personalised, online questionnaire. You will also need email copies of any P45’s,P60’s and P11d’s.

1st Contact Accounting will keep you updated on your Self Assessment progress through your own personal Accountant. We file the returns electronically to avoid any returns being lost in the post.

Self Assessment service includes:

• Collating all required information
• Calculating any tax liability or refund
• Completing and filing your tax return on your behalf
• Advising you when various payments are due and how much to pay
• Introducing you to any relevant tax saving ideas

Annual Shuttle Return (ASR)
The Annual Shuttle Return (ASR) is a form that needs to be completed and sent to Companies House by a business every financial year. This is to confirm the company’s trading details and director(s) details.
Filing your ASR is one of your directorial responsibilities. Failure to complete your ASR within 6 months of its annual expiry will result in a company being struck from the registrar of companies at Companies House. 1st Contact Accounting offers an ASR filing service for all our accounting clients.

Still unsure about something? Why not check out our FAQ section, designed to answer your small business accounting questions.
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