Help! Really confused about stuff I need to keep for accounts(14 Posts)
Right I am in the final steps of setting up a business as a sole trader. And I am so confused!
I have a business name and I have been receiving all invoices for stuff to set the business up in my name. Fine. But I got an invoice today ( large one) made out in my business name? Is this allowed? If not what do I do?
I have paid all expenses out of my personal account so far and I am going to set up a separate business account for all money I'm going to be given. Can this just be a separate current account? Or am I legally obliged to make it a business account?
I understand that I have to register as self employed within three months of my first sale. I haven't had my first sale yet so havenet done that. However when I do my return can I claim expenses that were solely for the business purchased before registering?
The way I do it is to keep one file for all expenses. Fill it with a load of scrap paper and then staple in small things like train tickets, receipts etc; hole punch any invoices and file them in the same file. This approach means you don't lose anything, have it all together and has the added benefit of keeping things in date order.
I don't think it matters about the name on the invoice.
Remember that the financial records for your business are just that - a record to be totted up and worked into a profit and loss at the end of the year.
I don't know if you are legally obliged to have a business bank account but most have free banking for a year and come with freebies such as accounts packages and legal helplines which could come in very handy.
Not sure whether you can claim expenses from before you register as self employed - I would imagine so if you only have to register 3 months after a sale. However, I would recommend doing it as soon as possible. When you register you set up your NI contributions at the same time meaning you don't miss any periods. It is only a small monthly contribution at the beginning.
Cheers. I think I'm confusing myself. A BBC qa suggests that it is possible to claim for expenses incurred up to 7 years before. I just have my eye on my first tax return which I will be submitting 7 months from now.
Does it matter if the bank account is in my own name rather than business name? The business name us not registered and I'm not planning on it. They look quite expensive.
You can have whatever business name you want without registering it - but it may be a problem, for instance, to pay cheques in your name into a business account with a business name and vice versa. I am a freelance writer and have got round this by using my own name plus a sub name as my business name ie. Billwoody, writing etc. Thus cheques are always in my name. But that might not work for other forms of business.
There is no such thing as "registering a business name" in the UK. If you are a sole trader it doesn't matter whether the business name or your own name is on the invoices. You might have problems paying in cheques made out to your business name unless you have a bank account in that name, and a bank is unlikely to give you a personal account in a business name. One way around this is to ask for cheques to be made out to "Ethel Banks t/a Super Stuff 4U" (t/a stands for "trading as"). Eventually the bank may catch on and try to get you to switch to an (expensive) business account.
This thing about 3 months hasn't been the case for some time now. You are supposed to register immediately you start trading. You can claim any pre-trading expenses as if they were incurred on the first day of trading. You won't have to submit a tax return online until the end of January 2014.
There are a number of advantages, as well as a couple of disadvantages, to forming a Limited Company; an accountant can help you decide.
Oh, you may find Business Link more comprehensive than the BBC, also UK Business Forums.
Have you thought about getting an accountant? Mine has been immensely helpful.
Re the documents, whether it's your name or the company name, it doesn't matter.
Get a separate account ASAP. So much easier than using your own accounts.
You do not have to have a business account (but don't tell your bank you want to use a normal account foe your business, they will be a pain)
Why don't you register as self employed now? If you don't make any money, you don't. Accounts are easy (£0 earnt, £x spent) which will be carried over the following year.
And, go and see an accountant. Mine did a first free meeting where they actually checked quickly that the business was viable and have me information on what type of company was best for (ltd or sole trader), how to best put all the accounts together etc... I pay a one off fee for the accounts (agreed before hand) and they are always there when I have a question for the accounts.
Keep receipts for every expense no matter how small
I also keep a detailed log of mileage per month as well, last year my accountant wasn't happy with the big pile of petrol receipts I gave him.
Car usage - unless the car is used exclusively for business (and you are only going to persuade HMRC of that if there are more cars at your home address than there are adults), you need a log of dates, where from and to, miles and what for.
No you don't need a business bank account.
Just keep good records.
An accountant is a good thing!
Just wanted to say good luck with the business. I did it and it was one of the best things I ever did. You don't need to register your business name as a sole trader, but it would be worth a quick check on Companies House to see if any one else uses the same name you have in mind. This makes it easier if you want to get a website later on using the name of your business e.g. if ethelb.co.uk for example is already taken.
Business bank accounts are fine if its free for the first year. Mine was (Lloyds TSB - not plugging them-only reason I used them was that its up the road from me for convenience). Then there are charges after the 18mths expired, but when I helped a friend with hers, the new cost calculations they have are overly compllicated. As she didn't expect to make much in the first year, the bank were happy for her to use a new current account. Ideally, use a separate bank account and get online banking. I would suggest as to whether you choose for invoices (and payments to you) to be in your name/business name, that you must be consistent. Its easier for customers, you and will save hassle with banks, HMRC etc. Plus if the same name appears on everything (invoices, receipts etc) its good for brand image.
Also, I would recommend HMRC's website https://www.gov.uk/browse/business/setting-up and they have some really useful business workshops on different topics e.g. starting out, expenses, tax returns etc. I attended two and they were very useful and only last approx 2 hrs.
"This makes it easier if you want to get a website later on using the name of your business e.g. if ethelb.co.uk for example is already taken"
No it doesn't (well not unless you want a ltd.uk address it doesn't). If you want ethelb.co.uk, or ethelb.com and it is already registered you would have to make an offer to the person that owns it, they are under no obligation to sell.
Thanks for all your help. I have my own domain already though I know that doesn't mean much but it should be easy to claim as an expense. I won't be travelling much for the job and if I do it will probably be a zip car so easy to claim. Or public transport. Thanks for the tip about Lloyds. I will look into them. Glad to hear the fact that I have been given receipts in both names isn't a problem.
Have a look at this page
I wrote it for ebayers but most of it is generally applicable.
There is an error on the limit for flat rate VAT that I must get around to updating but otherwise its OK
feel free to print out and take highlighters to it
That's brilliant talkinpiece. Just what u needed ESP what I need to be able to hand over to accountants. Info on that us surprisingly thin on the ground. I will look into going on a Hmrc course.
Join the discussion
Please login first.