There are 1.9 Million limited companies in the UK, and the main reason people choose to set up this way is to mitigate personal financial risk. If you are self-employed, you are personally liable for any debts. A Limited Company is a separate business entity that has been incorporated at Companies House as a legal person. This means that all finances belong to the company first. If you have a limited company or planning to set one up, the accounts have to be organised and up to date.
Check the top Accounting tips for your small limited company:
Open a Business Bank Account
Opening a business bank account is the first thing you should do because you limited company is a separate legal entity as an individual. This is to be done as soon as you register the company with Companies House.
Keep Your Personal and Business Expenditure separate:
Try to separate your personal expenses with business expenditure this way make things simpler for you and your company. Using business account as personal can create tax complications so it is best advised to keep them both separately.
Don’t use your personal money to fund your business:
If you purchase something from your personal money for your business you can surely claim it back. But it would make things simpler if you avoid doing so. Get a debit or credit card for your business account instead.
Don’t use your company credit card for Personal purchases:
If your business has a credit card- don’t use it for personal expenses. Always pay-off your credit card at the end of every month. This ensures that you will most likely to get credit in the future.
You must register for VAT if your turnover reaches £85,000 over the past 12 months (2019/20 tax year). HMRC have recently been clamping down on businesses who have failed to do so, and you could be fined.
Consider joining the Flat Rate VAT Scheme. Not only does this makes your VAT accounting simpler, but you may pay less tax depending on the amount of VAT you charge and reclaim. During the first year, you receive an additional 1% discount on the flat rate you have to pay to HMRC.
Make sure you only declare dividends when there are sufficient accumulated profits in the company to do so. Penalties will apply to any dividends which have been declared illegal.