What Is MTD ITSA, and How Will It Affect Self-Employed Individuals? Making Tax Digital for Income Tax Self Assessment (MTD ITSA) is a major change in the way self-employed individuals and landlords in the UK manage and report their taxes. It’s part of the government’s initiative to modernize the tax system, making it more efficient. If you’re self-employed, this change will likely affect how you record your income and submit your tax returns. Let’s explore what MTD ITSA is, how it will impact you, and what steps you need to take to ensure compliance. What Is MTD ITSA? MTD ITSA stands for Making Tax Digital for Income Tax Self Assessment. It’s an extension of the government’s Making Tax Digital (MTD) initiative, which already applies to VAT. MTD ITSA focuses on streamlining the process of reporting income tax for: Self-employed individuals. Landlords with annual rental income. Under MTD ITSA, you’ll need to: 1.Keep digital records [...]

There may come a time when you will start to wonder whether becoming VAT registered will benefit your business. You could reach this point before you even begin trading but it might never cross your mind until your business takes off. Either way, there are a couple of things that you may want to consider before deciding whether registering for VAT is the right thing for you.  It is worth remembering that VAT can be a complex area and it is wise to speak to an accountant first. This is more of a general overview. If your sales have exceeded the VAT threshold or are about to. The VAT threshold is currently £85,000 so if your turnover (total sales) has passed this, then you will need to register for VAT. Also, if you believe that your turnover will pass the threshold within the next 30 days, then you will have to [...]

Many sole traders and small businesses question whether they need the services of a bookkeeper. The obvious concern is cost, especially with all the new cloud based bookkeeping software that are on the market. A lot of them are now offered when setting up a business bank account. They are, however, only as good as the person inputting the information. I have heard many a 'bookkeepers tale' of having to unravel and correct bookkeeping entries, which ultimately proves more costly. Many businesses need to use an accountant for their year end accounts preparation and filing. Using a bookkeeper will substantially reduce an accountants bill. So, advantages of using a bookkeeper: Your paperwork is regularly updated giving you regular information to make financial decisions. You remain compliant with  HMRC regulations and payments. This is especially important with all the changes regarding Making Tax Digital. This is the quarterly reporting of figures [...]

I've started a business. Do I set up as self employed or Limited Company? Self Employed Register for self assessment with HMRC. This will inform them that you are self employed and will be completing a tax return at the end of each tax year. You will need to register by 5 October in your business's second year. So if you began trading April 2020 then you have until 5 October 2021 to register, but generally its best to register straight away. One to tick off the list! Limited Company A Limited Company will need to be set up before you start trading as you cannot trade through a Limited Company that does not yet exist. First thing to do is type your new company name into Companies House to check if the name is available. Most accountants will be able to incorporate a Limited Company. If you prefer to do [...]