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Advice for Start-Ups-Part 5b: what records will you need to keep?...

Our Advice for Start-ups series has now reached the second part of its accounting and bookkeeping for your business section. In this article we are going to delve into what records your business will need to keep.

We’ve come a long way in this series so far. Way back in Part 1: Taking the Plunge, we discussed the harsh realities behind starting up a business. In Part 2: Who Am I? we looked at what form your business is going to take as a legal entity, before moving into Part 3: What does it take to succeed. In that section we discussed the various characteristics you will need, or have to develop, to make your business a successful one. In Part 4: Taking on Tax we went head to head with some of the nitty gritty behind keeping your business functioning correctly in the eyes of the taxman. Finally, Part 5a which preceded this one, highlighted the importance of keeping accurate accounts, whilst also providing you with some questions to think about when developing an accounting and financial reporting system.

The simplest way for people to create an accounting system is by developing a chart of accounts. This chart takes into consideration how your business operates and what is important to you. Basically, it logs what your business needs and uses. From there an effective accounting system can be thought out.

New Zero Rate Tax Bands Confirmed...

New Zero Rate Tax Bands Confirmed…

Now that sounds exciting but in reality it isn’t.

The finance Bill 2016 was published in December and confirmed George Osborn’s announcements earlier in the year that from 2016-17 onwards individuals will be entitled to some new tax free investment allowances…

The so called Personal Savings Allowance (PSA)
which covers such income as bank interest will be:

£1,000 for basic rate taxpayers
£500 for 40% tax payers and
£Nil for 45% tax payers.
The Personal Savings Allowance will be deducted from the basic rate tax band.

Excuses for not filing a tax return...

Life can be unpredictable and there are genuine excuses why tax returns are late particularly in the light of recent flooding.  In fact HMRC have opened a hot line to give practical help and advice to people affected by severe weather and flooding – 0800 904 7900.

However some excuses are just plain laughable so here are the top 10 unsuccessful excuses used in penalty appeals:

  1. My tax papers were left in the shed and a rat ate them
  2. I’m not a paperwork-orientated person – I always relied on my sister to complete my returns but we have now fallen out

Excuses for not filing a tax return...

Life can be unpredictable and there are genuine excuses why tax returns are late particularly in the light of recent flooding.  In fact HMRC have opened a hot line to give practical help and advice to people affected by severe weather and flooding – 0800 904 7900.

However some excuses are just plain laughable so here are the top 10 unsuccessful excuses used in penalty appeals:

  1. My tax papers were left in the shed and a rat ate them
  2. I’m not a paperwork-orientated person – I always relied on my sister to complete my returns but we have now fallen out

CHANCELLOR ATTACKS RESIDENTIAL LANDLORDS...

In the Summer Budget the Chancellor announced a restriction on the deductibility of interest from rental income for individual landlords of residential property. This restriction will be phased in from 2017/18 to 2020/21, and it may make letting uneconomic for landlords whose businesses are relatively highly geared (high percentage of mortgage to market value).  Although it was presented as a tax on wealthier tax payers because it was announced that mortgage interest would only be allowed at the 20% tax rate, it has transpired that the mechanism of switching from an expense deductible from profit to a tax credit deductible from the tax payable has pushed those who are currently only paying 20% tax into becoming 40% tax payers after 2017-18.

Without other resources from which to reduce borrowings some landlords may be forced to sell some or all of their let properties but this will almost certainly give rise to significant Capital Gains Tax liabilities which could effectively wipe out their equity. 

The latest attack on property investors is a proposed 3% increase in Stamp Duty Land Tax.