When it comes to running a business, keeping your accounts in proper order is certainly one of your most important tasks. You need to set aside a time for it; otherwise, you could end up creating a mountain out of a molehill with outdated accounts and bookkeeping errors. Even if you are running just a small business enterprise, making sure that your accounts and books are in order can go a long way in helping your business grow and thrive. But not many are aware of the right accounts management, not to mention taxation laws and regulations in the UK. As a matter of fact, myths about taxation and account management abound. Here’s a look at the top three myths you should know about in UK taxation and managing your accounts.
Myth 1: You can avoid taxes if….
One major myth that many business owners mistakenly believe is that taxes can be avoided by setting up a limited enterprise or company. If this were really true, then wouldn’t it be obvious that everyone else would be doing it? The myth may arise due to the fact that there is no income tax for dividends for a limited company up to the threshold for dividend allowance of £5000 (this will be reduced, however, in the spring of 2018). Taxes will still have to be paid, albeit not by the individual, but by the company.
Myth 2: You have to be an expert at maths in order to do proper accounts
The second major myth related to management accounting for businesses is that you have to be good – nay, an expert – at maths in order to do proper accounts. The truth is that yes, you will have to be able to know how to add and subtract – but that’s really all it entails. Today, what with software, spreadsheets, and calculators, the management of your accounts need not be that difficult. But it is recommended that you correspond your system of accounting (be it spreadsheet, software, or manual) with your chosen accountant beforehand, as this may have an effect on the fees your accountant will charge.
Myth 3: HMRC is always right
Whilst every business owner and entrepreneur is understandably wary about HMRC and its rules and regulations, this doesn’t mean that HMRC is invulnerable to errors and mistakes. In fact, HMRC, just like any other organisation, may make mistakes now and again. HMRC is not always right. If you receive a letter or any other correspondence from HMRC, don’t immediately think that it is correct, especially if it involves an exorbitant sum or information that is clearly wrong. A good accountant, such as the central London accountants from GSM & Co., will always check and verify the information and give you updates on any amounts that are due.