A limited company is a kind of privately owned business legally set up for tax-free corporate income purposes. The name is derived from the term “limited liability business”. Which is now the official legal form of a corporate entity set up in the UK. In simple terms, a business is either a sole proprietorship or a partnership. Both these kinds of companies have separate accounting structures. Similarly, in the case of a limited company. The owner owns only one share of the total number of shares of the company. At the same time, the other shareholders are also individually liable for their taxes.
Understand the Need to Maintain Proper Bookkeeping Records
As a shareholder in a limited company, one has to pay taxes on his income or profits. If one earns higher yields than the limited amount he receives. Then his tax liability would be lower than those who make lower profits. Hence, every shareholder should understand the need to maintain proper bookkeeping records at every stage of operations. There are several ways that a shareholder can utilize to save money on his tax liabilities. One of these is by creating a limited company account.
Allows an Individual to Save Money
A limited business account allows an individual to save money on his tax returns. And be assured of a comfortable level of privacy as far as his tax payments are concerned. This is possible because the limited company bank account is maintained separately from the individual’s bank account. Hence, the individual has to make payments for his business account individually. The UK tax authorities feel that this practice by the shareholders of a limited company is unfair. They are not allowed to make payments against the tax they have to pay to the government. They can withdraw money from their business accounts. Pay to the government only if they have kept the necessary documentation relating to their business activities.
Saves on Time and Effort as Well
Moreover, when an individual creates a limited company account, he is withdrawing from his finances. If he were to continue with his finance separate from his business finances, he would have to make several financial calculations every month to determine whether he is making enough money to support his family. If not, he would have to cut down on other expenditures too. By creating a separate account for the business, a shareholder saves on time and effort as well. He can concentrate on his business rather than spending time on the calculation of his finances.
Help you Maintain an Appropriate Record of your Income.
Several companies offer services relating to the management of a limited company account. These companies have accountants on their staff who would help you maintain an appropriate record of your income, expenditure and cash flow. After all, keeping track of the various types of payments that you make to your business is not a simple matter. Hence, you might want to get hold of some of the different kinds of accountants who offer such services in your area. You can contact them and explain your requirements, and you might even end up hiring one of them.
Manage Limited Company Accounts
Many people choose sole traders accountants to manage their limited company accounts because they do not wish to deal with the intricacies of any specific law that might apply to their business. This means that they can take their time and concentrate on their core activities, and they can focus on generating better profits and less hassle at the same time. This is one of the main benefits of using sole traders to pay tax accountants. Since they are not tax accountants and have no intention of being tax collectors, they will ensure that your tax bill is kept to the minimum, ensuring that you save on tax. Therefore, you might want to hire someone to manage your limited company account because it costs less to pay a sole trader accountancy company to handle your charges and the fees you might have to pay for accounting services are much lower.
Advice on Setting up your Business
Apart from managing your limited company account and paying the appropriate taxes, you can also benefit from many other services offered by them, including advice on setting up your business, advice on making it grow and advice on international trading. They can help you decide what products you should sell and how you should price them. All these things can add up to more revenues for you so that you will pay higher dividends. They will also help you deal with the different types of suppliers that you will need for your business, such as wholesalers. Many people who are looking for ways to lower their business expenses choose to pay income tax through these companies because of all the various services they offer.
For most small business owners, taking time off from their regular jobs to devote themselves entirely to their businesses is an appealing idea. It allows them to spend more time working with their families and their kids, which they may not be able to do if they were juggling a full-time job. However, not everyone has unlimited free time, and even those who do have some spare time might not have the luxury of a late night and early morning accountant. If you have decided to use an accountant to help you manage your finances for your Limited Company, you will need to make sure that you find one who charges reasonable fees and who is trustworthy. The Internet can be an excellent place to start searching for an accountant who will fit your needs.