Rothmans Salisbury are happy to advise on all aspects of tax and accounting, including Cash Accounting.
If you run a small business have you considered opting into the new cash based accounting scheme? Bear in mind that this does not mean you will pay less tax.
The new cash based scheme allows an unincorporated business with a turnover of under £77,000 to use a simplified cash-based regime for financial years starting from 1 April 2013.
Basically this means you will pay tax on the cash you have received during the year, less allowable expenses, and ignores amounts owed to you by customers at the year end.
The scheme may therefore be helpful in that it eases your administrative burden but there are some pitfalls:
- Limited relief for business losses.
- Limited relief for money spent on assets used in the business.
- Interest payments are only allowed up to a limit of £500.
- Certain expenses are based on flat rate allowances such as car expenses.
Other points to consider are:
- If a business is growing it would be better to have proper accounts prepared to review performance and help with decision making.
- If you intended to apply for any loans or mortgages in the future full accounts would be required.
Your individual position would need to be reviewed to establish which system is most efficient for you based on your own circumstances. If you need help or advice on this please contact us.