5 COMMON MYTHS ABOUT ACCOUNTS AND TAX
As a well-established accountancy practice, Your Tax Shop are still often amazed by some of the myths which come to light about Accounts and Tax. We’re not entirely sure where these myths come from, but they usually begin with “my friend down the pub told me…”
Does this sound familiar?
Here our Your Tax Shop’s top five accountancy related myth busters:
There are ways to pay no tax if you set up a limited company
Our response to this statement is that if this was the case then everyone would do it! We believe this myth may have originated back when standard rate tax payers paid no additional income tax on the dividends they received. Those days however are long gone but, not only that, dividends are paid out of post-tax profits i.e. profits leftover in the company after Corporation Tax has been paid! So, there will have been tax to pay by the company regardless.
HM Revenue & Customs (HMRC) get everything right
If we had a pound for each time, we received a frantic phone call or e-mail from a client who has received an incorrect tax bill or conflicting information from HMRC then we would all be rich – after tax of course! The most frustrating part of this for us is that these errors are clearly wrong and takes valuable time to sort out. It’s important that you don’t just automatically assume that all correspondence from HMRC is correct. Like anyone, they do make mistakes and it is always worthwhile double checking. Especially if your tax bill is higher or lower than originally anticipated. If you’re unsure where to start, feel free to contact us at Your Tax Shop and we’ll be happy to help. Don’t be afraid to query anything you get through from HMRC. They’re not always right.
Your Accounts have to be prepared by a Chartered Accountant
This could not be further from the truth, unless your Limited Company is large enough to require an audit. In fact, there are no overall regulations in place which applies to someone calling themselves an accountant! So, how do you make sure that your accountant knows what they are doing, I hear you ask? Well like anything, we would suggest going on recommendation and also bear in mind that accountants who are members of the recognised accounting bodies such as AAT, ICAEW, ACA to name a few, are regulated.
All companies need an audit
This is not true at all. In fact, most companies are classified as ‘small’ and would not require an audit. So… what is small? A company is exempt from an audit if it meets two out of three of the following criteria:
- – Less than 50 employees
- – Turnover of less than £10.2 million
- – Balance sheet total of not more than £5.1 million
There are some exceptions to these rules so it’s always worth checking with your accountant, but an audit should be one less thing to worry about.
And last but not least…
All Accountants are dull and boring
This couldn’t be further from the truth! Since day one, our team has been dedicated to making Tax easy to understand, and step away from the stereotypical view of an accountant being stone-faced, dull and unapproachable. Our relaxed, friendly office environment is the perfect place to come in for a chat, and we consider you a friend here from the moment you walk through the door. Your Tax Shop are there to help you out every step of the way, making sure you’re always smiling when you leave us!