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Frequently Asked Questions (FAQ's)

Do you have a question? Below you'll find answers to the most common questions on accounting. If you don't see your question below drop us a message on our Contact Us page.

What is Accounting?

Accounting is the process of recording, classifying, summarising, and interpreting financial information. It is used to track the financial performance of a business, make financial decisions, and comply with government regulations.

What are the benefits of hiring an accountant?

There are many benefits to hiring an accountant, including:

  • Accountants can help you keep your books accurate & up-to-date.

  • Accountants can help you prepare your taxes.

  • Accountants can help you identify & reduce your business expenses.

  • Accountants can help you make sound financial decisions.

  • Accountants can help you comply with government regulations.

How do I choose the right accounting software program for my business?

  • When choosing an accounting software program, you should consider the following factors:

  • The size of your business

  • The complexity of your financial transactions

  • Your budget

  • Your level of technical expertise

How do I track my income & expenses?

Once you have set up your accounting system, you need to start tracking your income and expenses. This can be done by entering your transactions into your accounting software program. You should also reconcile your bank accounts and credit card accounts on a regular basis.

How do I prepare a balance sheet?

A balance sheet is a financial statement that shows the assets, liabilities, and equity of a business at a specific point in time. The balance sheet is used to assess the financial health of a business.

What are the different types of business entities?

There are four main types of business entities: sole proprietorships, partnerships, limited liability companies (LLCs), and corporations.

Can I amend my tax return once it's been filed?

You can make a change to a tax return after you filed it, for example because you made a mistake. Your bill will be updated based on what you report. You may have to pay more tax or be able to claim a refund. You must wait 3 days (72 hours) after filing before updating your return. You can correct a tax return within 12 months of the Self-Assessment deadline, online or by sending another paper return.

Is there a deadline for filing a tax return?

The deadline for filing your tax return is usually 31 January following the end of the tax year. However, if you are self-employed, the deadline is 31 October. If you miss the deadline, you may have to pay a penalty. 

How do I pay tax?

  • Pay As You Earn (PAYE): This is the most common way to pay tax in the UK. If you are employed, your employer will deduct tax from your wages before you get paid.

  • Self Assessment: If you are self-employed, you will need to file a Self Assessment tax return each year. This return will tell HM Revenue and Customs (HMRC) how much tax you owe.

  • Payment on Account: If you have a large amount of tax to pay, you may have to make payments on account each quarter. This will help to spread the cost of paying your tax.

  • Cheque or postal order: You can also pay your tax by sending a cheque or postal order to HM Revenue and Customs.

  • Direct debit: You can set up a direct debit to pay your tax automatically each month. This is a convenient way to pay your tax and it can help you to avoid late payment penalties

Do you have to report every crypto transaction & how do I go about it?

You are required to report your cryptocurrency transactions to HMRC if you make a profit. You can do this by completing a

self-assessment tax return. When you complete your tax return, you will need to provide details of all of your cryptocurrency transactions, including the date of the transaction, the amount of cryptocurrency bought or sold, and the profit or loss made.

What records do I need to keep for my cryptocurrency transactions?

You are required to keep records of all of your cryptocurrency transactions for at least 6 years. These records should include the following information:​

  • The date of the transaction

  • The amount of cryptocurrency bought or sold

  • The price of cryptocurrency at the time of the transaction

  • The fees paid for the transaction

  • The wallet address where the cryptocurrency was sent or received

What are the different types of accounting?

There are three main types of accounting: financial accounting, managerial accounting & tax accounting.

  • Financial accounting is the process of preparing financial statements for external users, such as shareholders, creditors, and government agencies. These statements provide information about a company's financial position, performance, & cash flow.

  • Managerial accounting is the process of preparing financial information for internal users, such as managers and executives. This information is used to make decisions about pricing, production, marketing, & other aspects of the business.

  • Tax accounting is the process of preparing tax returns and other tax-related documents. Tax accounting is a specialised area of accounting that requires knowledge of tax laws and regulations.

What are the different accounting software programs available?

There are many different accounting software programs available, each with its own strengths and weaknesses. Some of the most popular accounting software programs include FreeAgent, QuickBooks, Sage 50, and Xero.

How do I set up an accounting system?

Setting up an accounting system can be a complex process, but it is important to do it correctly. The first step is to choose the right accounting software program. Once you have chosen a software program, you need to set up your chart of accounts. The chart of accounts is a list of all of the accounts that your business will use. You also need to set up your bank accounts and credit card accounts.

How do I prepare a profit & loss statement?

A profit and loss statement is a financial statement that shows the income and expenses of a business over a period of time. The profit and loss statement is used to calculate the net income or loss of a business.

How do I file my taxes?

  • Register for Self Assessment. If you are required to file a Self Assessment tax return, you will need to register with HM Revenue and Customs (HMRC). You can register online or by post.

  • Gather your information. You will need to gather all of the information you need to complete your tax return, such as your income, expenses, and any other relevant information.

  • Complete your tax return. You can complete your tax return online or by paper. If you are completing your tax return online, you will need to create an HMRC account.

  • Check your tax return. Once you have completed your tax return, you should check it carefully to make sure that all of the information is correct.

  • Submit your tax return. You can submit your tax return online or by post. If you are submitting your tax return online, you will need to pay any tax that is due.

What happens if I miss the tax return deadline?

You’ll get a penalty if you need to send a tax return and you miss the deadline for submitting it or paying your bill. You’ll pay a late filing penalty of £100 if your tax return is up to 3 months late. You’ll have to pay more if it’s later, or if you pay your tax bill late.

You’ll also be charged interest on late payments.

How do I make a payment to HMRC?

Have you already submitted your tax return? You must pay your bill by 31st January. You can do this by:

  • Using the HMRC app

  • Through your online banking account

  • Using online or telephone banking (Faster Payments)

  • By CHAPS

  • By debit or corporate credit card online

  • At your bank or building society

If you do not pay your bill on time or miss a payment you may have to pay a penalty.

When do I need to pay tax?

In the UK, you have to pay tax on your income if you earn more than a certain amount. The amount you have to earn before you start paying tax is called your personal allowance. For the 2022/23 tax year, the personal allowance is £12,570. If you earn more than your personal allowance, you will have to pay income tax on the amount you earn over your personal allowance. The amount of tax you pay will depend on how much you earn throughout the tax year.

Do I need an accountant for cryptocurrency?

If you have sold any cryptocurrency assets, you may have to pay capital gains tax. You will need to speak to one of our crypto tax accountants for advice.

What happens if I don't file crypto on taxes?

HMRC are becoming more lenient on crypto, therefore it is recommended to file your crypto taxes on time, failure to do so could lead to penalties.

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