Question 1

Is an accountant necessary if I already use QuickBooks or Xero?

Accepted Answer

While accounting software like QuickBooks or Xero is excellent for bookkeeping, it does not replace expert advice. An accountant ensures your figures are accurate, helps you stay compliant with HMRC, and identifies tax-saving opportunities that software may miss.

Question 2

What business records should I maintain, and for how long?

Accepted Answer

You should maintain invoices, receipts, bank statements, and payroll records for a minimum of 6 years. HMRC may request these documents during a review or investigation.

Question 3

Can I claim home office expenses if I run my business from home?

Accepted Answer

Yes. You can claim part of your household costs — such as electricity, broadband, and rent — based on how much of your home is used for business. The method depends on your business setup and space used.

Question 4

How can I enhance my cash flow and prepare for tax bills?

Accepted Answer

To enhance your cash flow and prepare for tax bills, set aside a percentage of income for tax, issue invoices promptly, and regularly review aged debtors. Utilizing cloud software can also help track cash flow in real time.

Question 5

I’m a subcontractor, how do CIS deductions work and can I reclaim them?

Accepted Answer

Contractors deduct 20% or 30% tax from your payments and pass it to HMRC. At the end of the tax year, your accountant can offset this against your tax liability or help you reclaim any overpayment.

Question 6

What are my responsibilities under the Construction Industry Scheme (CIS) as a contractor?

Accepted Answer

As a contractor, you must verify subcontractors with HMRC, deduct the correct tax, and file monthly CIS returns. Additionally, you need to issue payment and deduction statements to each subcontractor.

Question 7

What expenses can builders and tradespeople claim against their income?

Accepted Answer

Common expenses include tools, protective clothing, materials, travel costs, public liability insurance, and accounting fees. Always keep receipts to support your claims.

Question 8

Should I buy or lease a company vehicle, which is better for tax?

Accepted Answer

It depends on the vehicle and how it’s used. Leasing can offer better short-term cash flow and VAT recovery, while buying outright can bring long-term savings and capital allowances — especially for electric vehicles.

Question 9

When do I need to register for VAT, and what schemes are available to small businesses?

Accepted Answer

You must register once your taxable turnover exceeds £90,000 (2024/25). Depending on your size and industry, you may benefit from the Flat Rate or Annual Accounting VAT schemes.

Question 10

Should I take money out of my limited company as salary or dividends?

Accepted Answer

Most directors opt for a small salary (to benefit from NI and pension) plus dividends for tax efficiency. The optimal split depends on your income level and company profits; your accountant can determine the most efficient mix for you.

Frequently Asked Questions