Own company, first accounts; where do start form?

Own company, first accounts; where do start form?

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Hi guys, this is my first one here...

My partner works for a limited company of which she is a sole director and shareholder. She gets wages from the company.

The company provides services and the small, annual turnover is around 12K. 

Time to file first accounts, and I wonder - assuming that I know what I'm doing, can I prepare her accounts without being qualified at all? In other words, do company accounts HAVE to be prepared and signed by an accountant?

[ Also, given that sh's a director and an employee - any money she gets, can I call it a 'wage' or it will necessarily be 'directors' remunerations'? is there a difference at all? Is she considered employed for tax credit, maternity leave etc either way? ]

Replies (9)

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By User deleted
06th Jun 2014 14:54

You can prepare the accounts if you want ...

... but given your questions I'm not sure that your assumption is a valid one.

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By Phil Rees
06th Jun 2014 14:57

I agree

You should engage an accountant because you do not understand the fundamental issues.

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Euan's picture
By Euan MacLennan
06th Jun 2014 14:57

This is basic stuff

If you need to ask the questions, I think you should talk to an accountant.

However, the simple answers to your questions are:

Yes - someone who is not a qualified accountant can prepare a company's accounts "assuming that [they] know what [they're] doing".No - company accounts do not need any report by an accountant, qualified or otherwise, but the balance sheet does need to be signed by a director.No - as she is a director, any salary paid to her and benefits provided by the company are defined as Directors' Remuneration and must be disclosed as such in Notes to the accounts.Yes - as a director, she is considered as employed by the company.

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By Philip Hoyle
06th Jun 2014 15:00

You may have missed the boat re payroll

Firstly, no, for a small company, anyone can prepare and submit the accounts and corporation tax.  You just have to make sure that you know how to do it properly (i,e, in accordance with accounting standards, FRSSE, etc, i.e. directors report, P&L and BS in the correct format, prepayments, accruals, depreciation of assets etc.) and that you know how to work out the corporation tax and prepare the CT return.  Company accounts and tax are a lot harder than sole traders.

Re payroll, yes, she'd be classed as an officer of the company which brings her into payroll/PAYE just like an employee.  She's NOT self employed for tax purposes.  Unfortunately, you've probably missed the boat to put any wages through for her now that we have real time reporting for PAYE.  For payroll to have been an allowable expense, it should have been reported to HMRC at the time, i.e. each month.  If you didn't report anything, then the best you can do is start paying and reporting a wage now for the current 14/15 tax year.  If she drew anything during that first year, and you didn't put it through payroll and didn't vote a dividend, then it would have to go down as director's loans, which have tax consequences and CT return disclosure.

To be honest, it sounds as if she needs an accountant - with a ltd co, you have to be on top of things as they happen and you can legitimately do very little afterwards to correct mistakes - like taking out money that you've not properly accounted to be payroll or dividends!

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RLI
By lionofludesch
06th Jun 2014 15:09

Too late

Afraid you should have been asking these questions last year.  What you have now is a fire-fighting situation.  Your partner can't just dip into the company as though it was a piggy bank - you need to make the money hers in some way - salary, dividend - by following procedures.  She may well have thrown away £9440 of tax allowances already - worth £1888 in tax out of your collective household pocket.

In theory, you don't need an accountant to prepare your accounts. But the reality is that it'll be a lot cheaper than acquiring the information you need to do it yourself.

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Stepurhan
By stepurhan
06th Jun 2014 15:11

Why a limited company?

I agree that you need an accountant, but why did she set up as a limited company in the first place? With that level of turnover it is extremely unlikely to have been worthwhile. You wouldn't be having to deal with the many complications that come with a company if this had been thought through in the first place.

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Locutus of Borg
By Locutus
06th Jun 2014 15:12

Lots of questions

There is nothing that requires a company to appoint an accountant (qualified or not) - it is just that it is often the easiest option.

To be honest, if your partner had come to me and said she only expected turnover of £12k, then I would have suggested that she think long and hard about whether using a company is more hassle than it is worth for that small amount of money. 

Directors remuneration is just the name for wages that a director gets.  I hope she is aware of the requirement to set up a payroll scheme when paying wages and also the reporting requirements of the RTI regime, otherwise it is likely that your partner's company will incur some fines.

Many companies file their own accounts at Companies House.  Filing the accounts in iXBRL format and the corporation tax return with HMRC tends to be more challenging for those will little experience.  However, it is possible to file these yourself via the HMRC Government Gateway login.

If you do not want to pay for an accountant, then I would suggest that you read through the Companies House website and also the PAYE and corporation tax sections of HMRC's website.  However, after you have read these you may realise it worthwhile speaking to a local accountant to help you go through everything.

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By pembo
06th Jun 2014 15:16

simple

 "assuming I know what I'm doing" is I'm afraid a contradiction given the content of your post ! Engage someone who does...there are plenty of cut price merchants out there who would do this for bladders if all you want is basic compliance work.It is an offence to prepare accounts that do not reflect a true and fair view of the companys position so this should not be taken lightly neither should the little matter of HMRC compliance.

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By ireallyshouldknowthisbut
06th Jun 2014 16:33

bargain basement option

As an aside if (and this is often the case) its somewhat debatable if the company has actually been used properly, or if quite frankly it was being run as a sole trade (no proper company bank account, contracts in the individuals names etc) the  "dirty option" would be to just declare all the income self employed and close the company, and walk away with a little whistle, nothing to see here, etc etc etc. 

No 'proper' accountant would do this for you, but as a cowboy "how the heck do I get out of this utter mess without a £750 fee" it might work.

its 3 lines on a tax return vs a mammoth task if you dont' know what you are doing. 

Then if you want a limited company ongoing, do it properly. 

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