As a self employed person, you pay on account for your tax. Once in July, and once in
January. The reason for that, is you pay your tax and arrears. You pay on account so in
January, you don’t get a big tax bill. You’ve already paid on account for it in July. And in
January, you’ll either have a balance in repayment or balancing charge depending on
whether you’ve paid enough on account or not.
Ideally, you should read your accounts with your accountant. The best way to do it is to sit with somebody who can run through them on a line by line basis. If you’re not able to that, the key three things to look at are your turnover, how much you’ve earned during the year, before any expenses. Then your cost of sales, which will give you your gross profit. Then the next thing to look at is your net profit which is ultimately the bottomline as we call it. In the accounts, all the expenses are categorized together. If you’ve made different payments to different advertisers, they’ll all be lumped together by category after their gross profit. You have expenses by category which will lead with your net profit. Ideally, give your accountant a call, run through them. If you’re not sure on anything, then ask the question. We can also look at accounts and tell you how you compare to other practices or associates within your area, but again, get in touch to ask that question.
A common question we are asked is how a company can save me tax. With a company, there are two taxes to consider. The first is corporation tax which is 19% which will be reduced to 17% by 2020. After corporation tax, you’re left with your distributable profits which are paid as dividends. They will be taxed either 7.5%, 32.5% or 38.1%. Depending on what your profits are, you might get a preferable rate of tax using a company by a blended rate of 17% corporation tax and somewhere between 25% to 20% dividend taxes. But that depends on your overall profits. To get a clear answer on whether it’s right for yourself, I would suggest you get in touch and we can do some quick figures for you and tell you what is right for you.
A very important question is what can you claim tax relief for as a dentist? In a nutshell, HMRC will allow you to get tax relief for anything you incur or spend on that relates directly to your trade as a dentist. If you buy dental equipment or if you go in a course, those things are easily identifiable as directly related to your trade. However, there are other things that you can also claim for that you might not be aware of such as mileage if you are traveling to see patients or between practices, you can claim for use of home as well, if you are working from home. We have a definitive list of items that can be claimed. My advice will be to get in touch, we can go through them to see if they’re appropriate for yourself as a dentist.
As a sole trader, your main deadline that you need to be aware of is the 31st of January. That’s the deadline where you have to submit your accounts and your personal tax return to HMRC. That’s the date it needs to be submitted, however, I would very much advise that you get in touch with your records way before that deadline, at least 2 months before then. By November, before the January in question, you need to get your records ready to allow your account enough time to prepare them, and to sit with you to discuss the accounts, so you’re fully aware of how the accounts have gone, and what your tax bill will be in January of that year.
The main deadline for self assessment filing is the 31st of January. That’s the date when your accounts and tax return need to be submitted to HMRC. However, it’s best to get your accounts and records ready at least 2 months before that deadline to allow your account enough time to prepare them, but also to discuss the accounts and tax bill with you individually.
Corporation tax filing is 12 months after your company’s year-end. That’s the date the corporation tax return needs to be submitted to HMRC. However, the corporation tax needs to be paid 9 months and 1 day after the company year-end. There are 2 main dates to consider.
First of all, we will communicate to you what your accounts and tax deadlines are well in advance of them arriving. That allows us time to plan for the work to get the accounts done, and enough time to sit with you as well. We will tell them to you. As a client, you’ll be informed and we’ll work together to deliver and meet the deadlines
Your confirmation statement is something that you need to submit once a year to Companies House. That is a record of the company’s offices and shareholders as well as the key information for that company. It doesn’t include financial information, but all the information that relates to who the directors are and the shareholders, and the company’s secretary, as well as the share capital needs to be confirmed once a year.
HMRC require that you keep your accounting records for 6 full years. That is something that is very important, and it’s actually a big administrative burden for businesses. However, it’s important, because HMRC can open an investigation and go back as far as 6 years, sometimes 7 years. If in doubt, keep it for 7 years. If you’re not sure what’s the best way to store it, or if you’ve got a room full of records and you don’t want that kind of headache, I would suggest looking at a cloud solution where you can load your records into the cloud and they’re kept there, saving you time and space.
It’s actually very straightforward to change accountants. Once we’ve been instructed, we take care of the process and make contact with your previous accountant, and request all the record to be transferred to us.