Sending your tax return doesn’t just deal with income tax though, and your bill can also include any National Insurance that you owe on your self-employment income. In this article we’ll explain how National Insurance works for self-employed people.

What is National Insurance?

Anyone aged 16 or over, up until they reach State Pension age, pays National Insurance on any employment or self-employed income they get over a specific amount.

This wording is quite important, because not all types of income are subject to National Insurance. For instance, dividends, and sometimes even rental income you get from property if this isn’t your main business, can be free from NI.

Why do I need to pay National Insurance if I work for myself?

Making NI contributions gives you entitlement to certain benefits and the State Pension. National Insurance contributions also help to fund the NHS.

How much NI will I need to pay?

There are different types of National Insurance, known as classes, and these have different thresholds and rates. The type you pay depends on how much you earn from a particular source of income. For instance, employees normally pay Class 1 NI on income they earn from an employer, whereas self-employed people pay Class 4 NI.

Class 4 National Insurance for self-employed people

Class 4 NI is charged as a percentage of the profits you make from being self-employed.

• Lower Profits Limit (LPL): You’ll pay NI at a rate of 6% on any profits you earn in 2025/26 and 2026/27 which are over the £12,570 Lower Profits Limit
• Upper Profits Limit (UPL): You’ll then pay Class 4 NI at a rate of 2% on any profits over £50,270

What happens if I don’t pay NI?

Paying Class 4 NI is mandatory if your profits reach the threshold, but not everyone will earn enough to reach it. If your profits are above the Small Profits Threshold (£7,105 in 2026/27, or £6,845 for the 2025/26 tax year) then you’ll get NI ‘credits’, which protects your entitlement. If your profits are below it, then you might consider making voluntary contributions to cover any gaps.

For self-employed people this means making Class 2 contributions (which used to be compulsory, but are now voluntary) at a flat rate of £3.50 per week for the 2025/26 tax year, or £3.65 for 2026/27.

How do I register to pay self-employed National Insurance?

You’re automatically signed up for National Insurance and any other tax contributions that you need to make when you register for Self Assessment with HMRC.

When and how do I pay my NICs?

HMRC will use the information you provide in your Self Assessment tax return to work out your tax bill. The total amount will consist of any income tax and National Insurance you owe, as well as any other taxes you need to pay.

The deadline to submit your tax return and pay the bill for Self Assessment is 31st January following the end of the tax year that you need to report. You can submit your return much earlier, but this doesn’t affect the payment deadline – which can be useful if you need to budget for it!

 
Find out more about getting support with your finances and tax in our guide to finding the right accountant.

The post How Self-Employed People Make National Insurance Contributions appeared first on The Cheap Accountants.

We’re here to help you understand what VAT is, and whether your e-commerce business needs to register for VAT.

What is an online marketplace?

An ‘online marketplace’ sounds self-explanatory – a marketplace that’s based online, but for a business to officially call itself one, it needs to hit a specific criteria.

For HMRC, an online marketplace is a business that has a website, app, or both that manages the sale of goods to customers. There are also conditions based on how the goods are listed, and how involved the business is in selling those goods.

What counts as an online marketplace

To qualify as an online marketplace the platform must:

• Set the terms and conditions on how goods are supplied to customers
• Be involved in either authorising or facilitating customers’ payments
• Have some involvement in either the ordering or delivery of the goods

If you’re still scratching your head at what a marketplace is, think of sites like Amazon, eBay, and Etsy.

They host a range of independent sellers and businesses but also set the terms and conditions, handle the payments, and are often involved in the shipping process at some point.

What doesn’t count as an online marketplace

A platform will not be classed as an online marketplace if it only provides one of the following:

• Either the listing or advertising of goods
• The processing of payments for the supply of goods to the customer
• Listing the products, but either redirecting or transferring customers to another website or app to purchase the goods (without any further involvement)

Why would I use an online marketplace for my business?

Running your business on an online marketplace is a cost-effective way of reaching a wider audience who will often be more comfortable purchasing your products on a site they trust. It’ll mean you pay less in advertising, and you don’t have to run your own website – or have any social media if you don’t deem it necessary.

This could be beneficial if you’re starting out, and you don’t have the time to build a brand outside of selling your goods.

So where does VAT come into selling through an online marketplace?

If your taxable sales are below the VAT registration threshold, you won’t need to register for VAT just because you sell on an online marketplace. But most online marketplaces are VAT registered in their own right, so platforms such as Etsy will automatically add VAT to your taxable sales.

The rate of VAT they must charge depends on what category the item comes under.

What is the VAT registration threshold?

You’ll need to register for VAT if your taxable turnover goes above £90,000 in a 12-month period (this is the current VAT registration threshold) or you expect your turnover to be over the threshold within the next 30 days. This could be for many reasons, for example, you’re hosting a Black Friday sale and anticipate the volume of your sales pushing you through the threshold.

You can also volunteer to register for VAT. Some businesses do this because they expect they’ll reach the threshold eventually, and don’t want it to look like they’ve raised their prices when it finally comes to adding VAT. Other businesses do it so they can claim VAT back on their purchases.

Will the online marketplace need my VAT details?

Yes, online marketplaces are required to ask for the VAT registration number of anyone they think should be registered.

Carrying on with the Etsy example, if your gross sales meet or exceed the VAT registration threshold in a 12-month period, Etsy will ask you to add your VAT number to your Etsy store. Your account will be placed on hold until this is complete.

Being VAT registered means all the usual reporting rules will apply when you make VAT submissions to pay or claim back any VAT owed.

The VAT rules are different for:

• Overseas goods that are sold directly to customers in the UK
• Goods that are sold from the EU to customers based in Northern Ireland that are not registered for VAT in the UK
• If you move any goods between Northern Ireland and the EU

It’s worth noting the VAT threshold is based on all of your income, so if you sell on both Etsy and eBay, and your total taxable turnover from both sites is above the threshold, you’ll need to register for VAT.

All VAT-registered businesses must add VAT onto the goods and services they sell which qualify.

How do I register for VAT?

Registering for VAT is fairly simple, and most businesses can register online.

Before you can register though, you will need a Government Gateway user ID and passport to hand, as well as information about your business. For example, if you run a limited company you’ll need to fill in things like your company name, bank details, and turnover.

Keeping VAT records

Keeping VAT records is a legal requirement, and once you’re registered you’ll need to make VAT submissions to tell HMRC about the VAT you’ve charged to customers, as well as any VAT you’ve paid.

You’ll need to keep your VAT records for 6 years from the date any goods are sold, so it’s well worth investing in good bookkeeping software will ensure you don’t lose any important documents.

 
Need some help on VAT? Check out our VAT guide for more expert advice!

The post Do I Need to Register for VAT if I Sell Through an Online Marketplace? appeared first on The Cheap Accountants.

There’s also some (understandable) confusion around the difference between bookkeeping and accounting, and it’s important to know the exact function of each when it comes to organising your finances.

We’re here to clear everything up for you – starting with the most basic question of all.

What is bookkeeping?

In a nutshell, bookkeeping is the process of recording the daily transactions which take place in a business.

This information will help you keep track of your income and spending, giving a clear picture of your business’s financial situation. Using this data also makes it much easier to predict what this might look like in the future.

The role of the bookkeeper

A bookkeeper’s job is to ensure transactions are correctly recorded and categorised. This generally involves taking quality control steps to verify the data, such as bank reconciliation.

Bank reconciliation involves cross-referencing your bookkeeping records with bank transactions to make sure they match up. Good accounting software should do this for you automatically, in real time.

A bookkeeper can also use your daily transactions to produce monthly reports, turning the raw numbers into something easier to read and comprehend. Some will even take on other technical tasks like running payroll.

The role is evolving, though, with many bookkeepers now offering a wide range of services. It’s why the line between bookkeeping and accounting is becoming increasingly blurred.

What’s the difference between bookkeeping and accounting?

Bookkeeping deals with the recording and organisation of day-to-day financial activity in a business, whereas accounting is more about long-term financial analysis and strategising.

Accountants are specially qualified to analyse financial reports and use them to help businesses improve moving forwards. Their responsibilities also include preparing official end-of-year reports (e.g. income and cash flow statements).

The reality is that both bookkeeping and accounting are vitally important to the continued financial health of a business, allowing the business owner to understand what’s working and what’s not.

Is bookkeeping a legal requirement?

Whether you’re a sole trader, a limited company, a freelancer, or in a partnership, HMRC expect you to maintain good bookkeeping records. These must accurately show what’s happening in your business, and include things like:

• All goods bought and sold
• Who you bought and sold them to and from
• Money spent by the business (e.g. receipts)
• Money received (e.g. invoices, loans, grants)
• Debts

Accurate and up-to-date bookkeeping helps keep you in HMRC’s good books, but there are other benefits too. For instance, recording all of your expenses properly means you’ll be able to claim them as tax relief against your tax bill. So don’t miss out on what you’re entitled to!

Should I hire a bookkeeper or an accountant?

Well, there are technically no rules stating that you have to use either! You can outsource your bookkeeping, or you can try and do it yourself if you so choose. This will obviously save you money, but you’ll have to set aside the time (and make sure you don’t make any errors!).

It’s also important to be realistic about your ability to handle everything on your own.

If you don’t feel confident doing it yourself (or you simply don’t have the time), then outsourcing to a bookkeeper and/or accountant is the way to go.

When it comes to choosing between a bookkeeper and an accountant, weigh up the pros and cons of each, and think about what kind of assistance your business would most benefit from. If you can find someone who offers both services, then great! Read our guide to comparing different accounting packages.

Do I need bookkeeping software?

You’ll obviously need some method of recording your expenses and cash flow, and bookkeeping software is one of the safest options available, enabling you to store your data on an ultra-secure server that you can access from anywhere.

Making Tax Digital and bookkeeping

As for whether or not bookkeeping software is essential, the answer depends on your circumstances. However, HMRC have begun rolling out a scheme called Making Tax Digital (MTD), which will presumably be a requirement for everyone in the future.

MTD is part of the government’s plan to bring the tax system into the 21st century by gradually digitising all records.

As of now, anyone who earns more than £50,000 of sole trader and/or property income in the 2024/25 tax year will have to comply with MTD Income Tax rules from April 2026. This threshold will then reduce to £30,000 the following April (2027) – and to £20,000 in April 2028.

While it may only impact some business types at the moment, you can choose to enrol voluntarily if you want to be ready for MTD and avoid any potential stress down the line.

Choosing bookkeeping software

Again, cloud-based software is the safest way to store your business’s financial information, and this is because data kept on the cloud is actually hosted on a number of different servers, all in different locations.

It’s also great for collaboration, as every change is universal and applies across all devices.

What’s more, real-time data can be accessed by any user, at any time, meaning everyone is able to stay in the loop. Handy if you’re working with an accountant or have a business partner!

 
Find more help in our online accounting hub, and learn more about how to find the right accountant for your business.

The post Basic Bookkeeping for Beginners appeared first on The Cheap Accountants.

The same study also showed that only one in four sole traders would choose hybrid working, with most preferring to work exclusively from home. With the many benefits that working from home (WFH) brings, it comes as no surprise that so many business owners opt to do so.

The advantages of being a WFH business owner include:

• Reduced overheads
• Tax benefits
• Control over where and when you work
• Better work-life balance

So, whether you’re thinking about setting up a side hustle to boost your income from home or maybe you’d like to swap your current employment for full-time financial freedom. Whatever the reason, here are some ideas for businesses you can set up from home and how to handle the formalities and legalities with HMRC.

What sort of businesses can I run from home?

Whether you’re planning to set up a side hustle or looking to take the leap into launching your own business, you may already have a clear idea of what you want to do. It might be the career you’ve been employed in for many years already or a specialist skill you’ve fine-tuned ready to freelance out.

If you don’t already have a clear idea of what you want to do and you just know you want to start a business from home, here are some popular examples:

• Virtual Assistant
• Recruiter
• Ecommerce business or online store (selling products online)
• Dropship business
• Content writer/copywriter
• Video editor
• Web/app designer
• Graphic designer
• Online tutor or in-person tutor
• Nail technician
• Hairdresser
• Dog walker
• Consulting services
• Professional services (e.g. accounting and bookkeeping)

However, this really is just the tip of the iceberg. With advancements in technology, more access to business support and resources, and remote working, opportunities for home businesses are more open and diverse than ever.

As with any kind of business, it’s about honing in on your skillset and then building a brand and an offering that will help you find your niche (your USP) and stand out in the market.

What makes a good home business idea?

In order for any business idea to be a good one, it needs to be well thought out and carefully considered. Setting up a business, especially if it involves leaving employment behind, isn’t a decision that should be rushed into or taken lightly.

It’s essential to thoroughly research your business idea to validate the need for what you’re offering. It’s crucial to know that there are customers out there who will want to pay for your product and service and it’s important to know how you’re going to set yourself apart from your competitors.

Validated your business idea? Great! Here are some other qualities that make a home business idea a good one:

• Low set-up costs: The lower your start-up costs, the less you’ll be out of pocket before you start turning a profit and the less risk your initial investment will be at.
• It doesn’t require anyone else: Ideally if you’re running your business from home, you want it to be something you can handle alone or with only the bare minimum of help. If you do employ staff, a remote working option might be worth considering to minimise costs.
• Little to no training is required: You want to hit the ground running and pick a skill or product you know you’ll be able to sell without having to invest time and money into training first. Or, if training is required, for it to be well worth the cost!

When you need to tell HMRC about your business

You’ll need to tell HMRC about your home or hobby business once you start earning more than the Trading Allowance, which is currently set at £1,000.

The Trading Allowance means you can earn up to £1,000 from self-employment or miscellaneous trading each tax year without telling HMRC or paying tax on those earnings. You’ll need to register your business and start paying tax once your income tips over that threshold.

To register for tax, you will need to choose a legal structure for your business as this will inform how you report your earnings and pay your taxes.

All structures come with their unique pros and cons, so it’s about finding the one that’s more suited to you and your business type, whether that’s Sole Trader, Limited Company or something else entirely.
 

Do you get tax relief if you work from home?

You’ll be glad to know that when you set up and run a business from your home, there’s tax relief available for using where you live for business-related activities. Known as allowable expenses, the costs are knocked off your income, and you’ll pay tax on the profits left over.

Typical allowable expenses if you run a business from your home can include:

• Electric, gas, heating
• Internet and telephone costs
• Gas and heating
• Maintenance and repairs
• Water usage if it is a substantial part of your operations- for example, if you’re a hairdresser

You can only claim tax relief on costs that are directly related to the running of your business, so you can’t claim all of your household bills – just the proportion related to your business activities.
 

Calculating your home business expenses

These are the two accepted methods for working out your home-working tax relief claim:

• Simplified expenses: Using HMRC’s flat rate to claim tax relief based on the number of hours you work from home each month.
• Cost method: Working out what the precise costs of working from home are, so you can claim these expenses more accurately.

Looking for more expert business support? Check out our accounting support hub for more help, or to ask a tax question.

The post Business Ideas You Can Start from Your Own Home appeared first on The Cheap Accountants.

We’ll guide you through your initial steps to becoming self-employed, along with when and how to inform HMRC.

What are the initial steps to becoming self-employed?

What is it that you want to do? Be a self-employed graphic designer, handyperson, or fitness coach? Sell handmade items on Etsy? The possibilities of working for yourself are endless so once you’ve decided, it’s time to get started.

Step 1 – Decide on a legal structure for your business

This is a huge decision to make, largely down to the fact that the structure you choose has a massive impact on the way you pay tax as a self-employed person. While it’s normal to assume ‘self-employed’ is a business structure, it isn’t.

But don’t panic, there are plenty of business structures to choose from, that will suit your business and how it operates. Two of the most common business structures are sole traders and limited companies.

What’s the difference between a sole trader and a limited company?

Though they’re both types of business structure, operating as a sole trader usually means less paperwork but potentially higher risk compared to setting up as a limited company.

Sole traders:

If you’re a sole trader you are the business. HMRC doesn’t differentiate between you and it. This has its pros – for example, you can keep all the profits you make after you’ve paid your tax and National Insurance, but it also comes with some cons.

A good example of this is liability. Because you are the business, you’re also personally liable for any debts your business incurs. It can cause problems if the business runs into trouble.

You don’t need to register as a sole trader until you’ve exceeded your tax-free trading allowance (which is currently £1,000), and depending on how much you earn, you may not need to pay tax at all. But you’ll still need to keep HMRC in the loop on the profits you’re making!

Limited company:

If you run a limited company, you’re separate from your business (so this means it’s a legal entity in its own right). Depending on how much you earn, this could be much more tax-efficient because of the way that company owners can pay themselves from the business. It’s also good if you work in a ‘high risk’ industry, because of your ‘limited’ liability. Any debts belong to the business, so your personal assets are safer.

The cons involve more paperwork, because if you do decide to start a limited company then you’ll normally have more reporting requirements to think about too, such as:

• Submitting a Company Tax Return and paying Corporation Tax
• Sending annual accounts and confirmation statements
• Reporting income that you personally take from the business, such as reporting a salary through PAYE, or submitting a Self Assessment tax return if you receive dividends

Alternatively, there are other business structures that you could use instead, such as a business partnership. Confused? Don’t worry – we have a complete guide on how to choose a business structure for your business.

Step 2 – Choose a business name

Deciding on a business name can be tricky, so take some time to think about what you’d like your business to be called. There are different rules depending on your business structure. For example:

• Sole traders and partnership can trade under their own or a business name, as long as it’s nothing offensive, and it can’t include ‘Limited’ or ‘Ltd’
• Limited companies must register a name in their own right, because they’re separate legal entities. It can’t be too similar to another company name or trademark, or you may receive complaints! You’re also banned from using anything that suggests an official relationship with the government or another body. The name must include ‘Limited’ or ‘Ltd’ after it.

Registering as a sole trader

To set up as a sole trader you’ll need to register for Self Assessment and submit tax returns to tell HMRC about your profits and pay tax on them. You can always swap to a different structure at a later date – for example, if the business grows and you find it more tax efficient to form a limited company after a while.

Setting up a limited company

Limited companies must be registered with Companies House, who will issue a registration number within a few days. You’ll need to confirm the names of the company’s director(s) and shareholder(s).

The company will normally be registered with HMRC at the same time, so it will be set up ready for Corporation Tax – just make sure you have access to your online account, and that it’s connected to any tax services you need. You’ll also need to register for personal tax (such as Self Assessment) separately – this isn’t automatic!

Step 3 – Create a Government Gateway account

If you’ve ever needed to check anything tax-related online, such as your tax code, you would’ve done it through Government Gateway.

It’s an online government portal, home to people both employed and self-employed that want to check anything HMRC related. To access it, you’ll need to create both a Government Gateway ID and password.

If you’ve never used it before, you’ll need to set one up to register your business and submit your tax returns. It’s also great for keeping an eye on your National Insurance contributions!

Step 4 – Opening a bank account for your business

Opening a business bank account is a legal obligation for limited companies, although sole traders can use their personal account because they ‘are’ the business.

If you’re the latter, we’d recommend opening a business bank account anyway, especially when it comes to completing your bookkeeping. It makes tracking everything much easier and minimises any mistakes that could cost you in penalties!

If you ever transition to a limited company further down the line, it’ll mean you’re already fulfilling your legal obligations too.

Step 5 – Write a business plan

You’ll need a decent business plan to set you off on the right track. It’s basically used to give an overview of your business, why you’ve come up with it, and what makes it stand out from similar businesses in the market.

Included in a business plan will be things such as:

• How the business will run
• A marketing strategy
• The logistics
• Who’s involved in the business
• How you plan to raise funds, as well as other plans such as how much you plan to make over the coming year or quarter.

Step 6 – Organise your financial records

Once you start buying materials and trading, you’ll need to begin keeping a note of your expenses and profits through bookkeeping – which is a legal requirement!

The type of records you must keep includes:

• All of your sales and income
• Business expenses
• PAYE records (only if you employ people)
• Records on personal income
• Any grants

It can be daunting at first, so get yourself sorted with decent accounting software which includes features to help save you time.

If you need more help, we have tips and advice to get your started. Need an accountant? Learn more about hiring one today.

The post How Do I Become Self-Employed? appeared first on The Cheap Accountants.

Learn more about CIS tax responsibilities for contractors and how to stay on the right side of HMRC when working in the building trade.
 

The Construction Industry Scheme explained

The Construction Industry Scheme was introduced to standardise the way in which contractors pay their subcontractors, and reduce the risk of tax evasion in the construction industry.

Under CIS rules, contractors are required to deduct tax from the payments they make to subcontractors they work with. As a contractor you’ll be responsible for reporting these deductions using a CIS Return, and paying them on to HMRC.
 

What does this mean for contractors?

For contractors, all this really means is a bit more admin. CIS returns have a more substantial impact on subcontractors because the tax rate at which CIS deductions are calculated is based on whether or not the subcontractor is CIS registered.

The calculation also doesn’t factor in the tax-free personal allowance, so the tax that’s deducted might not be completely accurate (but this will be corrected once the subcontractor submits their own tax return).
 

Who does CIS apply to?

The scheme applies specifically to contractors and subcontractors in the construction industry. This primarily includes builders, property developers, labour agencies and gangmasters.

There may also be times when the definition includes housing associations, government departments, arm’s length management organisations (ALMOs) and local authorities.

Do I need to register as a CIS contractor?

As a contractor, you must register for the Construction Industry Scheme if:

• You pay subcontractors to perform construction work for you
• You’ve spent more than £3 million on construction in the 12 months following your first subcontractor payment, even if your business doesn’t fall under the category of construction

CIS covers building works such as site preparation and decoration but not things like scaffolding hire, carpeting, delivery of materials, surveying, or the management of site facilities (such as on-site food provision)
 

How do I register as a CIS contractor?

CIS registration isn’t an automatic process, and contractors are responsible for registering themselves at the appropriate time. To sign up as a contractor you’ll need to follow the same process as if you were registering for PAYE as an employer.

Make sure you register for CIS as a contractor before making your first payment to a subcontractor!

Requirements for contractors under CIS

There are certain regulations you need to follow as a contractor working under the Construction Industry Scheme:

• Check whether or not any subcontractors you hire are registered for CIS. You can do this on the HMRC website using their UTR number
• Confirm that you can actually recruit somebody as a subcontractor. In some cases, a person might need to be contracted as an employee. This kind of mistake is easy to make without thorough due diligence but can lead to costly fines from HMRC.
• Submit monthly CIS returns and maintain up-to-date CIS records for HMRC, even if you don’t intend to pay subcontractors all the time
• Keep a record of the gross amount of any payments you make to subcontractors (excluding VAT) and the sum of CIS tax deductions from these payments

You will also need to make sure that the CIS records you keep are up to date and accessible to HMRC for a minimum of three years.
 

Do CIS contractors still need to submit tax returns for their business?

Yes, you’ll still need to submit tax returns for your business, even if you need to register for CIS to tell HMRC about your subcontractors. Your tax return tells HMRC:

• How much money the business earned in a tax year
• How you earned it (i.e. through your contractor business and any other form of income)
• The allowable expenses you want to claim tax relief on (e.g. equipment, tools, work-related travel costs, etc.)
• Any tax you have already paid (to prevent you paying double tax)

Don’t forget to consider IR35

If you’re a contractor or setting up a contracting business, you’ve probably already heard of IR35. It’s an initiative designed to clamp down on contractors who operate through their own limited company but are technically an employee for all intents and purposes.

Some contracts will be ‘within IR35’ and some won’t – it depends on the client you’re working for and the nature of the contract.

Generally, the end client is the one responsible for figuring out the IR35 employment status of a contractor. However, if you’re providing contracting services to a small client outside the public sector, an intermediary may be responsible for deciding your employment status and if IR35 rules apply.

If the rules do apply, your client should deduct income tax and National Insurance from your invoice before they pay you and send these deductions to HMRC on your behalf – just like they would if you were a regular employee.

This means the payment you receive from the client is the ‘after tax’ amount, so you’ve already paid tax on it. Make sure to document this accurately on your Self Assessment tax return so you don’t end up paying tax on it twice.

 
Looking for more support with your contractor business? Head over to our info hub, and learn more about finding the right accountant for you.

The post Do I Need to Tell HMRC I’m a Contractor for CIS? appeared first on The Cheap Accountants.

Whether it’s mandatory or not will depend on what type of limited company you have – private, or public. We’ll take a look at who needs a company secretary as well as the difference between being private or public.
 

Do all limited companies need a secretary?

The answer to this question varies. According to section 270 of the Companies Act 2006 you don’t need a company secretary for a private limited company, unless the articles of association require you to appoint one.

It’s different if you operate a public company, which does need to appoint a company secretary. Section 271 of the Companies Act 2006 literally, word-for-word, reads “a public company must have a secretary.”
 

What’s the difference between a private limited company, and a public limited company?

Private limited companies are the most common type of company to be incorporated in the UK (meaning most limited companies don’t require a company secretary). They’re ‘private’ because they’re owned by private shareholders who have invested in the business, rather than being listed on the stock exchange.

In a public limited company there are still directors and shareholders, but the company is listed on the stock exchange and anyone can buy shares.

There are other major differences between the two types of company. For example, a public company must have a minimum of £50,000 in share capital, whereas no minimum is required for private companies. If you’re just starting out on a small scale, it’s highly likely you’ll setting up be a private limited company!

Read more on the differences between a Private and Public Limited Company.
 

What is a company secretary?

Company secretaries are seen as ‘officers’ or the ‘head of governance’ of the company and are crucial members of the management team. They’ll typically spend their time ensuring the company is operating within all financial, legal, and statutory regulations. In most cases, they’re the ones shareholders will come to – as well as being responsible for administration duties.

If you’re a private limited company that doesn’t require a secretary and chooses not to have one, the responsibilities that would usually fall on a secretary belong to the director – or a person ‘authorised generally, or specifically in that behalf by the directors’. Because of this, you’ll find many private companies opt for a company secretary anyway to take some of the workload off the directors.
 

What are the main duties of a company secretary?

Company secretaries have lots of duties and are a vital part of any business. Here are some of their key responsibilities:

• Administration duties as well as filing confirmation statements and Company Tax Returns
• Looking after the company’s statutory records
• Setting up and being responsible for all directors’ and shareholders’ meetings
• Letting Companies House know if any company details have changed (for example the company address or following the resignation of a director)
• Managing the registered office address (this involves informing Companies House of the registered office address as well as checking it is correctly disclosed on the website, emails, etc)
• Make sure the business is compliant with all legal, financial, and statutory regulations
• Keeping all legal documents safe
• Being the communication point for shareholders
• Signing any legal documents

It’s worth noting that even though a secretary has lots of responsibility, the director of the company is always legally responsible for anything that happens.
 

What is the main difference between a company secretary and a director?

While the role can feel very similar, a director will be responsible for the overall management of the company, while the company secretary will focus more on administrative duties.
 

Should I hire a secretary for my limited company?

If you’re a private limited company, a company secretary could help with any tasks your director doesn’t have the time to do. While it’s not a legal requirement, it is an option that many companies take.

You will need to ensure you appoint someone appropriate for the role according to HMRC’s guidelines though. For example, they can’t be an ‘undischarged bankrupt’, or be the company’s auditor.

You’ll need someone with excellent communicative and administrative skills that can really hold the company together while the directors and shareholders run the other tasks. A secretary is the secret backbone doing all the ‘behind the scenes’ bits for your business!
 

How do I appoint a secretary?

You can appoint a secretary online via the GOV website, or by filling out paper forms (APO3) – it will take longer to complete if you send them through the post, and your business cannot use this method if your company is in the protected online filing (PROOF) scheme.

If you need to remove a company secretary, you’ll need to let Companies House know within 14 days from the date of removal (this is the same time period for appointing a secretary too). If any of your secretary’s details have changed, you’ll need to file form CH03 to Companies House.

Need some support with running your limited company? Compare accountancy packages here to get started.

The post Does My Limited Company Need a Secretary? appeared first on The Cheap Accountants.

It happens to the best of us, but the good news is there are often ways to reduce costs. We have some tips to help you snip any unnecessary spending in your business faster than you can say Edward Scissor Hands.
 

Check your finance reports

Regularly reviewing your financial reports is like a full MOT for your business. You can see the condition the business is in, highlight any issues, and identify your most valuable assets and resources. Looking at your business under the microscope will help you to both understand your business more and make effective cost cuts.

Fortunately, creating financial reports can be much less complicated than you may think, particularly if you use bookkeeping software. This can help you:

• Stay up to date with what’s what: Know exactly what your income and outgoings look like and identify any hidden costs such as forgotten subscriptions.
• Plan for your future growth: You’ll be able to spot trends and set realistic targets based on the data you have.
• Make better business decisions: Over time, you’ll be able to make more effective decisions. Good data leaves less room for guesswork!
• Delve deeper into your finances: Get to know your finances like never before. Understand which clients pay on time and identify any late payers who disrupt your cash flow. You can also manage your costs, for example, by monitoring specific purchases or tracking your energy bills.

Look at your energy costs

Is there anything your supplier can do to help trim down your energy bills?

Not a lot of people know that energy companies actually offer businesses grants and schemes to help reduce bills by making you more energy efficient. Have a chat with yours to see what they offer and if they don’t provide any help or give you advice – look elsewhere! Check out Ofgem for more details.
 

Don’t be afraid to haggle to reduce your costs

We’ve all haggled at some point in our lives, whether we’re trying to get a better phone deal, or make an offer on a property. The people who do it best, are always the jammy ones with the best deals.

If you’ve been with a particular supplier for a while, whether that’s your energy supplier or your accountant, if you don’t feel like you’re getting the best deal possible, have a chat with them. Nothing is more valuable than loyal customers, so get your haggle on at once – that is an order. Remember: If you don’t ask, you don’t get!
 

Check your subscriptions

It is unbelievably easy to take on a bunch of subscriptions that cost a few pounds a month here and there, but before you know it, you’ve racked up hundreds of pounds a month on stuff you no longer use.

Do you still need the three different types of photo-editing software you signed up for last year? Letting this sort of thing pile up can really drain your profits. Ask yourself:

• Is this still beneficial to my business?
• Are there any free alternatives?
• Can I find one subscription that does all (or most) of what I’m getting out of the subscriptions I currently have?

There are almost always free alternatives to take a look at, or software that gives you multiple features in one, so you can keep on top of what’s what.

And remember, some software charges you per user, so if someone leaves or changes their role, make sure to remove them or give access to another member of staff.

We’re using subscriptions as an example, but it’s good practice to really scrutinise each transaction going out of your business. Some of your spending might be there simply out of habit.
 

Allow remote working

If you employ staff, is it worth considering offering them flexible working? Home working = less energy used in your workspace = money saved.

We get that working together in an office can be much better for collaboration, but letting your employees work just one day per week from home could make a big difference to your energy bills.

It also gives your employees more flexibility, which many studies have said makes them happy and more productive!

You might even decide to ditch the office space altogether, although we get that it’s not a suitable suggestion for every business.
 

Use freelancers

Sometimes you’ll have bits and bobs that need doing, like a particular project or something you need ongoing support with, but is it enough work to justify hiring a full time, permanent employee?

Outsourcing to a freelancer means you pay solely for the work/projects you need, which cuts down your costs, and you won’t need to think about the extra expense of making employer’s pension and National Insurance contributions either.

You can find freelancers with various levels of experience for a price that suits your business.
 

Get practical advice

If you’re really stuck on where to cut costs, speak with your accountant. They’ll take an expert look at your finances, and usually advise you on where you can save money, be more efficient, or claim tax relief to ease your bills.

Find more tips and advice for your business on our website, or tap into our guide on hiring the right accountant.

The post Cost Cutting Tips for Businesses appeared first on The Cheap Accountants.

But choosing how to set up your business impacts all sorts of things, from how to register it, paying tax, and even attracting investment and funding.

So how do you know which path to follow? Here we take a look.

Why do I need to choose a particular business structure?

The structure of a business dictates (amongst other things) its tax status, who is liable for any debts, how to take money out the business, and how it’s run.

So what are the different types of business structure?

First off, it’s well worth familiarising yourself with the main types of businesses available, their features, and advantages.

Sole Trader

You and your business are essentially one and the same, so you own all assets and profits, as well as being responsible for any debts. You are your own boss with no shareholders to answer to.

Limited Company

A limited company is a separate and distinct legal entity with its own assets and employees. Shareholders only have liability up to their own share value.

General partnership

A general partnership is where two or more partners share the profits of the business. Partners might be individuals, a limited company, or even another partnership.

Limited liability partnership (LLP)

Very similar to a general partnership but with limited liability.

I’m a start-up looking to grow. What structure is best for me?

Think carefully about the goals of your business. Are you looking to attract new customers, expand, and perhaps sell it later on? If so, a limited company might be easier to sell because it’s legally separate to you as the owner.
 

What about sole traders?

If you plan to stay small, or your business isn’t likely to be that risky, then operating as a sole trader might be more straightforward. There are around 3.1 million sole trader businesses in the UK – that’s about 56% of all UK businesses!

It’s a really popular way of doing things as it’s not only quick to set up but is pretty stress-free too. Just don’t forget Making Tax Digital for Income Tax is on the horizon!

Many sole traders offer fairly low-risk services such as freelance writing or run artisan businesses. Whilst you do have full personal liability for the business, you may also be able to insure yourself against some of the risks with things like professional indemnity insurance.
 

What kind of scenario would best suit a partnership?

There are lots of reasons why a partnership might be useful, for instance if you decide to join forces with another business without needing to set up a limited company.

Another business might offer different products or services, but with a similar goal – such as two lifestyle brands working together. Forming a partnership can also help to you share costs and develop new ideas on a less formal basis, but with the benefit of some sort of agreement in place.

We could go back and forth with the pros and cons of each structure all day, but really it very much depends on your business and what you’re trying to achieve. It’s well worth a chat with an accountant if you’re not sure!

Find more help and accounting support in our online hub, or learn more about finding an accountant.

The post How Do I Choose a Structure for My Business? appeared first on The Cheap Accountants.