Tag: #limitedcompany

Five Reasons To Outsource Your Accounting Operations

Why is it important to outsource your accounting operations? Every business irrespective of size needs to keep accurate and up-to-date records of every financial transaction. This includes sales, purchases, payments and receipts. Outsourced accounting is becoming more popular as it helps to reduce business overheads and you won’t need a dedicated office space. In team4’s latest article we look at five of the benefits of outsourcing your accounting operations by having a professional accounts department.

Reasons to outsource to a professional accounts department

  1. Expertise
  2. Better use of your time
  3. Reduced costs
  4. Scalable and flexible options
  5. Peace of mind

What is outsourcing?

“Outsourcing is the business practice of hiring a party outside a company to perform services or create goods that were traditionally performed in-house by the company’s own employees and staff. Outsourcing is a practice usually undertaken by companies as a cost-cutting measure. As such, it can affect a wide range of jobs, ranging from customer support to manufacturing to the back office.”

Investopedia

  1. Expertise – make more effective decisions by knowing the financial situation of your company

It makes a lot of sense to outsource your accounting operations. Trained professionals will have the expertise and will understand how to apply the best practices to your business. You will know the current state of your company in real time. By knowing the margins on every client or job, keeping a healthy cash flow and knowing the productivity of your team, you will have an insight into what drives your bottom line results leading you to make more effective decisions. You will also remain compliant with current legislation, which is apt to change frequently. Buying or renting accounting software will become a thing of the past. Your expert outsourced accounting department will use the software best suited to your business.

  1. Spend time running your company – not doing the books

As your business grows, bookkeeping and accounting tasks will grow too. You may initially have been able to cope with these yourself, but not anymore. It’s far better to free up your valuable time, and let’s face it, time is the most precious resource you have, by doing something more productive and what you do best, running your company. You can spend your time developing and growing your business to increase revenue knowing you have a professional outsourced accounts department to take care of the additional financial implications. So, don’t let bookkeeping and accounting distract you from operational tasks.

  1. Reduced costs – save on payroll and productivity costs

Why not pay for the actual accounting itself? When you outsource your accounting operations, you won’t need to employ a member of staff on a full-time or part-time basis. You will save in payroll and productivity costs. You can determine the number of hours required each week and this way you are not employing someone and paying them for hours that are not required. The money savings can be quite considerable.

  1. Scale up or down depending on requirements

When you outsource your accounting operations, it will give you lots of flexibility. You will be able to scale up or down based on your requirements. This could range from a few hours to few days a week. You will have the flexibility to bring in the help and expertise you need during a time of growth. And you won’t be adding to your payroll. And if times become challenging, you may find you can ride out the storm by reducing your accounting costs and using their expert knowledge. You can also get the latest developments and technology without having to invest in it.

  1. Peace of mind

Ultimately, this is what you are looking for. By turning your bookkeeping and accounts over to experts will ensure you have confidence and trust in the accuracy and quality of the financial information of your company.

How can team4 help you to outsource your accounting operations?

Outsourcing your accounting operations will give you a cost-effective, affordable, efficient and valuable alternative to functions that have been carried out in-house. You will not only benefit from the cost and time savings but also have the peace of mind that your books and accounts are being looked after professionally so that you can focus on your business. Outsourcing can be a very effective solution when trying to survive in tough times although we know that outsourced bookkeeping and accounting is not the best solution for everyone. Bookkeepers know bookkeeping and by using team4, you will have a team of experts at your disposal. Call us on +44(0)1825 763378 or email info@team4bookkeeping.co.uk to find out more.

Eight Advantages Of A Limited Company

What are the advantages of a limited company? In our last article, we discussed the merits of setting up as a sole trader. This is certainly the most popular way of running a business when you start-up. However, once your company has been trading for a while and is growing, it may make more sense to set up as a private limited company. Setting up a limited company is fairly straightforward. However, it is important that you understand your legal situation regarding the financial arrangements you need to put in place and the other responsibilities that a limited company entails. In the latest article from team4, we look at the definition of a limited company, why you should set one up and the main advantages.

What is a limited company?

A limited company is a business structure that is a separate legal and financial entity from the person or people running it. The company has limited liability, which means if the company fails or is sued you are only liable for the face value of your share in the business. Beyond that your personal assets are protected.

Unbiased

A limited company is a company limited by shares or limited by guarantee.

Limited by shares are usually businesses that make a profit. This means the company:

  • Legally separate from the people who run it
  • Has separate finances from your personal ones
  • Has shares and shareholders
  • Can keep any profits it makes after paying tax

Limited by guarantee companies are usually ‘not for profit’. This means the company:

  • Is legally separate from the people who run it
  • Has separate finances from your personal ones
  • Has guarantors and a ‘guaranteed amount’
  • Invests profits it makes back into the company

GOV.UK

Private and Public limited companies

There are two types of limited companies in the UK. These are namely private and public. In general, private companies are smaller with a few shareholders, whereas public companies tend to be larger and have shares that can be bought and sold.

Key points about a limited company:

  • Separate entity
  • One or more directors
  • Own bank account
  • Can be bought or sold in the form of shares
  • Must be registered at Companies House
  • Limited liability

Benefits of setting up a business as a limited company

  1. In most cases, your overall tax burden as an owner or director will be lower than a sole trader. Limited companies pay corporation tax on their profits, the rate of which is currently between 19% and 25% dependent on the profit of the business.

 

  1. It is a separate legal entity. The ownership of assets, a business bank account, and any involvement with contracts etc. is company business and separate from the interest of the company shareholders.

 

  1. You will have limited liability. This means that your liability for any financial losses incurred by your business is limited. You will not be liable to pay any business debts personally.

 

  1. Often, it creates a stronger brand and a more professional image. You may find that larger companies you want to deal with are more inclined to deal with incorporated businesses rather than sole traders.

 

  1. As you have to register your company with Companies House, the company name is legally protected. Your name cannot be used by any other business. This is in comparison with a sole trader whereby a company could trade under the same name as you, with little you can do about it.

 

  1. You may find it easier to secure business finance.

 

  1. As a limited company, you can issue shares. You then can sell shares within your company or transfer ownership of shares. The shareholders agreement will outline your responsibilities and this will also describe how any conflicts arising can be addressed.

 

  1. It can also be easier to sell or transfer ownership of your company, should you want to sell it in the future. You can sell everything tied up in your business, such as equipment and clients, whereas with being a sole trader, many elements of your business are tied up to your specific identity.

The disadvantages of a limited company

To give a fair picture, it is also important to be aware of the disadvantages of a limited company. These can include more paperwork and compliance. You will need to file annual accounts and hold annual general meetings. These can not only be costly, but also time consuming. A limited company may potentially be more expensive to set up as you will need professional advice and assistance.

How can team4 help you with setting up a limited company?

The main benefits of setting up your business as a limited company include limited liability, tax advantages and increased credibility. In most cases, setting up a limited company isn’t expensive or difficult. If you feel that the advantages we have described in our latest article would suit your business or if you are considering outsourcing your accounts, please contact team4. Call team4 on 01825 763378 or email info@team4bookkeeping.co.uk

 

We are based in East Sussex and have clients nationwide. Please contact team4 to find out how we can help you.

You Are The Business As A Sole Trader

If you are starting a new business, do you want to set up as a sole trader? It’s certainly an exciting time as you think of what to call your company, how to brand the business and get noticed by those all-important customers. There is certainly a lot to do, but part of the process is picking the right structure for your new company. You will want to adhere to all the legal requirements and to also stay tax compliant. Whether you set up as a sole trader or a limited company is an important consideration. If you are not sure whether you should register as a sole trader, our latest blog explains what it entails, the benefits of being a sole trader, as well as the disadvantages and how team4 can help you.

What does being sole trader entail?

 A sole trader is a self-employed person who owns and runs their own business as an individual. The simplest way to run your business is to register as a sole trader. By doing this, you do not have to pay any registration fees, but you must register as self employed. You will need to inform HMRC and you will then pay tax through Self Assessment. This means filing a tax return every year. It’s at this point you will have to decide if you are going to do the accounts yourself or whether you need a bookkeeper to do them for you. By going down the route of being a sole trader, you get to keep all the profits you make. Sounds good? However, you are also personally liable for any debts that your company incurs. This could be a risky way to do things if your new business needs a lot of investment. In short, if your company runs into financial trouble, creditors can come after your house and possessions.

Benefits of being a Sole Trader

  • No requirement to register with Companies House
  • Can start working straightaway
  • Complete control with no shareholders or directors
  • No Corporation Tax or Accounts to Companies House
  • Easier to set up than a Limited Company
  • Simple to switch to being a Limited Company in the future
  • Financial information is kept private
  • You are your own boss – you are the business

You will need to register within three months of starting up your business and then submit an annual Self Assessment form and pay Class 2 NICs.

Disadvantages of setting up as a sole trader

  • Unlimited liability – you are personally responsible for any debts and losses of the business, including outstanding tax, rent etc.
  • Less credibility – not as appealing as a limited company to customers, so check how your competitors have set up their businesses
  • More difficulty in getting financing
  • Full responsibility – you are accountable for everything and make all the decisions

How can team4 help you as a sole trader?

You will have to maintain accurate accounting records as a sole trader that follow standard accounting practice. These will have to include records of your sales and expenses. You’ll actually find that these are invaluable when completing your annual self assessment tax return. Here at team4, we can help you decide whether this is the most flexible and cost-effective route you should take and also advise you when it’s time to set up as a limited company. The most important thing for us is that the operating structure you decide to implement is the most beneficial one for you and your business. We pride ourselves in helping self-employed people to not only set up their businesses but to also grow them as well. Please get in touch with us so you can decide if starting out as a sole trader is right for you. Call team4 on 01825 763378 or email info@team4bookkeeping.co.uk

Next time we will be looking at Limited Companies in more detail, so stay tuned.