In 2012 there were an estimated 4.8 million businesses in the UK. Of the private sector businesses operating, 99.9% were reckoned to be Small-Medium Enterprises (SME’s) employing over 14 million people and with an estimated turnover of over £1.5 billion. There are six types of SME operating in the UK, with the most popular being:
Limited Company: – These have always been popular due to their flexibility and security. A limited company is seen as a separate legal entity from its owners and they do not become liable in the event of the company failing and so there is limited liability. In addition, profits are given to the owners as dividends rather than a salary and since dividends are not subject to National Insurance, savings can be made.
Sole Trader: – Beloved of many single operators from taxi drivers to plumbers, the sole trader is the easiest to set up and operate but comes at the cost of there being no s-distinction between company and personal assets.
Partnership: – Similar to the sole trader model, a partnership exists where more than one person wants to own and run the business. Each partner is responsible for their own tax and National Insurance liabilities.
Her Majesties Revenue & Customs (HMRC) is the arm of government that deals with important aspects of business in the UK, and is a good source of reading material for those thinking about setting up a new business. By going straight to them you can avoid many of the pitfalls as it is HMRC who will be inspecting your accounts and advising on payments due to the government in terms of tax and National Insurance.
It is these two elements that cause the most amount of headaches for anyone starting up a business in their chosen field. Taxes and other monies due must be paid into the government coffers and failure to do so by the appointed time will lead to fines and possible legal action. Because this area is so complex yet so important, it is always advisable for an SME to employ an accountant to keep an eye on their books for them. This will ensure that all dues are paid when they need to be.
So where do you find an accountant? A good place to start is by looking online. Many accountants now have web pages as a means of advertising and demonstrating the scope of their services. Some are large groups capable of running the accounts of large businesses; others are themselves sole traders and prefer to look after the affairs of other small businesses. Wherever you find them, a good accountant will always have time to discuss your needs with you and help your business grow.
Nixon Williams have been a leading accountancy practice for nearly twenty years. They specialise in looking after the accounts of freelance consultants, interim Managers and contractors in and around the UK. You can contact them at http://www.nixonwilliams.com