Working through a Limited Company: Keeping Accounts
Keeping accounts is very easy indeed. You simply need to track your cash flow, invoices and expenses. Competex will provide you with software to record this information, and will make sure that you comply with HMRC regulations. The key to success is to keep it simple and to get into the habit of updating your records regularly.
You will be able to claim as expenses all the normal costs of running a company, so make sure you keep a record of all expenses, together with the corresponding invoices and receipts. Keep receipts for everything that relates to the business, writing details on the back of the receipt as a reminder where necessary. Although Competex will not normally wish to see receipts when preparing accounts, HMRC may wish to see them, so you should be meticulous about how you file them.
Subject to funds being available after applying IR35 rules (if applicable), you will be able to include as company expenses all reasonable pre- and post-incorporation expenses that you have incurred. Below is a list of expenses that are allowable under Corporation Tax rules:
- Travel (including from home to client – but there is a 24-month rule)
- Networking events
- CV writing services and company brochure
- Business stationery
- IT hardware and software
- Internet (only if separately billed and in the company name)
- Telecoms equipment (e.g. mobile phone, but only if in the company name)
- Membership of professional institutes and associations
- Other professional subs (e.g. IoD or own professional association)
- CPD training (not allowable for IR35)
- Accountant’s fees (not allowable for IR35)
Entertaining is allowed as a company expense but is disallowed for Corporation Tax purposes, and there are also strict rules regarding what kind of entertaining expenses are allowable.
You are strongly advised to keep your record-keeping up to date, to avoid penalties for late filing. If you are organised, this record keeping should not normally take much more than one hour per month, in addition to the time you take to organise your personal expenses. If you have difficulty, Competex can provide extra bookkeeping support.
Next resource: Working through a limited company: Getting paid