AO Accountancy & Consultancy Services Ltd

19/12/2025

Great pre Christmas 🎅🏼 break in London, meeting up with friends and relations and taking in the sights and a west end show.

22/12/2024

Ards most famous player passes away aged 88.

17/12/2022

Wishing all our family, friends, clients and business associates a very peaceful and merry Christmas and a happy and prosperous new year.

17/12/2021

Wishing a safe and peaceful Christmas and a happy and prosperous New Year to all our clients, suppliers, associates and friends.

AO Accountancy & Consultancy Services Ltd.

08/11/2021

Should my business operate as self-employment or as a limited company?

The choice is important as it will affect many aspects of your business, including your legal and tax responsibilities. Opting for the wrong business structure can see you paying more tax than is necessary, as well as opening yourself up to personal liability if things go wrong. Each structure has its advantages and disadvantages and you must ensure you choose the best one for your business.

Self-employed

This is the most popular way of running a business in Northern Ireland and may be the best option if you want to trade with minimal fuss. You can operate without worrying about filing annual accounts, paying corporation tax, or registering your business with Companies House.

Instead, after registering for Self-Assessment with HMRC, which is a simple process that can be done online, the only administrative responsibility is to complete your Self-Assessment tax returns each year. To help with this process you should keep accurate records of your expenses, receipts and invoices.

A major drawback to this type of structure is that there is no legal distinction between yourself and your business, you as an individual are the business. If the business fails and there are debts outstanding, a self-employed sole trader is held personally liable for this and must ensure the debt is cleared. In extreme cases you could find yourself declared bankrupt as a result of your financial difficulties.

You must pay income tax on any profits which take you above the personal allowance, currently £12,570 (2021/22 tax year). You should be aware that your personal allowance includes any income received from other sources, for instance if you are in paid employment elsewhere. You are also responsible for making National Insurance contributions (NIC) on any profit above £9,568.

Limited company

Choosing to set up as a limited company is not as straightforward as self-employment and it does come with ongoing additional administration. The business needs to be registered with Companies House, directors must be appointed and an annual tax return along with a set of accounts must be filed.

On the plus side, you could pay substantially less tax. This is because you are able to take an element of company profits as dividends instead of receiving this as income; dividends are taxed separately and are not subject to NIC. However, limited companies tend to have more complex accounting responsibilities.

A major difference between a limited company and a self-employed sole trader is that a limited company is classed as a separate legal entity to its shareholders and directors. This means that unless fraudulent activity has taken place, you as a director will not be held personally liable for any financial difficulties the company finds itself in. This creates a clear distinction between your home life and your business, which helps to reduce your financial risk.

Need advice?

The decision as whether to operate as a self-employed sole trader or as a limited company is a difficult one to make, and there is no definitive right or wrong choice. It all depends on your circumstances. What may be the best structure for a small business venture will be different to that needed by a larger business with a high turnover and many employees.

Regardless of which path you take, it's worth noting that your decision isn't final as it is always possible to change your business structure later should your needs change.

At AO Accountancy & Consultancy Services Ltd, we can offer sound and practical advice on matters such as above. We also provide a full accounting and book keeping services which includes:

· Accounts preparation

· Self-Assessment Tax Returns

· VAT Accounting

· PAYE Services

· Company Accounting

· Corporation Tax

· Capital Gains Tax

· Business Planning

· Strategic Planning

For a free initial consultation contact us at 07974415084 or at [email protected]

As a very experienced Accountant (FCCA), I provide a full range of accounting and tax services to bo

08/11/2021

Should I Register For VAT?

As an accountant in practice, this is one of the most frequently asked questions from my clients. This short article explains:

• What is VAT?
• Should I be VAT registered?
• Advantages and Disadvantage of VAT registration
• What are the different VAT schemes available?
• How to apply for VAT Registration

What Is VAT?

VAT (or Value Added Tax) is a charge made on the sale of goods and services by VAT Registered businesses in the UK. The current standard VAT rate is 20%. By being VAT registered, businesses collect VAT on behalf of the HMRC. In doing so they are also entitled to claim back the VAT they have been charged on products and services.

Should I Be VAT Registered?

If throughout the course of a rolling 12 month period your turnover exceeds the VAT registration threshold (which is currently £85,000), legally you must be VAT registered.

There are also other benefits of being VAT registered, even if your turnover is less than the VAT threshold.

Advantages Of Being VAT Registered

• You can reclaim VAT that you are charged by other businesses for goods and services. This is particularly beneficial if you buy large quantities of materials.

• Being VAT Registered gives your business the impression that it is larger and suggests your annual turnover is greater than £85,000. This can help when you are competing with other businesses that are not VAT registered.

• Your business customers, if VAT registered themselves, can claim back the VAT you charge, meaning there is no net change in the amount they pay.

• Your VAT number can be displayed on invoices/websites, which can make your company look more attractive to potential customers.

Disadvantages Of Being VAT Registered

• Customers that are not VAT registered may be put off using your products or services due to the additional 20% VAT charge, compared to using a non-VAT registered company.

• Your business needs to maintain clear records of all business transactions that attract VAT and file a VAT return every quarter.
VAT Schemes

There are a range of VAT Schemes available depending upon your individual circumstances. Some of these are listed below:

Standard Scheme

The standard scheme is based upon the date when your invoices are sent. You will therefore need to pay the HMRC by the end of the quarter in which you send the invoice. This can sometimes cause cashflow problems for small businesses if payments are not received quickly by customers.

Cash Accounting Scheme

The Cash Accounting Scheme is based upon the date when your invoices are paid. This scheme is better suited for small businesses because VAT is owed to the HMRC at the end of the quarter in which a business pays for a good or service. This ensures the money is in bank your account ready for when your VAT is payable to HMRC.

Flat Rate Scheme

The net amount of VAT you pay to HMRC is usually the difference between the VAT that you charge customers and the VAT that you pay on your own purchases.

The Flat Rate Scheme gives you a fixed rate of VAT that you pay to HMRC and is dependent upon your industry

You keep the difference between what you charge customers and what you pay HMRC. However, unlike the other schemes you are unable to reclaim VAT on your purchases. The Flat Rate Scheme is also not as beneficial to businesses which don’t charge VAT on all of their sales, e.g. builders contracting new houses.

To join the Flat Rate Scheme your annual turnover must be under £150,000 per annum (excluding VAT). There is also a reduction of 1% for new VAT registrations.

It’s therefore important to understand your business and calculate whether there is a financial benefit to using the Flat Rate Scheme.
Flat Rate VAT Example

An advertising business attracts a flat rate is 11%

Therefore:

Net amount charged to client £1,000
VAT Charged (20%) £200
Gross Amount £1,200
Flat Rate VAT payable on gross (11%) £132
Net difference in VAT (Profit) £68

Should I register for Flat Rate VAT?

The question on whether to register for Flat Rate VAT therefore depends upon two factors:

• The net difference in VAT if registered on the Flat Rate Scheme (as calculated above)

• The amount of VAT you could reclaim if registered on the Standard or Cash VAT scheme

If the Flat Rate VAT amount is more than the Standard VAT amount then there could be a financial benefit to joining the Flat Rate VAT Scheme.

How to register for VAT

You can find more information on VAT registration and apply for VAT registration Online via the HMRC website.

Need help with VAT registration?

At AO Accountancy & Consultancy Services Ltd, we can offer sound and practical advice on VAT. We also provide a full accounting and book keeping services which includes:

• Accounts preparation
• Self-Assessment Tax Returns
• PAYE Services
• Company Accounting
• Corporation Tax
• Capital Gains Tax
• Business Planning
• Strategic Planning

For a free initial consultation contact us at 07974415084 or at [email protected]

13/10/2021

Becoming Self Employed

The COVID-19 pandemic has forced many of us to re-evaluate our priorities. Homeworking has been a boon for many and a difficulty for others.

Many have thought about starting up their own business. It’s a big step and this article intends to tackle some of the issues involved in making that decision.

There are over 4 million self-employed people in the UK, contributing over £300 billion to the national economy. Everyone knows someone who's done it, but how do you get started?

There are plenty of reasons to go self-employed. You get to ‘be your own boss’ and work more flexibly. And depending on your industry, you may be able to command a much higher rate than the salary you’d be able to achieve as an employee.

But there are downsides to self-employment – and when you’re thinking through being self-employed there’s lots to consider.

Is it right for me?

There are advantages and disadvantages to being self-employed, and when you're weighing up self-employment against employment there are a number of things that you need to consider, including:
• are you clear about how you’d get clients or customers?
• do you have some money to set yourself up?
• would you be able to cope with periods of little or no income?
• do you feel confident about managing your own business, for example managing cashflow, keeping thorough records and completing tax returns?
• have you thought through the impact of losing employee benefits, for example holiday pay, sick pay, and employer pension contributions?

You’ll also need to think about personal things such as whether you’d miss working with colleagues, if you have the space you need, and any upcoming life-changing events like moving home or becoming a parent.

Benefits of being self-employed

There are plenty of perks of being self-employed - this list isn't exhaustive:
• you have more flexibility and control, so it may be easier to fit your work around other commitments such as childcare
• your work can be more varied, as you may be working on several different projects at any one time
• you can explore your creative and entrepreneurial side as you build your business

There are also many financial benefits if you’re self-employed. You can deduct costs such as travel and some utilities bills from your income when calculating your tax liability.

Meanwhile, day rates for self-employed consultants and freelancers tend to be much higher than salaries.

Disadvantages of being self-employed

It’s important to take into account the disadvantages of being self-employed. Some of the challenges include:
• finding clients
• start-up costs
• administration such as bookkeeping
• complying with industry regulations

You’ll also need to consider some of the risks of being self-employed:
• your income isn’t guaranteed, which can make it hard to keep up with rent / mortgage payments, loan payments, and living expenses
• you bear the responsibility for the failure or success of the business
• you won’t get paid if you take a holiday or can’t work because you’re unwell
• it can be more difficult to get approved for things like renting a property, getting a mortgage, or getting a loan
• it can be difficult to separate your home life from your work life, and to get a good work-life balance
• being self-employed can be isolating if you’re working on your own a lot

Going self-employed checklist

When you’re going self-employed there are several things you need to do

You need to decide on a business structure. Most people chose to set up as a sole trader, but some decide to incorporate as a limited company. If you’re starting a limited company, there are certain things you need to do, including registering with Companies House, drawing up a memorandum of association and paying corporation tax. This article takes a look at the more popular route when commencing self-employment – setting up as a sole trader

Here are some of the things you need to do:
• tell HMRC that you’re self-employed, so that they know you need to pay tax through Self-Assessment and pay Class 2 and 4 NIC
• set up a business bank account
• establish a process for recording your sales and expenses - this will make it much easier when it comes to completing your HMRC tax return
• check your tenancy agreement or mortgage agreement to make sure you’re not contravening any terms if you’re working from home
• sort out your public liability and / or your professional indemnity insurance
• think about your pension –it might be a good idea to set up a private pension so that you’re still putting money aside for retirement

How much tax will I pay?

This will depend on how much money you’ve made and the allowable expenses you’ve incurred in the course of your business.

Certain business-related expenses can be deducted from your income when you’re calculating your taxable profit.

The tax-free personal allowance and the tax bands are the same for self-employed and employed people, so for 2021-22 you can make up to £12,570 before you need to pay tax.

You’ll then pay the basic rate of income tax (20 per cent) on income up to £50,270. The higher rate of 40 per cent applies to income over £50,270, and on income over £150,000 you pay the additional rate of 45 per cent.

Being self-employed and getting a mortgage

One of the disadvantages of being self-employed is that it may be more difficult to get a mortgage. When you apply for a mortgage and you’re employed, the lender will usually confirm your income by asking for payslips and bank statements. When you’re self-employed, you’ll usually need to provide business accounts including a copy of your Self-Assessment tax return forms.
Lenders often ask for between two and three years of accounts, so you may not be able to get a mortgage if you’ve only just become self-employed. Usually, the lender will take an average of your income over the last two or three years to calculate how much they’re willing to lend you. They may also ask to see other documents - business plans, for example - to check that they’re confident you’ll be able to keep up with the mortgage repayments.

What can I claim for as self-employed?

Self-employed allowable expenses

In terms of what you can deduct from your income when you’re calculating self-employed profit that’s taxable, the list includes business insurance, part of your utility bills if you work from home, office costs, stock and certain business-related travel.

Self-employed benefits

If you’re self-employed and not earning very much money, you may be eligible for Universal Credit or / and Working Tax Credits. You can check the government website for more details.

Other Support

There are a number of programmes and initiatives available that offer financial help and advice. These include:

The Enterprise Programme

This Programme run by the Prince’s Trust, helps young people interested in self- employment to explore and test their ideas, write plans and start their own businesses, or achieve alternative outcomes in education, training, volunteering or work.

Advantage NI

This organisation works with clients in the public, private and not-for-profit sectors to promote starting a business as a realistic and viable career option to young people aged 16-30. It offers individual, tailored information, advice and guidance on starting, running and growing a business.

Enterprise Northern Ireland

If you are thinking of starting a business, Enterprise Northern Ireland will provide training, business loans and premises for start-up businesses.

Go For It programme

This offers advice and guidance to help you produce your own business plan and register for self-employment. It is delivered free of charge by your Local Council through Northern Ireland’s wide network of experienced business mentors.

As part of the programme, you will receive:
• a one-to-one assessment meeting with your local business advisor
• a finance and business planning workshop
• a one-to-one finance and business planning meeting
• tailored guidance to develop your business plan
• best practice guides, tools, videos and more to help you get started

At AO Accountancy & Consultancy Services Ltd, www.aoaccountancyconsultancyservicesltd.co.uk we can offer sound and practical advice on becoming self-employed. We also provide a full accounting and book keeping services which includes:
• Accounts preparation
• Self-Assessment Tax Returns
• VAT Accounting
• PAYE Services
• Company Accounting
• Corporation Tax
• Capital Gains Tax
• Business Planning
• Strategic Planning

For a free initial consultation contact us at 07974415084 or at [email protected]

Based at the foot of the Mourne Mountains, we provide a full range of accounting and taxation services to a range of clients, spanning self-employed tradesmen to large partnerships and limited companies. It provides a full range of services which include:·        Accounts preparation·   ...