Empowering Financial Freedom through Accountancy

Taxation Essentials

• What are allowable business expenses for tax purposes?

Allowable business expenses typically include costs directly related to running your business, such as office supplies, travel expenses, and professional fees. It’s essential to keep accurate records and ensure that claimed expenses are genuine and necessary for your business operations.

Bookkeeping Basics

• How do I reconcile my bank statements with my accounting records?

Reconciling bank statements involves comparing the transactions recorded in your accounting system with those on your bank statement to ensure they match. Any discrepancies should be investigated promptly, including outstanding checks, deposits in transit, or bank errors, to maintain accurate financial records.

Financial Reporting Demystified

• What is the difference between gross profit and net profit?

Gross profit represents the difference between revenue and the cost of goods sold, indicating the profitability of core business operations. Net profit, on the other hand, is the amount remaining after subtracting all expenses, including taxes and interest, from gross profit. It reflects the overall profitability of the business.

VAT Made Simple

• When should I register for VAT?

You must register for VAT if your taxable turnover exceeds the VAT registration threshold. This threshold may vary depending on your location and business activities. However, you can also voluntarily register for VAT, which may be beneficial if you want to reclaim VAT on your business expenses.

Payroll Procedures Explained

• What are the statutory deductions from employees’ wages?

Statutory deductions from employees’ wages typically include Income Tax and National Insurance contributions. These deductions are calculated based on the employee’s earnings and are legally required to be withheld and remitted to HM Revenue and Customs (HMRC) by the employer.

Auditing Essentials

• What is the purpose of an audit?

The primary purpose of an audit is to provide assurance on the accuracy and reliability of financial statements. Auditors examine financial records, internal controls, and processes to ensure compliance with accounting standards and regulatory requirements, thereby enhancing stakeholders’ confidence in the integrity of the financial information provided by the company.