Frequently Asked
Questions

Our Services

1) Why do I need an accountant?

  • Save money both now and in the long run

While many small business owners think that they are cutting costs by not hiring an accountant, having your company properly administered by a financial professional will save you your hard earned cash. Accountants can advise on ways to lower your tax bill, identify money saving opportunities, make sure you’re not overspending on resources and look at the long term financial impact of your business strategy. With their expertise you are less likely to make costly mistakes or find yourself facing heavy fines from HMRC.

  • Support & guidance

With an experienced accountant just a phone call away you can sound off ideas with them about your business plans. Our ongoing support and assistance means you effectively have a year-round business partner to offer a fresh perspective and help you navigate through what can be an uncertain economy.

  • Stay up-to-date

A qualified accountant will make sure that you and your company stay up to date with ever-changing rules and regulations so you’re not caught out at the end of the year or hit by costly fines that can be expensive to repair. As a forward thinking firm, it’s our responsibility to stay one step ahead and make sure that you always comply with your legal requirements in the most efficient way.

  • Peace of Mind

There’s no need to spend hours agonising over complex paperwork or crunching your numbers late into the night. With an established and experienced accountancy partner like Carnegie Knox, you can be confident that your finances are properly documented and filed and that you are getting quality expert advice that adds value to your business.

2) Which types of businesses do you work with?

We work with all types of business structures from limited companies, partnerships, limited liability partnerships and sole traders. The business structure you choose will affect its legal status, how much tax it pays and when.

It’s worth thinking carefully about which structure best suits the way that you intend to do business. If you are unsure as to which set up is right for you, we can guide you through your options and look at the pros and cons of each structure to determine the one that’s right for you.

3) How much will your services cost?

We don’t time bill like most accountancy practices. Instead we offer a bespoke upfront pricing strategy based on your annual needs.

We meet with our clients to assess your specific needs and business requirements, discuss any possible tax saving opportunities and answer any questions you may have.

Based on our initial consultation you will receive a fixed fee quote for the full year. At this point you’re able to discuss the fees with us and ask further questions before making your final decision. By having an open discussion up front, you will know exactly what you are getting and at what price, with no nasty surprises or escalating costs to worry about.

For some of our services we need to take a slightly different approach. For instance contractors typically have fewer transactional costs and mostly just bill for their time. That’s why for contactor based services we operate a fixed fee of £150 + VAT per month.

4) How often do I meet my Client Manager?

We take a pro-active approach to ensure our clients always receive the best advice and that we build a strong collaborative relationship with them. We encourage regular contact, be that face-to-face, via email or over the phone, because our service delivers more than just accounts and tax returns.

Your Client Manager will be your go to contact for any queries you might have and they will ensure you are kept involved in all activities relating to your business. At a minimum we suggest you meet with your Client Manager at least quarterly to review your records and documentation, but contact can be much more frequent if you prefer. We also aim to respond to all enquiries within two days.

5) What accounting software do you use?

We have developed a strong partnership with FreeAgent to deliver to our customers an online bookkeeping service that is optimised for small to medium sized businesses.   FreeAgent offers market-leading functionality with several unique tools, such as the Tax Timeline, while being exceptionally easy to use.   We chose to work with FreeAgent to make the process of accounting simpler for you and to give you easy access from anywhere to a secure facility where you can review your accounts in real-time.

6) What resources will I have access to?

Many of our customers take great interest in how we manage their accounting and, in respect of HMRC guidelines we encourage our customers to take a more active role in the running of their company at an accounting level. To help, we publish a wealth of documents and tools that our customers can consult or use at their convenience.

Your Client Manager will make you aware of these resources that include for example: factsheets on personal and business issues; headline articles; calculators for mortgages, loans, APR, payslips, VAT, stamp duty, company car and fuel benefits-in-kind; market data such as statistics and rates of annual inflation, annual earnings, exchange rates, FTSE 100 index, house price index, interest rates and retail price index; downloadable HMRC and Companies house forms; or tax calendar.

7) If I have a query or require advice, how long will it take for you to respond to me?

We will usually respond to you within 2 working days. Our aim is to ensure you are well informed at all times. Our experience shows that a well-informed client makes our job easier.

8) What do I need to do to move from an existing Accountant?

It is very easy to move to Carnegie Knox. All we require is basic information about your company and the details of your existing accountants. A member of the team will be on hand to walk you through the required steps and we can have you set up and running within 24 hours.

Your Business

9) How do I start up a new company?

A company can be set up cheaply either through an accountant, a formation agency, a solicitor or you can do it yourself by lodging the correct forms at Companies House.   However, in addition to registering the company it is important that it is also registered for all necessary taxes. Our company formation services will take care of all of this, as well as providing assistance with opening a bank account, VAT & PAYE registration (if required) and submission of all documentation required by HMRC.

10) What are the legal requirements for running a Company?

The type of business structure you choose will affect its legal status, and therefore the level of administration, filing and record keeping required. For example the administrative and regulatory demands are typically heavier for a limited company set up than for a sole trader or partnership. Annual accounts and financial reports must be prepared in accordance with the Companies Act and an annual return confirming who owns and runs the company must also be submitted to Companies House.

There are other legal requirements for a limited company that will need to be implemented from the outset, such as having at least one director and a registered office address, and having “Limited” or “Ltd” after the company’s name.

If applicable the limited company may be required to register as an employer with HMRC and submit all relevant returns relating to the employment of its personnel.

Finally, if the total value of everything you sell through your business exceeds the VAT threshold it is also required to register for VAT and charge VAT on its supplies.

As with knowing which business structure is right for you, Carnegie Knox will ensure all legal requirements are met throughout the lifecycle of your business, including the company’s certificate of incorporation, copies of the company’s articles of association, any other important contracts with employees, customers or suppliers and accurate completion and submission of statutory books and records.

11) Why do I need a separate business bank account?

Although not compulsory for sole traders, it is usually recommended that you open a separate bank account for your business, especially if you process a large number of transactions each month.

Unlike a sole trader set up, a limited company has its own legal identity independent from its members. It is therefore advisable that it has its own bank account so that business income and expenses are kept separate from any personal transactions. If this is not the case there could be expensive tax implications.

12) What do directors do?

If you have a limited company you are legally required to have at least one director.

The director(s) are commonly referred to as the officers of the company. The officers are legally responsible for ensuring that the company is run in accordance with the Companies Act (this is the legislation that governs the running of a limited company).

13) What are your company secretarial services?

If you have a limited company its details will be held on public record and any changes to the initial set up must be submitted to Companies House to ensure these records are always kept up to date.

As part of our company secretarial services we will assist you to ensure that the correct paperwork is submitted to Companies House so that your business complies with the Companies Act.

We will also help with the preparation of the company’s Confirmation Statement. This is an annual submission confirming who the company directors and shareholders are, along with details of its registered office etc. The return is not to be confused with the company’s annual accounts. There is a statutory fee payable to Companies House in respect of filing the Annual Return, but this fee is included within the cost of all our packages.

14) How do dividends work?

Dividends are payments made to the shareholders of a company out of any profits remaining after corporation tax has been deducted and reserves carried forward from earlier years. The total amount of dividend you receive depends on the number of shares you hold. A dividend voucher is prepared in respect of each dividend that is declared.

We can help you calculate the amount of dividends available for withdrawal and we can also provide advice on the tax efficiency of withdrawing dividends.

15) Can I use my home address as my registered office address?

It is perfectly legal and acceptable to use your home address as a registered office for your limited company. The only requirement is that the registered office address is situated in the same country in which your company is incorporated.

However, all registered office details will be held on public record by Companies House and all statutory records will legally need to be stored at this address. For these reasons many company owners prefer not to use their home address as their registered office address.

Carnegie Knox can provide you with an alternative registered office address either here in Scotland (Aberdeen) or in England & Wales.

16) Can I involve my spouse in the company?

  • Spouse as employee

If your spouse already spends a considerable amount of time helping out with your business and you are considering making them a formal employee, keep in mind that you will need to set up a PAYE scheme and give your partner and HMRC a P60s form, just as with any other employee. It is also recommend that you have an employment contract in place to ensure you do not fall foul of minimum wage legislation. By issuing a payroll you will also need to deduct employees’ national insurance from your spouse’s salary before you pay them.

Finally, keeping a record or timesheet of all the activities your spouse does for your business will help prove to HMRC that they are legitimately earning their salary and are receiving a reasonable wage rate for the job that they do.

  • Spouse as director

Directors are responsible for managing the day-to-day aspects of the business, including operational, financial and administrative duties. If your spouse does not work elsewhere and is involved in your company, you can appoint them as a director and pay them director fees simply for being responsible for the position of Office Holder of the company.

These fees are treated the same as salary for tax purposes, however they don’t need to be as heavily justified in comparison to a salary. As long as the fee amount is proportionate to their level of activity in the business and they are paid a similar amount as other directors in the company there should be no issues with HMRC.

It is important to remember that directors can only receive a salary. In order to receive shares your spouse would need to be appointed as a shareholder.

  • Spouse as shareholder

Shareholders are typically a spouse, a civil partner, or family members (However only a spouse or civil partner can be a shareholder in a personal service company (PSC))As shareholders they are legally entitled to dividend income and many company owners appoint their spouse or civil partner as a shareholder to benefit from considerable tax-saving opportunities.

It is common knowledge that director-shareholders will often pay themselves through a combination of salary and dividends to reduce their overall tax bill, but if your spouse is also a shareholder you can utilise their position to minimise the financial impact even further.

If this process is not carefully carried out, HMRC may deem the appointment or dividend payment as a form of ‘income splitting’ (where a person moves their income from their high income bracket or tax rate band in order to take advantage of a lower tax rate band used by their spouse, thereby reducing their own tax liability). However the landmark Arctic Systems case was lost by HMRC and as such is it is still possible for a spouse to extract remuneration from a company via dividends.

On losing the case, the government announced that it intended to introduce legislation that would prevent the practice. However, since that announcement the banking crisis and the recession that followed have placed this proposed legislation on the back burner. It could nevertheless be introduced at any point.

Spouse as general partner

Partnerships are owned and run by individual partners who are personally and jointly responsible for the actions of their fellow partners. It is therefore advisable to have a partnership agreement in place outlining the terms and conditions of the partners, their duties and responsibilities, percentages of ownership and distribution of profits and losses. There is no restriction on the number of individuals in a partnership.

For more detailed advice based on your personal circumstances please get in contact with one of our advisers.

17) What records do I need to keep?

The complexity of your record keeping will depend on the volume of transactions going through your company however, regardless of the amount you will need to maintain exact records of everything you spend and receive. That includes maintaining careful records when it comes to employee payroll, accounts receivable, purchases, and other expenses.

It may be the case that a simple spreadsheet detailing all transactions through your company bank accounts together with a file containing all supporting documentation may suffice, but more often than not you will need a little more guidance and support.

At Carnegie Knox we can give you access to FreeAgent, which is an online accounts application. This software encourages collaboration between the business owner and accountant and it will help ensure that the company records are as accurate and up to date as possible.

It is important that you keep your personal finances separate from those of the business. Generally you should pay for business expenses using your business cheque book or business credit/debit card. Personal expenses should be paid for using the personal equivalents.

In certain circumstances, you may have to pay personally for a business expense. In such cases you should reimburse the amount incurred personally from the business bank account as soon as possible.

You must be able to prove that all expenses claimed through your business are business related and accordingly you will need to retain supporting documentation. You are legally required to retain all business records for a period of six years in case of a HMRC enquiry.

18) I’m about to hire my first member of staff. Do I need to offer them a pension?

For the past five years, companies have been obliged to automatically enrol their staff into a pension scheme, and make a contribution towards their retirement savings. This is known as Auto enrolment and was introduced to help people in the UK save for retirement. It was designed so that employees had to be put into a pension scheme, but had the option to leave if they wanted to. The rules that were introduced back in 2012 applied to the biggest companies in the UK initially, but over time have been rolled out to medium and small employers as well. The legislation also applies to ‘micro’ employers like you. Previously, people who had one or two employees were given a ‘staging date’, which was effectively notice that they had to enrol their staff into a pension. But since 1 October 2017, anyone taking on staff must immediately offer a pension scheme – technically known as ‘instant staff duties’.

Your staff member has to meet a certain criteria before you are legally obliged to enrol them into a pension scheme. They must be:

Aged 22 or above

But below state pension age

And earn a minimum of £10,000 a year.

Pension rules tend to be quite complex and auto-enrolment rules are no exception to this. The amounts that you as an employer will contribute are set to increase over the next few years. Currently, a minimum of 2% of an employee’s earnings must be paid into a pension – a contribution 0.8% by your employee and 1% by you. The remaining 0.2% is made up of tax relief from the government. However, the contribution rates apply to the employee’s ‘qualifying earnings’ only. This means that the percentage of contributions are made on a minimum of £5,786 and a maximum of £45,000. This range of qualifying earnings changes every year. Over the next two years, contribution rates will be increasing: In April 2018, employers will need to pay in 2%, with employees paying in 2.4%. Government tax relief will add a further 0.6%. In April 2019, employers will need to pay in 3%, employees 4% and the government will contribute 1%.

Carnegie Knox will be able to provide you with further help and assistance in understanding your legal obligations as an employer, selecting a pension scheme and setting up auto-enrolment for staff for the first time.