The 123 Guides

VAT - The Basics

Business Structure Review

The 123 Way

What is included as standard for a fixed fee of £65.00 + vat per month:

Full Contracting health check - is your business performing as best it could - we'll ensure it is.

If you're new to freelance contracting, we'll ensure you start trading in the right way.

Then you can sit back and relax, your ongoing HMRC & Companies House compliance will be taken care of.

The 123 Way - simple & stress-free.

You have to register for VAT if the annual turnover of your business will exceed £73,000 (2011/12). There are however many advantages to being VAT registered so we usually recommend that you register, even if your turnover will not reach this threshold.

The Basics

VAT is a tax that you have to pay on many expenses and charge to your clients on top of your fee rate.

The current rate of VAT is set at 20%.

Example:

In your first month you charge a client £1,000 and you are VAT registered, you will have to add VAT on top of this at 20% this would be £200 making your total invoice £1,200.

During the month you have expenses that include £100 of VAT - say you bought a laptop for £600, £100 of this would be VAT.

You then need to pay £100 VAT over to HMRC (£200 VAT you charged to your client minus £100 VAT you paid on the laptop).

This is known as the VAT Standard Scheme which is a great system if your business has a lot of expenses that carry VAT - most contractors and freelancers do not have high levels of expenses that carry VAT, so they opt for the VAT Flat Rate Scheme. Take a look at VAT - The Choices for much more information on both the Standard and Flat Rate Schemes.

VAT Responsibilities

There are three main VAT responsibilities you should understand:

1 You need to complete a VAT return every three months which is done online, and pay whatever VAT is due.

2 Each VAT return is due 1 month after your quarter end, so if your quarter ends on October 31 you have to submit your return by 30 November.

3 When you submit your return you need to make payment for your VAT, this gives you up to a month after your VAT quarter to make payment.

The 123 Way includes the preparation and submission of your VAT returns every quarter.

Running a Limited Company

Being a Sole Trader

Responsibilities

Business Bank Account

Drawings

Bookkeeping & Records

Trading Accounts

Business Tax

VAT - The Basics

VAT - The Choices

123 Income Illustrator

The 123 Income Illustrator shows you what you can expect to take home from a given contract.

It also compares the differences between freelance contracting through your own Limited Company, through an Umbrella Company, as a Sole Trader or if you were to return to full time employment.

The123 Income Illustrator

Invoicing

Expenses

Expenses - Detailed Guide P1

Expenses - Detailed Guide P2

Personal Tax/Self Assessment

Importance of Information

Important Dates

Calculators

123 Referral

We run a simple referral programme where for every client you refer to The 123 Way we will give you £123.00

For more information check out the link below:

123 Referral

FAQs

Disclaimer:
This information is for general information only. No responsibility is taken for any action taken or refrained from in consequence of its contents. Always seek professional advice before acting.