The 123 Guides

VAT - The Choices

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.

Standard VAT Scheme or Flat Rate VAT Scheme

Standard VAT Scheme

The Standard VAT Scheme allows you to claim back any VAT you have incurred on expenses.

For instance if you were to buy a computer costing £1,200 the first £1,000 of this is the fee paid to the shop for the computer with the additional £200 being the VAT that the shop will then pay to HMRC. You would then be able to claim this £200 back from HMRC when you file your VAT return.

The Standard VAT Scheme is a very good system for businesses that incur a great deal of expenses. However most contractors & freelancers do not incur many expenses that carry VAT and it is therefore inefficient.

The following expenses do not carry VAT

- Travel
- Food
- Books
- Postage
- Stationery
- Director’s salary

Flat Rate VAT Scheme

The Flat Rate Scheme was introduced to simplify the operation of VAT and, because contractors have very few VAT carrying expenses, in nearly all cases it will save you more money than the Standard Scheme.

The Flat Rate Scheme works by way of you charging your clients VAT on the work you do at 20% – just like the Standard VAT Scheme, then instead of claiming back the VAT on your expenses, you get to keep a percentage of the VAT you charged your client.

The decision for which VAT scheme to join is up-to you as propietor. Majority of contractors choose the Flat Rate Scheme out of simplicity and money saving capabilities. However if you feel you will have a high level of expenses that do carry VAT, the Standard Scheme may be better for you.

When you sign up to The 123 Way we will review your business and offer you advice on which is the best scheme for you to join. We will then register you for VAT if you are not already registered and prepare and submit your VAT returns each 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.