|Posted on 17 October, 2019 at 5:35||comments (0)|
What Happens When A Business Owner Dies Unexpectedly?
The untimely death of a business owner is just one of those subjects you don’t want to broach really isn’t it? That’s why, in this blog post, we’re asking the question for you and then doing our best to provide some informative advice. It might be a bit of a morbid topic to touch upon but unfortunately, one that needs covering.
The situation for sole traders
In the circumstance of a sole trader passing away, the business essentially dies with them. As their business and personal finances are one, anything they owned falls into their Estate. It will be dealt with via the business owner’s Will or inheritance.
Assets will be sold to clear any debts or outstanding balances and anything left after that will then be left to the deceased’s family to settle. This covers things like debts and loans, mortgages, employee wages, and unsettled invoices.
The situation for partnerships
Following the death of somebody in joint business ownership, the partnership will naturally dissolve. The portion of the business which belonged to the deceased can then be bought by the remaining partner. If this isn’t financially viable for them, the portion of the business can then potentially be bought by somebody else.
There are lots of grey areas that might arise in this situation so we recommend addressing what will happen in the event of death in any partnership contracts you draw up when starting or running the business.
Part-ownership in a business can be gifted to a successor either while the owner is still alive and deemed mentally fit, or through power of attorney. Of course, this should only be done when you are sure and ready.
What about limited companies?
With Limited Companies, the owner’s business and personal finances are two separate entities. This means that the company itself takes on any debts or liability in the event of a death – not the deceased business owner. Shares can then be sold or transferred with limited liability attached to the family of the deceased.
So, how can you make sure you’re prepared… just in case?
- Get your succession plan sorted – have a plan of action in place for if it should be required.
- Invest in a good life insurance plan – this will be a massive financial relief for those left behind.
- Set out clear contracts while you’re alive and well – set the records straight while you can.
We are looking at running a free seminar on this to make sure that all of your affairs are in order, please drop us a message to express your interest.
|Posted on 4 June, 2018 at 7:05||comments (0)|
Every year we receive emails or telephone calls from clients stating that they have received an email or text message from HMRC about their tax refund.
HMRC willl never email or text you regarding tax refunds, you will only receive a letter in the post.
The emails usally include a link that you are required to click on to fill in your information and bank details to process the refund. This is not the case and you are allowing the scammers to take money from your bank account or use your identification.
HMRC will pay refunds directly into your bank account if your bank account details have been entered in your tax return. If HMRC do not have your bank details you willl receieve a chequwe through the post. You will never be asked to click on an emailed link to provide your bank details.
Please do not be caught out as so many people are each year.
If in doubt forward onto us and we can advise, but also remeber if we havent told you, that you are due a refund and it sounds to good to be true...... it normallly is.
Have a great day.
|Posted on 30 May, 2018 at 5:15||comments (0)|
The Making Tax Digital pilot for self-employed businesses launched in March and in a few years’ time, this new form of tax administration will be mandatory for any individual, business or non-profit organisation that has to file a tax return, although it won’t affect pensioners, those who are solely paid through payroll/PAYE, or those who have a secondary income of less than £10,000.
Are you ready?
What is Making Tax Digital?
Making Tax Digital (MTD) is the core of HMRC’s plan to become one of the most digitally advanced tax administrations in the world.
HMRC is working with commercial software providers (rather than online ‘cloud-based’ software providers) to see how they can directly link together using Application Programming Interfaces (API). This will allow your chosen software to automatically update your tax account and submit information to HMRC.
Paper accounting and the yearly tax return will become completely obsolete as the legislation comes into force in stages.
April 2019: businesses above the VAT threshold (currently £85,000) will be required to set up a digital tax account and file returns online for VAT purposes.
2020: it’s expected that the legislation will come into force for those VAT-registered businesses with turnovers less than £85,000.
At a later date, MTD will become mandatory for anyone who files a tax return and will cover income tax too.
What are the benefits of Making Tax Digital?
The government believes that MTD will make life easier for businesses and HMRC, improving efficiency, effectiveness and ease of compliance. HMRC estimates that the behavioural impacts of Making Tax Digital will contribute over £1bn to the Exchequer by 2022 to 2023.
- The predicted benefits for businesses include:
- The ability to review all your tax information from your personal digital tax account
- Faster and simpler submission of your information to HMRC and online payment of any tax owed
- Increased accuracy and reduction of errors in reporting, meaning you’re more likely to only pay what you owe and are less likely to experience compliance checks and audits.
- A more up-to-date picture of your finances and the tax you owe
How can I sign up to the income tax pilot?
As part of the Making Tax Digital pilot, self-employed businesses can voluntarily use software to keep their business records digitally and send Income Tax updates to HM Revenue and Customs (HMRC), instead of filing a Self Assessment tax return. This means you’ll see an estimate of how much tax you might owe as you go, rather than waiting until the end of the tax year.
By signing up for the pilot scheme, you can ensure you’re ready for the transition well before MTD becomes compulsory.
HMRC advise any business whose year-end date is other than March 31 to consider using MTD systems far earlier. For example, a business whose year-end is June 30 will be required to file its VAT obligations through software for the quarter ending June 30 2019.
To join the pilot scheme, you will need to:
- Sign in to the Government Gateway using the Government Gateway user ID and password you got when you signed up to the Self Assessment online service (if you’re not already signed up to the online service, you need to do that first).
- Use software to keep your business records, recording income and expenses. Check if your software can send updates to HMRC.
- Use your software to send your income and expenses summary to HMRC quarterly (every 3 months).
- Send a final report to confirm your income and expenses at the end of your accounting year. If you need to claim allowances and reliefs, you can do this within that final report. You’ll be able to see a tax calculation for the year.
You can also choose to:
- Send an update to HMRC more often (this is handy if you want to see an up-to-date estimate of the tax you might owe)
- Pay your tax bill as you go, which may make budgeting easier
- Ask your accountant to send updates for you
Don’t ignore MTD until it becomes compulsory! Use this opportunity to learn about how it works and ensure you and/or your accountant are prepared for the change. Are you prepared?