Running Your Business

Sales

Sales invoices must be issued to your customers for all of your sales.

Invoices should always be sequentially numbered, without gaps.

Sales Invoices should also include the following items:

• your company name, address and contact information

• the company name and address of the customer you’re invoicing

• a clear description of what you’re charging for

• the date the goods or service were provided (supply date)

• the date of the invoice

• the amount(s) being charged

• VAT amount if applicable

• the total amount owed

Purchases

You should retain invoices for all of the items you purchase, including those purchased using the business account and petty cash.

Receipts and Invoices from your purchases should not include any personal purchases where possible. Try to obtain separate receipts for business purchases when made alongside personal purchases.

Dividends

If you are a limited company, you may pay dividends to your shareholders.

You must ensure the business has the profits to pay these dividends are they are considered to be illegal.

Any dividend payments must be agreed by the board, with any minutes of the board meeting recorded.
A dividend voucher must then be created for each payment to each shareholder.

Retention Period

You must keep records for 6 years from the end of the last company financial year they relate to, or longer if:

• they show a transaction that covers more than one of the company’s accounting periods

• the company has bought something that it expects to last more than 6 years, like equipment or machinery

• you sent your Company Tax Return late

• HMRC has started a compliance check into your Company Tax Return

What to keep records of

You must collect and keep records of:

• what you pay your employees and the deductions you make

• reports you make to HM Revenue and Customs (HMRC)

• payments you make to HMRC

• employee leave and sickness absences

• tax code notices

• taxable expenses or benefits

• Payroll Giving Scheme documents, including the agency contract and employee authorisation forms

A lot of these records are kept with your payroll files that we process for you.

Retention Period

Your records must show you’ve reported accurately, and you need to keep them for 3 years from the end of the tax year they relate to. HMRC may check your records to make sure you’re paying the right amount of tax. 

Claiming Mileage Allowance

When you use your personal vehicle for business use, you may be able to claim back the Mileage Allowance from your company.

This allowance enables your business to have the allowable expense associated with business mileage in your private vehicle; it also allows you, as the individual, to recover some costs associated with using your vehicle.

The 2024 rate is 45p per mile for the first 10,000 miles, and covers your personal expense of fuel used, as well as wear and tear on your vehicle.

Your business will pay the amount of mileage claimed to you, as the individual, and claim that expense in its accounts.

Records to Keep

You will be required to keep a detailed record of your business mileage, that your personal vehicle has been used for, including:

• Starting postcode

• Ending postcode

• Reason for the travel

• The number of miles travelled

Note: Travelling to and from your place of work is not considered business mileage.

You should submit your mileage records to us for each complete calendar month as soon as possible after the end of the month. That way we can get your records updated promptly, and advise you of any potential issues. You don't need to send us the full details, just a summary of what you are claiming.

By holding and processing personal information about the people you do business with, and that of your employees, you may need to register with the ICO and pay a Data Protection Fee.

The ICO website contains information about this topic, as well as a tool to determine if you should register with them.

Please see our guide on the ICO Fee for more information.

What to do Each Pay Period

Every pay run, you will need to send us details of each employee's pay.
We will then run your payroll, make the necessary deductions, before generating summaries for yourself and payslips for your employees.

You will then pay your employees based on their net pay.

Payroll Taxes

Where applicable, PAYE, National Insurance, Pensions and Student Loans are deducted from your employees' pay.

You will be paying your employees the net amount after these deductions, meaning you will be holding on to the taxes that they are paying.

Every Quarter, or 3 months, we will advise you on the total of these deductions and you'll need to pay this amount to HMRC on your employees' behalf.
For pensions contributions, you will pay the amount deducted to your pension provider.

In addition to employee deductions, you may also pay Employer versions alongside the payments you're making on behalf of your employees.
For Employer's NI, this is paid to HMRC with your employees' taxes.
For Pensions, you'll add in your Employer Contributions and pay that alongside your employees' contributions to your pension provider.

Holiday Pay

In addition to the wages you pay your employees, they will also accrue holiday pay.
There are a few different methods of running Holiday Pay, and you should use the appropriate one for your business.

You will have to pay out from this balance when an employee takes time off, or when an employee leaves.

It is worth considering that besides the wages you pay to an employee, you also have this liability and need to be able to cover this cost.

There are different forms of taxes, payable throughout the year, and annually.

VAT

If you're VAT Registered, you will pay your VAT every 3 months, 4 times per year.
The months covered in each period will be determined by when you registered.

Every vatable sale you make will include 20% (or the applicable rate) which you will need to pay to HMRC.

You should aim to put aside this 20% from every sale to cover your VAT bill. Any input VAT from Purchases will reduce the amount of VAT you owe, but by setting aside 20% you know you have enough saved.
Remember, it's not technically your money. You collected it from your customer on behalf of HMRC and will need to pay it on to them.

After each VAT quarter, once we have all of your documents in, we will advise and seek your approval to submit your VAT Return.
Once submitted, you will need to send this money to HMRC.
You can pay via your Gov Gateway Login, where you can also set up a Direct Debit.

We recommend setting up a Direct Debit so that you never miss a payment.

Payroll Taxes

Each pay period, you will deduct taxes owed by your employees from their pay.

You need to hold onto these taxes and pay them to HMRC each quarter.
Along with the taxes you hold for your employees, you may have to pay Employer's National Insurance at the same time.

For Pensions, you deduct this from your employees' pay the same as taxes, but you pay this to your pension provider each pay period, along with your Employer Contributions.

For every pay period we process, we send you an Employer's Summary, which details the amount of deductions you need to set aside.
Each quarter, we will send you a P30, which outlines how much you need to pay to HMRC, the reference to use, and when it needs to reach HMRC by.

Annual Taxes

If you are a business you will have to pay Corporation Tax, if you're an Individual you'll have to pay Self Assessment,  each year on your taxable profits.

This means that at the end of each accounting period, you should expect to pay the tax at the relevant amount on any profits you make.

You should check what your expected rate may be, and ensure you have enough set aside to cover this.

We always recommend putting aside at least 20% of your business income to cover your tax bill, if you are a small business.

For Self Assessment, you may need to make a Payment on Account. This essentially splits your next year's bill up and you pay part of it in advance. If you have to pay a Payment on Account, you should factor this into the amount of money you put aside for tax.