FAQ’s: Your Most Popular Accounting Questions Answered

09
Oct

As a business owner, you might have questions. Questions about starting a business and increasing sales, or questions about how to get your employees to be more productive and take less coffee breaks.

While we can’t help you with that last one, we can help to answer some of those tricky and often confusing accounting questions which have been keeping you up at night. Questions such as, ‘What’s the difference between accounts payable and receivable?’, ‘How do I file my small business taxes?’, or ‘How should I structure my business?’

For the answer to these questions and more, keep reading as our team of accounting experts answer your most common questions. Ten Forward Finance provide accurate, efficient, and flexible cloud accounting solutions for SME’s, startups, and creatives. Let’s get started:

Your Accounting Questions Answered

How should I structure my small business? There are many different ways to structure your small business here in the UK including:

  • Sole Trader
  • Partnership
  • Limited Liability Partnership
  • Limited Company

Deciding on which structure to select can be daunting and depends mainly on the type of business and the amount of liability you want. Setting up as a Sole Trader is the most popular business structure for new businesses in the UK, it’s easy to set up and requires the least amount of paperwork. However, sole traders have unlimited liability which means if the business gets into debt, the owner is liable.

There are pros and cons associated with all business structure models, find out which is best for your business, speak to one of our friendly experts today.

Should I open a separate business bank account? We would always advise opening a separate bank account for your business. Not only does this help you to keep business and personal funds apart, it also protects your personal funds and ensures that your taxes will be filed correctly.

What accounting terms should I know? While most of your accounting should be handled by a professional, there are some accounting terms that you will need to know.

  • Cost Of Goods Sold (COGS): This is the amount of money you have spent on the products you are selling. Subtract this from the sale price to see your profit.
  • Assets: This is the tangible or intangible property that adds value to your business. Tangible assets are the assets in which you can touch such as a vehicle, or your computer. Intangible assets are non-physical such as patents, copyrights, or branding.
  • Liabilities: This is the money that your business owes.
  • Equity: This is the value your business after subtracting your liabilities from your assets.
  • Revenue: This is the amount of money your business brings in from sales.

What’s the difference between accounts payable and receivable? Accounts payable is the money you owe to vendors and accounts receivable is money owed to your business.

How can I lower my tax liability? HMRC allows businesses to claim a wide range of tax deductions which can reduce your tax liability. To find out if you are eligible, please get in touch with us.

How do I calculate my business’s profit? Calculating your business’ profit can be done using the following formula: ‘Net Profit = Revenue – Cost of Goods Sold – Expenses’

Contact Ten Forward Finance

To have your accounting questions answered by a professional, contact Ten Forward Finance today!

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