31st January looming..

Hi every­one,

Do you have a tax account set up?

With the 31st Jan­u­ary com­ing up tax pay­ments are on every­ones mind and cause stress. Set­ting up a tax account can help to reduce the anx­i­ety and mean that funds are set aside (rather than spent).

This works well for indi­vid­u­als and com­pa­nies. If you are run­ning the busi­ness from the bank account then it can lead to a false sense of secu­ri­ty – until the tax bill lands!

If you take £120,000 of income in this quar­ter then there is £20k of VAT on this and the remain­ing net income of £100,000 will have some cor­po­ra­tion tax due (depen­dant on your costs).

Each com­pa­ny is dif­fer­ent but in this exam­ple lets assume the com­pa­ny makes net prof­it of 25% (ie £25,000) and the costs of £75,000 are £30k of staff wages and £45k of over­heads (of which £35k of them are VAT­able).

The “approx­i­mate” prof­it and loss / tax accounts would there­fore look like this: