Articles

Why should you give importance to efficient bookkeeping, and Vat Return Services?

by Benny Gala DNS Accountants

The importance of bookkeeping cannot be stressed enough. It cannot be denied that it is one of the most important aspects of a business and the reasons, which are as follows are self-explanatory

·        It helps in giving a quick and efficient overview of the profits and losses as well as the performance patterns.

·        Maintains a proper track record of where every single penny comes from.

·        Proper explanation to the tax authorities in case of discrepancies arising in the future.

Bookkeeping comes in very handy in case of filing of tax returns which are necessary for every company. This brings us to our next important factor of business- VAT Returns.

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What is VAT?

Value Added Tax or VAT as is commonly known is, in the simplest terms, the tax imposed by the UK government on the sales of goods and services. Any company registered under the High Majesty’s Revenue and Customs (HMRC) has to pay this tax to the government on a monthly or quarterly basis, the latter being the norm.

Who pays it and when?

Any company registered under HMRC pays a VAT on its goods purchased and sold once its annual turnover crosses £ 85,000. The company needs to charge VAT on goods sold from customers and pay VAT to the government on the goods bought. In an ideal scenario, the VAT charged must roughly be equal to the VAT paid by a company. However, the concept of VAT returns comes into play in case there is a substantial amount of difference in the two amounts.

What are VAT returns?

A company has to file for VAT returns every 3 months. VAT returns refer to the amount of difference that arises between the VAT charged and the VAT paid by the company. If the company pays more VAT than what it charges, then the difference is refunded by the government after filing for VAT returns. If it pays less than it charges, then the government recovers the remaining amount from the company. Thus, while filing for VAT returns, bookkeeping comes into action because that is the only means to keep track of the transactions of the last few months and those are the financials referred to whenever a company files for VAT returns.

How to file a VAT return?

Once registered for paying VAT, business is assigned to a “VAT stagger group” which determines the months in which your payments are due. There are three stagger groups:

·        Group 1- quarters ending in March, June, September, and December

·        Group 2- quarters ending in January, April,  July, and October

·        Group 3- quarters ending in February, May, August and November

The Vat filing and payment need to be done before the 7th of every quarter month. Once you have your financial statements and all the paperwork in place, you have to file the VAT Return online on the HMRC website.

Along with VAT, another important aspect to be given a lot of consideration is payroll accounting.

What is payroll accounting?

If you are a company, you are going to have employees, be it few or many. And if you have employees in your company, you will spend a considerable fraction of the company’s revenue on them too. They share a considerable portion of the company’s costs and hence, maintaining a clear record of the money spent on them is essential for accounting purposes. This very account of the money spent on the company’s employees is what comes under payroll accounting.

What all does payroll accounting include?

Every penny spent on the employees comes under payroll accounting. The major expenses, common to any company are:

·        Wages, bonuses, and commissions to the employees

·        Employee health insurance premiums, and other such securities

·        Money spent on the employee’s paid holidays/ vacations/ pensions and other such benefits

·        Employer’s portion of Social Security taxes, Medicare tax, unemployment tax, etc.

 


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About Benny Gala Senior   DNS Accountants

156 connections, 4 recommendations, 649 honor points.
Joined APSense since, June 30th, 2017, From Harrow, United Kingdom.

Created on Mar 23rd 2018 01:19. Viewed 709 times.

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