Frequently Asked Questions

Below, is a short list of our most frequently asked questions, to help give some immediate answers to questions you may have.

Is the first meeting free?
Our first meeting is always free and no time limit is placed on it. It is important we spend as long as it takes with each other to make sure we fully understand your requirements and what we have to offer. Subsequent meetings are free of charge once you become a client.
I want to set up my own business as a self-employed. What should I do?
Self-employment is the easiest way to set up a new business, and has many advantages:

  • There are no formation costs
  • Sole traders are not required by law to have annual accounts nor to file accounts for inspection, but you will need annual accounts to complete your tax returns.
  • Losses generated by a sole trader can be set against other income of the year or carried back to prior years.

However, the main disadvantages are that you will be personally liable for the debt of your business. If you have assets or savings, they are vulnerable to a claim made against you.

To become self-employed you will need to register with HM Revenue & Customs. Once you have registered, you will receive a Unique Taxpayer Reference (UTR) and HMRC will set up the correct tax and National Insurance contributions records for you. You should keep your UTR safe because you will need it when completing your Self-Assessment tax return. If all of this seems a little daunting, then we are here to help and will assist in all stages of your registration.

If I want to set up my own business as Limited company, what should I do?
A company has a separate legal identity from its owners and directors, so by trading through a limited company, you are, literally, placing a limit on your liability to any money you may have invested in, loaned to or are owing to the company, unless you have signed a personal guarantee for its debts.

There are a number of advantages in becoming a limited company, such as:-

  • You can give a share of the business to others eg family.
  • It may be easier to attract people to invest money in your business.
  • Obtaining bank loans may be easier.
  • Corporation tax rates at present are lower than most of the income tax bands.
  • In the event of a partner leaving or somebody dying, it is easier to continue the business.
  • It is easier to sell the business.
  • You have better standing in the public eye.
  • It can assist in the protection of a name.
  • People have more confidence in your business as they can check up on your company on the public records at Companies House.

The main disadvantages of becoming a limited company, are the extra costs of preparing annual accounts and some loss of financial privacy. We are able to help you with the formation of your new company and can advise over the best share structure and your other responsibilities.

How long does it take to set up a business with HMRC?
Once you have appointed us as your agent, we will proceed to register your business as required. This could include forming a new company, registering with HMRC for VAT, PAYE or Corporation Tax. The timescale is completely dependent on HMRC once we have sent the applications and can be delayed if they decide to request further information, however, as a guide, we would expect the process usually takes around 2 weeks to be completed once the registration has been actioned.
How will Hill Lillis & Company help my start-up business?
Starting a new business can be a monumental task. A start-up involves, along with a million other tasks, market researching, choosing a company name, designing logos and business cards, branding, networking and product sourcing. It’s easy to get carried away with aesthetics and forget about the numbers. We will help you get your business running, show you the ropes, free up your time and avoid any mistakes that that could be detrimental to a young business.
How can I know whether I am employed or self-employed?
This depends upon what your contract says or what your working arrangements are. You can be employed and self-employed at the same time. When defining your employment status, you should consider the following questions:

  • A self-employed person:
    • Runs his own business and decides about the type and time of its work.
    • Can have more than one customer at the same time.
    • Can hire people.
    • Takes care of the main equipment needed to perform business activities.
    • Bears responsibility for the success or failure of the business
  • An employed person:
    • is paid a regular wage or salary.
    • Is told how, where and when to do your work.
    • Works within fixed hours.
    • Work for just one person at a time.
    • Has to perform the tasks imposed.
    • is not in charge of the business nor takes responsibility for it, that is the employer’s task

HMRC has a useful tool which is helpful in assisting when the distinction is less clear and can be accessed here. However, we encourage you to contact us at Hill Lillis & Company for specialist advice if this is an issue of concern to you

Can I register for VAT if my turnover is below the threshold for registration, if so, why would I want to?
Yes, you may register for VAT voluntarily If you are doing business in the UK even if your turnover is below the threshold for registration. There are several reasons why you might choose to do so:-

  • If you qualify for one of the flat rate schemes then it might be beneficial if your customers are also VAT registered businesses.
  • If there is a zero VAT rate for the items you sell however you buy standard-rated items, it may be beneficial as HMRC will regularly give you a VAT refund.

Please note, by registering for VAT, you do become responsible and potentially liable for HMRC penalties

What is CIS? How can I tell if my business falls under CIS?
CIS stands for the Construction Industry Scheme. There are special CIS rules relating to making payments to subcontractors by contractors in the construction industry and both the Contractor and the subcontractor need to be registered as part of the scheme, otherwise, a higher rate of tax will be deducted from payments.

Sometimes, businesses which do not consider their core activities are in construction, fall into the scheme where HMRC determine you are a deemed contractor (usually relating to the level of expenditure on construction services). We, at Hill Lillis and Company can help if this is a potential issue.

Is tax payable by the recipient of a lump sum cash payment received from someone’s will?
You are not taxed on the receipt of a gift, but you do have to pay tax on any income that is generated from this legacy. However, if you receive a lump sum or asset during that person’s lifetime, there is a possibility that you could pay IHT if they die within 7 years of giving it to you.
How much is a person's allowed to give away without worrying about inheritance tax?
There are several different types of relief available that you may be able to use if you are planning on making gifts during your life time, for instance;

  • £3k per annum
  • Lump sum gifts on marriage
  • Small gifts of £250
  • Regular amounts of surplus income

We recommend you meet with us at Hill Lillis & Company, so that we can discuss some of the options available to you.

Am I legally required to have an accountant?
Having an accountant is absolutely not a legal requirement for small companies. However, providing detailed and accurate records of your business when you prepare your accounts, is essential. It is perfectly possible for you to do your own accounting, but only if you know exactly what you’re doing. When it comes to DIY accounting, you’ll need to know all the rules, all the deadlines and all the standards.

Using a Tax Advisor, such as Hill Lillis and Company, will ensure you can have reassurance regarding your financial position and you will be able to call us for advice, when needed, freeing up your time to do more of the things that matter to you!

What kind of support will I receive from Hill Lillis & Company?
Taxes and running a business can be daunting, especially, at first. We will be there to help and support you whenever the need arises. You can contact us via Phone, email or to call into our offices at a time to suit. We will do all we can to help you stay on top of what you have to do and when.

Keep in touch

For more information on the above, please Contact Us or telephone on 0121 384 4222 and we will be glad to answer any questions you may have. Even better, why not book your FREE consultation today, it only takes a minute. At this stage, if you are just looking for an idea of how much our services cost, then please feel free to complete our Request a Quote Form and we will get back to you within 48 hours.

In the meantime, why not follow us on Facebook or Twitter for the latest news that may affect your business or subscribe to our Newsletter for automatic email updates. If you are out and about in the Sutton Coldfield, Kingstanding, Great Barr, Minworth, Erdington, Birmingham or West Midlands area, why not give us a quick call to confirm if we can arrange an immediate, free consultation.