Making Tax Digital, plainly.

At £25,000 of profit a company saves almost nothing and adds about £800 a year of admin and our fee difference; stay a sole trader. At £40,000 the saving is a few hundred pounds a year and depends on whether you leave money in the company. At £60,000 and above a company usually wins, by more each year. Three times it is a mistake regardless: when you need all the profit to live on, when your customers are mostly IR35-caught public bodies, and when you are about to apply for a mortgage and the lender wants two years of sole-trader accounts.

A salary up to the National Insurance threshold (about £12,570 for 2026/27, which is also the personal allowance), then dividends from profit after corporation tax, then a company pension contribution for anything you do not need to live on, because it comes off the corporation tax bill. The numbers move every April, which is why we write a one-page plan for every director client each spring rather than once at the start.

You must register when your taxable sales in any rolling twelve months pass £90,000, within thirty days of the month you pass it. Register early if your customers are VAT-registered (they do not mind) and you buy a lot of taxed things. The flat rate scheme pays HMRC a fixed percentage of sales and suits low-cost service businesses under £150,000; cash accounting means you pay VAT when the customer pays you, not when you invoice; annual accounting means one return a year with monthly instalments. We tell you two months before you reach the threshold.

Six weeks before your year end we ask for: the bank statements to the date, the stock figure, the mileage log, the home-office days, any equipment bought and its date, any loans and their balances, money owed to you and by you at the date, the wages if we do not run them, the dividends declared, the pension paid, anything personal paid from the business account, and anything business paid from the personal one. Each one changes the tax bill, usually downwards.

A nudge letter ("we think you may have income from…") is a prompt, not an accusation, and needs a reply within the time given. A compliance check letter opens an enquiry and must come to us the same day; do not ring HMRC yourself. A penalty notice has a thirty-day appeal window, which we often win where there is a reasonable excuse. Anything by text, by email with a link, or demanding payment by gift card or bank transfer to a personal account is a scam; HMRC writes letters.