Small businesses – Cash basis accounting
As the new tax year approaches, small businesses are being urged to consider a scheme that allows them to report on a cash basis, rather than using standard accounting rules.
The ‘cash basis’ scheme is available for some sole traders and unincorporated businesses. The scheme is relatively simple in that a business will work out the cash received in a tax year, less any money spent on allowable business expenses.
Many small businesses particularly those providing services, for example window cleaners, taxi drivers, plumbers and electricians, could benefit from the simplicity of the cash basis.
In addition, unincorporated businesses can choose to use ‘simplified expenses’, which involves using flat-rates, instead of making complex calculations of actual business expenses.
It can be used for the following expenses:
- Business costs for vehicles
- Business use of your home; and
- Private use of a business premises as a home.
If you feel this could apply to you and would like to know more then please get in touch with our Tax Team on 0161 249 5040.