It's spring in London, British Summer Time has arrived and we are hoping for a warm summer. This may not naturally make you think about the end of the current 2013/14 tax year, but a few of those ISA savings adverts will soon remind you.

So if you are a business owner or a contractor with a limited company, what should you be doing before the tax year ends on 5 April 2014?

Here is my very short list of 3 Things you should be doing before 5 April 2014.

1. Pay yourself a Salary

A salary can be a good tax efficient way to extract some income from your company. For the 2013/14 tax year, you can pay yourself a salary of £9,440 with no income tax becoming due. However,  you and the company will be liable for National Insurance.

The most tax efficient salary to extract is typically £7,696 as this avoids Income Tax, Employees National Insurance and Employers National Insurance.

2. Remember to extract your Dividend

Every year you can extract a dividend up to the value of your personal allowance and basic rate band without paying any further amounts in Income Tax or National Insurance.

If you haven't already, you should extract the remainder of your profits via a dividend. For startups or new small businesses, you may not have enough cash to pay a dividend (even though you may have made a profit). 

To not waste the basic rate band, you can pay the dividend, but then loan the cash back to the company. When times are better, you can repay the loan to yourself with no tax becoming due.

For 2013/14, if you have already paid a salary of £7,696, you can extract a further £30,378 in dividends and pay nothing further in Income Tax.

3. Make any pension contributions

If you are making payments into a personal pension scheme. The payment will be deductible in the 2013/14 tax year, only if the payment is made before 5 April 2014.

If your income has gone above the basic rate band, it is a very efficient way to save for your retirement. For a higher rate tax payer. Every £100 paid into a personal pension scheme will turn into £167 instantly. Where else can you get that type of return?

I hope you have found the above useful. If you have any further questions, you can arrange a free consultation by emailing blog@kbraccountancy.co.uk

As always, advice on this blog is for information only and may not be suitable in your personal circumstance. You should seek professional tax advice if you are unsure.

So you've thought about it for a while and finally taken the plunge. You are now the proud owner of a Limited Company.

So what's next?

There are a few things you must do and few others that we recommend.

What you are legally required to do!

You should do the following from the day you launch your business:

• Once your Company starts trading, you must let HMRC know
• You are required to keep adequate records of all your transactions. Either in a book, spreadsheet or using software.
• If you will be employing any staff, you have to register for PAYE.
• You should monitor your turnover to check if you need to Register for VAT.
• You should consider making a voluntary VAT Registration even if you don't reach the turnover threshold of £79,000.

The following are things you must do after the end of your first year of trading. But it is highly recommended that you think about this from the beginning to get the best accounting and tax results (i.e. pay less tax).

• On the anniversary of forming your Company, you will be required to complete and file your Annual Return with Companies House. This is a document that states a few basic facts about the Company, it's Directors and Shareholders.

• 9 months after the end of your first accounting year, you have to do 3 things:
• File your Annual Accounts at Companies House. This will include your financial results from your first year of trading.
• Pay any tax due to HMRC.
• File your Corporation Tax Return with HMRC. This will include doing a tax calculation and also completing the tax return ("CT600").

Other points to consider

If you were previously trading as a sole trader

• Notify HMRC that you've stopped trading.
• You may be able to extract some tax free cash from the business if your business has any goodwill, such as a 'well known trading name'.

Are you one of the Directors?

• You should make arrangements to register and file your personal Self Assessment Tax Return

Highly recommended...

Before you start trading, draw up a very short business plan (2-3 pages long). This might sound unnecessary if you're not looking for investment or a loan. But it can really help you have a clear direction when you start.

Businesses that have a clear goals and targets from the beginning will do better going forward.

If you are unsure about any of the above, come and see us at our offices in Highgate, North London for a FREE CONSULTATION.

We love hearing from new businesses and watching them grow and succeed.