Hello from a newbie. I stumbled upon this forum recently and am now becoming a regular lurker. I'm an FFA (Institute of Financial Accountants) and have been working as company accountant for a number of sme's in the past, most of them having gone out of business making me redundant (it wasn't my fault - honest).
I took the plunge last September working as a freelance bookkeeper and have picked up a few clients over the year. I have a couple of tax clients as well and one question keeps nagging me for which I can't find an answer.
If a sole trader started trading on, say, 1st February 2010 and decides to make up accounts to 31st January 2011, then how is the relevent proportion of income declared on the 2009-10 Tax Return (2/12 of year end accounts to 31/01/2011) in time for the deadline of 31st January 2011 if that's also his first year end?
I hope to contribute help and opinions in the future as the people on this forum seem a very nice bunch.
There are prescribed ways of dealing with soletraders for the opeining years and they can geta bit messy with overlap profit etc. What I would suggest to any new clients like this is to make the first set of accounts 'short', ie do accounts up to 5th April in line with the Fiscal year. Subsequent years will also go to 5th April. This avoids overlap profits being taxed twice and then relief being claimed at cessation or change of accounting date.
Thanks Rob. That sounds like a good idea. I never did like tax work - I'm best at cost accounting but we've lost all our industries now, so I'm a bit of a dinosaur.
My pleasure guys. There was a thread some time ago where all these opening year treatments were discussed...shaun and I were trying to put together a diagramatic explanation of it but we failed! But stick to this method and you don't need to worry about it!
