Accounting for a small investment company on a voluntary, unlicensed basis

Gary1089 Registered Posts: 8 New contributor 🐸
Hi everyone,

I am progressing nicely through my AAT level 4 studies and I am beginning to think of the ‘what comes after’. Having unsuccessfully reached out for work experience, and not being in the position where I can quit my current role to take an entry level accounting position within a practice (ultimately I want to be freelance anyway) I have made the choice to obtain relevant experience by way of voluntary freelance work for sole traders, partnerships and small limited companies (looking at those which qualify as ‘micro-entities’ or ‘small companies’).

I have a potential client whom I intend to do the accounts for on a voluntary basis when I have studied and feel competent in the relevant areas, and his line of work is investment. His business model involves handling the money of several investors (family and friends) and he intends to raise between £100,000-£200,000 which he will then invest in various companies with the intention of paying out dividends from profits generated, and taking a fixed commission of 25% of all profits generated.

I have a few queries surrounding this;
- as this is a private limited company, would the correct accounting treatment be that the company is seen to have several private shareholders, one director (also share holder) in the gent who is running the investment company and the methods of remuneration should be laid out in a company policy to state that the director/shareholder is entitled to a 25% profit share (split into dividend, salaries and retained earnings in whatever way they see fit) and the remaining profit is distributed as dividends to the remaining shareholders?
- should I also obtain the accounting work for the several shareholders, would they need to keep their own sets of accounts (I was thinking in the form of a sole traders whose principle activity is investing) or would it suffice to just assist them with personal tax?
- from my discussion with this potential client, he said that he doesn’t sell that often, however I would assume that if he sold in excess of £85000 in a year (or expected to) he would also have to register for VAT? Or is investment activity VAT exempt?

Any assistance on the above queries would be greatly appreciated.



  • Gary1089
    Gary1089 Registered Posts: 8 New contributor 🐸
    Just a comment to bump this up, sorry!
  • Duchess1
    Duchess1 MAAT Posts: 86
    I would think as follows (but anyone please feel free to correct)...

    * you need to make sure you have professional indemnity insurance, even if you provide the service for free. You would still need to make sure you feel confident you have the professional competence to provide these services.
    * company accounts are prepared for the private limited company
    * personal tax returns for the director and shareholders are separate from the above
    * VAT is charged on goods and services. Tax is paid on dividends.
  • Duchess1
    Duchess1 MAAT Posts: 86
    Are you sure you want to get involved with this one??
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