Managing the accounting processes of a business can be frustrating for small business owners as it is seen as an admin task that takes time away from the core tasks of the business.
Therefore, whilst the accounting processes of the business should be legally compliant and give the business a full picture of the company’s financial situation. They should also be designed to be as streamlined and simple as possible.
Keeping things simple allows you to manage your business effectively and keep up to date you’re your legal accounting responsibilities whilst minimising the amount of time spent inputting and managing the system.
A great way to do this is by embracing the wide range of cloud-based services that are available, here are just three ways that a small business can streamline their accounting processes.
Cloud based accountancy software allows businesses to integrate their accounts with their banking, payroll, sales processes and creditors.
The automatic feed of information and bank accounts in real time meaning that less time is spend inputting information into spreadsheets or fiddly software.
This saves time and increases compliance by making things as simple as possible for everyone within the business.
Using cloud based accounting software (accessible via an app or the internet) allows for accounts to be updated from anywhere by anyone with the right access credentials. Data is fed into the accounts automatically, so sales and expenses can be tracked in real time.
This makes it easier to make decisions and keep on top of where your business finances really are.
Managing small cash expenses can be extremely time consuming, particularly when using a manual process.
There are now a number of smartphone apps that can streamline this process across all levels of decision making. The apps allow expenses to be logged in real time, taking pictures of receipts and creating the expense claim that can be submitted immediately.
This also allows employees to make expense claims, have them reviewed by their manager/accounts and paid without having to fill out a single form.
Many self-employed people and those in employment are failing to claim their clothing allowance. And that is because most have no idea they can claim for both clothing and laundry costs by using an HMRC allowance for their work uniform.
The rates vary wildly from £60 to £185, and further to the above, there are many many more whose rates are fixed at £60.
These are annual allowances, and are worth from £12 a year in reduced tax to £37 (for ambulance staff on active service).
The above is a snapshot of just how complicated the UK tax system is.
If you’re in the armed services, you don’t need to worry as these are already claimed on your behalf by MoD from 2013/14.
But for everyone else, you may be missing out on your legally allowed claim against tax.
You can normally backdate your claim up to 4 years if you’ve not claimed before.
Make sure you claim these in your self-assessment form to take advantage of your extra allowance.
You can also claim for certain clothing used in your business, eg. protective clothing or uniforms.
This can either be done through normal expenses by keeping your receipts or through the basic allowance of £60 if you qualify.
Read more about that on HMRC’s official site here:
If you would like us to do it all for you at more than competitive rates, call us on 01945 588105 during normal office hours and we will be delighted to help.
Most business owners have a set stereotype in their mind when they think of an accountant and our sources tell us it is not all positive. It comes to us as a surprise that dinner party guests do not fight over the honour of sitting next to an accountant.
We admit that the stereotypical accountant does not get great press, words like “boring” straight-laced” and “dour” may come to mind. Our first reaction would be to try and convince you otherwise, tell you that every accountant is different and that it really depends on who you meet.
Then we get bamboozled, as an accountant telling you why accountants are not boring is probably the most boring conversation imaginable. Instead let’s focus on the exciting things about accountancy and why you should strongly consider making one your friend.
Why You Should Love Your Accountant
Forensic accounting, balance sheets and cash flow forecasts may not get everyone’s engine running, but there are far simpler reasons to love your accountant. Although we do advise that you take your time and do not take the plunge on a whim, make sure you find the one that is right for you.
There are two main reasons you should love your accountant.
They Can Make Your Live Simpler
The first is that combined with a reliable bookkeeper they can make your world simpler, they can remove the stress of admin. Giving you the time to focus on your business or even squeeze in a round of golf on a Friday afternoon.
They Can Save You Money
One of the weaknesses of the UK tax system is that it is complicated, with a proper understanding of how it works and only a few tweaks many businesses can make significant savings that far outweigh the cost of having a good accountant and bookkeeper.
If you have fallen out of love with your current accountant, would like to pay them less to keep the romance alive or are looking to find your first love (from an accountancy perspective) give us a call on 01945 588105
While all firms are required to register for VAT once they hit the turnover threshold (£88,000 for 2017/18), voluntary VAT registration should be considered on a case by case basis.
This is because VAT registration can have some financial and non-financial benefits that make it worthwhile from day one. We have highlighted three benefits every business should consider.
WARNING: Voluntarily registering for VAT when you don’t need to by law adds a whole new level of administration and responsibility to your business. The cost of that extra administration and responsibility can outweigh any tax advantage. The best advice is to become registered for VAT only when you are required to by law.
Depending on the nature of your business, you may have to think about VAT straight away, or it could be something that takes years to affect your company.
The VAT registration threshold increases in line with inflation, with the current rate for 2017-2018 in the UK set at £85,000. If your business is likely to hit this quickly, then it is advisable to consider voluntary VAT registration.
Registration allows your business, to operate with consistent procedures and pricing from the beginning. Selling your product as a retailer could see your prices rise 20% once registration is mandatory.
If you are going to have to register in the future, it makes sense to do it from day one.
Despite increasing the cost of goods to your customers, voluntary VAT registration can help businesses reduce your companies costs. The way this works and how much can be reclaimed. Is dependent on the individual circumstances of the business and the VAT scheme you enrol in.
Typically VAT registration allows businesses to claim back VAT on any purchases. Those on the flat rate scheme benefit by reducing the amount of VAT they pay to the HMRC compared to how much they charge their customers.
Registering for VAT can have a reputational impact on a business particularly those selling to other businesses. Being VAT registered can be interpreted by potential customers to the size and stature of the company due to the turnover threshold. Registration like forming a limited company can also increase the perception that the company is professional and well run.
Although there are a number of VAT schemes that can help reduce the burden of producing VAT returns, that burden is still there, and it relies on an accurate and up to date bookkeeping process. Most businesses operate their VAT on a quarterly basis.
Every 3 months they prepare their accounts, fill in the boxes on the VAT return and submit it to HMRC within a month and a few days at the end of each quarter. If you can put up with the extra admin required and can justify that with increased profits (due to a saving by reclaiming your purchase VAT) or due to increased prestige in your market, then it may be worth going ahead and opting for voluntary registration.
More details from HMRC here: https://www.gov.uk/vat-registration/how-to-register
Our blogs do not constitute accounting or business advice, if you are confused about voluntary VAT registration please contact HMRC.
The government is expected to crack down soon on the use of personal service companies (PSC) that use the IR35 scheme to reduce costs.
These company structures are popular for entertainers, IT contractors and business consultants. However, the government feels the system is being abused, leading to a review of personal services companies. We are likely to see related changes that will affect business owners and contractors in the next budget.
Personal service companies are referred to as business structure, such as a limited company, that a majority of contractors rely on to create the necessary professional image and to manage their finances in the most tax-efficient way.
The use of personal service companies has increased dramatically since the recession. With companies looking to reduce their headcount and associated costs. Whilst former employees enjoy lower tax and NI bills.
There are now more than 200,000 personal service companies in the UK that the government looks set to target. The reasons are two-fold; first there is a fear that companies are exploiting a loophole to avoid benefit and pension obligations to contractors who are employees in all but name.
This is a legitimate concern; however, sceptics may point to the estimated lost revenue that is the real reason. The use of personal service companies costs the treasury £400m each year . Tax avoidance/efficiency has been a controversial political issue. Personal service companies are low hanging fruit for the government without directly increasing taxes.
The revelations that there are members of the BBC and the public sector using the structure to lower tax thresholds has added fuel to the fire. Adding social acceptance to the pursuit of reform to the IR35 scheme rules.
The UK has a new chancellor and the autumn statement is only a few months away. An announcement on personal service companies and the IR35 scheme is expected to be included.
Potentially signalling a huge shift in the way personal service companies work. Changes to enforcement could have a huge impact on the accountancy sector and small business owners.
Tax structures should not be abused by companies to reduce costs and disguise employees. This must be balanced with a need to protect the 5m businesses in the UK, particularly those that legitimately use contractors.
Hopefully changes will keep the right balance between rewarding entrepreneurship and enforcing the rules of the system fairly.
If you are unsure how IR35 and personal service companies affect you then give our team a call 01945 588105
Let’s be honest; nobody gets excited about calculating their HMRC self-assessment tax return.
For those that are required to complete a self-employed tax return, it can be tempting to ignore this deadline. After all, running a business can be demanding and finding the time for non-billable client work can be tough.
Failure to get your return in on time can be costly. Fines are due even if there is no tax to pay. These can quickly mount up and make paying your taxes even more painful (if that is even possible).
The HMRC self-assessment tax return deadline may feel like months away but in the fast paced world that is running a small business it can sneak up on you.
Calculating your return well in advance gives you time to get all your figures together and check your calculations or seek professional assistance from an accountant if your sums do not add up. This time, may end up saving you hundreds if not thousands of pounds in taxes and late fees.
If you are unable to file your return on time, then the HMRC will issue fines. So here are the penalties that you could face if you get to the 1st of February without filing your return
The self-assessment tax penalties:
If you are worried about your accounts or feel you are paying too much. Then why not give us a call on 01945 588105 to find out how we can help you do your accounts for less money and less hassle.
The HMRC self-assessment tax return deadline may feel like months away, but it can sneak up on busy self-employed business owners.
It can pay to complete your HMRC self-assessment tax return sooner rather than later, so we have come up with a few reasons why submitting your return early is good business sense.
Calculating your return well in advance gives you time to get all your figures together and check your calculations. With plenty of time to seek professional assistance from an accountant if your sums do not add up. This may end up saving you hundreds if not thousands of pounds in taxes and late fees.
The HMRC self-assessment tax deadline is a hard deadline, poor internet signal or an emergency on deadline day are not going to cut it.
Our two favourite excuses submitted to the HMRC in recent years for late returns were “My husband ran over my laptop” and “My dog ate my tax return.” These may prove the old excuses from school are not dying out, but they will not wash with the HMRC.
By getting your return in early, the 31st of January becomes just an ordinary day. Where you can smile smugly knowing you have avoided the last minute panic.
January is a busy time for accountants and bookkeepers. Getting their attention and focus on your business can be hard. Leading to errors or at best increasing your stress levels as the deadline looms.
If your accountant is unreliable or you haven’t spoken to them in a while. Then an early submission can make things easier. However, it may pay in the long term to stop spending a fortune with them and switch to a cheaper more responsive firm.
Worrying and procrastinating over your HRMC self-assessment tax return can lead to unneeded stress and anxiety.
Submitting your tax return before the deadline allows you to plan for how much tax you will need to pay in advance. Helping with cash-flow planning and make paying your tax bill less stressful.
Worried about your accounts or feel you are paying your accountant too much?
Give us a call on 01945 588105 to find out how we can help you do your accounts for less money and less hassle.
Any organisation or individual who provides accountancy services to other businesses needs to be registered with HMRC under the Money Laundering Regulations (MLR), and if so, and they become registered, they can use the term “HMRC Registered Accountancy Service Provider”.
That means if you are looking for a firm or individual to help you with your bookkeeping and/or year end accounts, then you’re going to need to do your own due diligence and choose a registered bookkeeping or accounting service.
The key terminology determined by HMRC is “by way of business”. So the only exceptions to this are, and here’s a typical example: partners of business owners who do their bookkeeping for free.
HMRC define “by way of business” as:
You will need to register if you carry out all the above, however, if you only carry out some of the above, then you should still check with HMRC whether you should be registered under MLR.
They also state that if you do NONE of the above, then you are OK, so if you have a friend who is happy to do your bookkeeping for you for free on an adhoc basis, then there is no need to hire a professional bookkeeper.
The downside of using a non-professional is they will most likely not be up to date with the latest regulations.
You can read more about the designation “HMRC Registered Accountancy Service Provider” here on HMRC’s site.