Articles in Category: Accountancy Advice

Things to think about when you are starting your own business

on Wednesday, 13 June 2018. Posted in Making Tax Digital MTD, Startup Advice, Accountancy Advice, Business Advice, Cloud Accounting, Tax Advice, VAT advice

Did you ask your accountant everything that concerned you?

Plan for your first meeting with your accountant

 

As an accountancy practice that specialises in start-ups, contractors and entrepreneurial Small and Medium-sized Enterprises (SMEs), our first meeting with a new business-owner often covers the following areas:

  • Which trading vehicle to use: generally this boils down to being self-employed or incorporating the business into a limited company.
  • Company name: is the name you want to use available and does it contain sensitive words that you may not be allowed to use?
  • VAT registration: and now that covers the impact of Making Tax Digital (MTD) and the rules for recording all transactions digitally.
  • Corporation tax – how it is calculated and when it needs to be paid by.
  • Income tax – self-assessment and the 31 January deadline. Clients are also warned about the delights of Payments on Account. In essence beware of the £1,000 tax level but there is an exception!
  • Cloud Accounts Apps: our favourite is Xero but others to consider are FreeAgent, KashFlow and Intuit QuickBooks.
  • IR35– be aware of this ever-changing regulation.
  • The timing differences between PAYE that an employee suffers versus having your own company: just because there is £1 left in the business account it doesn’t mean you can take it!
  • We like to think of ourselves as the friendly approachable accountant. We always encourage clients to contact us about anything that is troubling them, there is no such thing as a stupid question.

If you would like to find out more about setting up your own business, about being an entrepreneur, then wherever you are: whether in Leeds, Bradford, Wakefield, Harrogate, Wetherby or elsewhere in the country or even overseas and thinking of setting-up in the UK, please get in touch.

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Which trading vehicle to use

on Friday, 15 June 2018. Posted in Startup Advice, Accountancy Advice, Business Advice, Tax Advice, Contractors

To incorporate or not?

Which vehicle is right for your business?

 

In another blog we highlighted some of the points we discuss at our first meeting with a new business-owner. This blog will consider the first of the points we mentioned.

When you have decided to start your own business and you know what you are going to do, one of the next questions to consider is which trading vehicle to use. Are you going to be self-employed or will you incorporate the business as a limited company?

Some of the pros of being self-employed are:

  • simplicity,
  • less bureaucracy,
  • there can be less expenses,
  • the tax treatment of cars can make it quite favourable to run a car through the business,
  • if the profits are low there can be less overall tax to pay.

And some of the cons of being self-employed are:

  • often existing businesses do not like trading with self-employed people – the gig economy can create confusion over whether you have worker’s rights and whether you are actually an employee or not.
  • Depending on the profits of the business you could be paying more tax than you need to. The higher the profits the self-employed have the more tax they will pay when compared to a company and its owner.
  • If the business fails you will be responsible for all the liabilities that are owed.

The Pros of trading via a limited company include:

  • Businesses prefer to trade with a “proper” business that is incorporated.
  • With higher profit levels overall less corporation tax, national insurance and income tax will be paid over to HM Revenue & Customs (HMRC) than a business that is self-employment.
  • Limited liability: if the company fails (and assuming the insolvency is not due to illegal reasons) your liability to pay creditors is restricted to those to whom you have given a personal guarantee to.

The Cons of using a limited company include:

  • Often it is not worth having a company car as too much tax is paid.
  • There are more costs of compliance: Companies House, the Accountant etc
  • The entrepreneur’s relationship with the company can become confusing as they can have multiple interactions: they are the owner, director, employee, creditor and often the landlord.

Aysgarth Chartered Accountants is an accountancy practice that specialises in start-ups and entrepreneurial SMEs. This blog is not intended to give advice, it merely introduces the subject and is not an exhaustive list of all the Pros and Cons of being self-employed or incorporating. If you would like to know more about establishing your own business we would love to discuss this in more detail with you at our Leeds office. Please get in touch.

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Choosing a Name

on Tuesday, 19 June 2018. Posted in Startup Advice, Accountancy Advice, Business Advice

Your new company's name

Choosing a name

 

Continuing our blog series on “Things to think about when you are starting your own business” this blog is all about the name of your new company. Some of the points raised will be applicable to other types of organisations but unincorporated organisations do have more freedom of choice with regards names.

Companies House has lots of information regarding names of companies and what you can and cannot choose. You need to consider the following:

Same as names. The company name cannot be the same as another company.

However some words and symbols are counted as the “same as”.

Therefore certain punctuation marks, certain special characters (eg the plus symbol: + ), a word or character that’s similar in appearance or meaning to another from the existing name, and a word or character commonly used in company names; are all deemed to be the same.

Companies House gives the example that the following names would be treated as the same name: Hands UK Ltd, Hand’s Ltd and Hands Ltd.

These company names that are treated as the same will be all right IF the companies or LLPs are all within the same group and you have written confirmation that the existing company does not object.

Too like names. Companies House will register a company if it has a similar name to another company but if someone complains and Companies House agrees with the complaint then you will need to change the name.

The example Companies House gives is that “Easy Electrics For You Ltd” is the same as “EZ Electrix 4U Ltd”.

Offensive names are not allowed.

Sensitive names. Certain words are defined as being sensitive, so for example the company’s name cannot imply a link to the Government, unless there is one. Some sensitive words need the Secretary of State’s approval and other words need the approval of another Government department or quasi-government agency, examples being the General Optical Council or The Solicitors Regulation Authority.

Trading name. A company can trade with a different name to its registered name. This trading as name is known as a business name. A Business name also has a few rules that must be followed. You may be able to apply for the Business name to be trade mark protected.

Companies House does have a name checker that can be used to make sure a company name is available.

Once you have decided on the name you will also have to consider other issues like domain names and email addresses, as well as branding and logos.

Aysgarth Chartered Accountants is an accountancy practice that specialises in start-ups and entrepreneurial SMEs. This blog is not intended to give advice but to introduce the subject of Company Names. We would love to discuss incorporating a company for you, when we will go through these items in more details. To arrange an initial no obligations 1 hour meeting please use the contact page to get in touch with us.

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The Business Start-up and VAT

on Wednesday, 20 June 2018. Posted in Making Tax Digital MTD, Startup Advice, Accountancy Advice, Business Advice, Cloud Accounting, VAT advice

VAT registration

Should a start-up immediately become VAT registered?

 

Warning: The World of VAT is constantly changing, so if you are reading this blog any time after the day it was published then you should doublecheck that the rates, limits and rules are still correct!

VAT Registration limit: All businesses with turnover (or invoiced sales) of more than £85,000 per annum should be registered for VAT. If you expect your turnover will go over the VAT registration limit then you should register. The year to review is any rolling 12 months. It does not matter if your existing business has been trading for years, per the annual accounts, at £80,000. What matters is that if you add up any 12 month period will the turnover be less than the registration limit? There is currently a consultation taking place about whether to reduce this registration limit to a lower amount.

Voluntary registration: Some new businesses chose to immediately register for VAT. This could be a good idea if your customers are all likely to be VAT registered themselves as it will give the impression that your new start-up company has a turnover of over £85,000 and is therefore a “proper” business. Many limited companies do like trading with businesses that aren’t VAT registered. But if the general public are your customers then they would rather save the 20% VAT and buy from non-VAT registered businesses.

VAT invoices: once registered for VAT the business needs to make sure that certain information is on every VAT invoice, for example your VAT registration number. Businesses may not be able to reclaim VAT if the purchase bill is incorrect, therefore to protect themselves they may not pay your business until the VAT invoice is correctly drafted.

VAT Schemes: You need to also consider the many VAT schemes that are available. It is outside the scope of this short blog to discuss all these. Generally for service organisations the Flat Rate Scheme is no longer viable but all businesses with a turnover of less than £1.35 million should consider the Cash Accounting Scheme (or the Flat Rate Scheme equivalent). As the name implies VAT only then becomes due to HMRC when customers have paid (and input VAT can only be deducted once it has been paid out). This helps the smaller end of the SME sector with their cashflow.

Making Tax Digital or MTD. Currently from April 2019 HMRC are planning to make all VAT registered businesses with a turnover greater than the VAT registration limited to record all their transactions digitally and to file their VAT returns not via the Government Gateway but electronically via an accounting programme or online accounting app. There will be the possibility of using spreadsheets to record the transactions and then filing the VAT return via APIs, but when this blog is being published there has been no information about the APIs. This is just the starter of MTD and VAT – expect these requirements to start to cascade down to smaller entities.

Get in touch: to discuss VAT more fully with Aysgarth then please email us via the contact page and we will arrange to meet-up with you to discuss your new enterprise and VAT.

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The Business Start-up and Corporation Tax

on Saturday, 23 June 2018. Posted in Startup Advice, Accountancy Advice, Business Advice, Tax Advice, Contractors

how it is calculated and when it needs to be paid

When to pay corporation tax

 

Companies pay Corporation Tax based on their profits. The profits chargeable to Corporation Tax may not be exactly the same as the profits before tax figure in the year end financial statements. Some of these differences include:

Permanently Disallowed Expenses: From the accounts figure there maybe some items that are permanently disallowed as a tax deductible expense, for example entertaining suppliers or customers. This means that whilst entertainment is a valid business expense for the accounts it is not a tax deductible expense, spending on entertainment will not reduce your tax bill.

Temporarily Disallowed Expenses (timing differences): Other items, like pension contributions, are only allowed in the financial year they are actually paid over and not when they are provided for in the year end accounts.

Depreciation of fixed assets is generally not allowed but instead Capital Allowances or an Annual Investment Allowance are given as a deduction.

Dividends: UK dividends payable and receivable are outside the scope of corporation tax

Other differences: There are claims, like the R&D allowance, that create a different tax deductible expense when compared to the expense in the accounts.

Corporation Tax rate. Once the profits chargeable to corporation tax have been calculated then the correct corporation tax rate needs to be applied. HMRC treat each year ending 31 March as the corporation tax year.

For the year ended 31 March 2018 all companies will pay tax at a rate of 19% of the profits chargeable to corporation. The previous year it was 20%. If then a company has a year end of 31 December, for the 2017 year it will pay tax at 20% for January to March 2017 and 19% for April to December 2017.

When is the tax due to be paid? Ignoring companies that are on quarterly payments, in general corporation tax is due 9 months and 1 day after the year end. Therefore a company with a 31 March year end should pay its tax by 1 January the following year. If tax is paid early interest is paid by HMRC, if tax is paid late they charge interest. A tax return also has to be filed within 12 months or there will be penalties.

HMRC is set-up to only process tax periods that are 12 months or less. Therefore if a company has a 13 month financial period for its accounts, 2 company tax returns will have to filed and the corporation tax due is payable on 2 separate dates: 9 months and a day after the end of each tax return.

And unlike other taxes, when corporation tax is paid the payment reference changes every year, the last number increases by 1 for each company tax return period.

This leads to the main point we try to get the directors of start-up companies to understand: unlike PAYE which is deducted immediately an employee is paid, corporation tax is not due until 9 months and a day after the year end. Make sure you do not spend all the company’s bank balance because you may well be spending the tax that will become due.

Don't worry! This blog is just a simplified version of the corporation tax rules. Rates and rules may change in the future. The comments above may seem complicated but in this short space they cannot cover every possibility or scenario. If you are our client we will look after all this for your company. But if you are stuck with your corporation tax or would like a second opinion on a tax matter then please get in touch.

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Self assessment

on Friday, 29 June 2018. Posted in Startup Advice, Accountancy Advice, Business Advice, Tax Advice, Contractors

Income tax and tax returns

31 January tax deadline

 

If you are self-employed or receive untaxed income then you have to file a self-assessment tax return. Technically that does not necessary mean a director has to file a tax return but usually HMRC like to think it does.

Self Assessment tax returns are your personal responsibility. If you pay an accountant to prepare your return on your behalf they should invoice you personally. If they invoice your limited company then there would be a benefit in kind and you would have additional tax to pay.

If you are going to file a paper tax return it must be filed by 31 October following the end of the tax year. Electronically filed returns have the deadline pushed back 3 months until 31 January. If the tax return is late there will be a fine to pay.

Tax arising from the tax return is due to be paid by 31 Januaryax arising from the tax return is due to be paid by 31 January after the tax year to which it relates. At new client meetings I then usually take a sharp intake of breath and try to explain payments on account!

If your tax is over £1,000 then you have to pay a further 50% of it as a payment on account (in advance) for the current year’s tax. Another payment on account is due by 31 July – ie in 6 months’ time (and AFTER the end of the tax year to which it relates). The tax then due by the next 31 January has the payments on account made over the last 12 months deducted but you then add 50% of the tax liability (before the payments on account were subtracted) for the next tax year. Confused?!

Try to follow through this table:

Tax year Tax due Payment on account 1 Payment on account 2 Less payment on accounts paid Total due 31 January Tax due 31 July Year tax paid
X1 500 0 0 0 500 0 2019
X2 1,500 750 750 0 2,250 750 2020
X3 1,500 750 750 (1,500) 750 750 2021
X4 2,000 1,000 1,000 (1,500) 1,500 1,000 2022
X5 2,000 1,000 1,000 (2,000) 1,000 1,000 2023
X6 2,000 1,000 1,000 (2,000) 1,000 1,000 2024
X7 3,000 1,500 1,500 (2,000) 2,500 1,500 2025
X8 3,000 1,500 1,500 (3,000) 1,500 1,500 2026
X9 3,000 1,500 1,500 (3,000) 1,500 1,500 2027

Important things to be aware of are:

  • if your tax is less than £1,000 then you will escape payments on account.
  • you will also escape payments on account if the tax due is less than 90% of your total tax suffered, eg if you earn a large salary under PAYE but have other minor income that is untaxed
  • Payments on account do not mean you are paying MORE tax, it just means you are paying it EARLIER (but still a lot later than our PAYE friends are)
  • Payments on Account are fixed by legislation but if your income goes down or you have more taxed income (ie a PAYE salary) then you can justify reducing the payments on account
  • If you under pay payments on account HMRC charges interest on the late tax but if the payments on account were too much HMRC will give you interest on the money deposited with the government.

All this can soon become very complicated. If your income stays roughly the same then all that happens is that once you are into Payments on Account there is a rhythm: every January and July paying some income tax. If your tax liability is gradually increasing then the January payment will also include a balancing payment, so the rhythm is large payment January, “small” payment July, large payment January…

The tax rules do change so the rules mentioned today may not be applicable in the future. If you are unsure about your tax return then please contact us to take the stress and worry out of self assessment.

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IR35 and disguised employment

on Wednesday, 15 August 2018. Posted in Startup Advice, Accountancy Advice, Business Advice, Tax Advice, Contractors

A brief introduction

IR35 – be aware of this ever-changing regulation

IR35 is the name given to the legislation that was introduced to stop people misusing limited companies and puts them back to the same tax position as if they were employees. Essentially the veil of incorporation is removed and consideration is given as to whether the appropriate employee of the removed Personal Service Company (PSC) is really an employee of the client company. In the past it was for the directors of the PSC to decide but since April 2017 the client (if it is a public sector organisation) has to decide and in the future this may be extended to the private sector.

IR35 is probably best explained with an example. Andrea has her own company, A Limited, which contracts with Big Plc. A Limited is contracted to deliver a project for Big Plc, which Andrea will deliver. Is Andrea a disguised employee of Big Plc or not?

There are no simple answers to this question. In the courts they will consider Mutuality of Obligation (MOO) – does the client (Big Plc) have an obligation to provide future work and does the contractor have to accept this work. HM Revenue & Customs (HMRC) has an online Check for Employment Status for Tax (CEST tool), which they now admit does not test for this critical factor.

The CEST tool does however ask about: personal service, control, financial risk and part and parcel. If you take the online CEST checker then as soon as the tool decides IR35 does not apply it will end the test. Make sure you keep a copy of these results. If you get to the last section the result will either be that IR35 applies or (unhelpfully) that it is unable to determine the status. This last result is frequently the answer CEST gives when the facts of IR35 cases that HMRC have lost are fed into it.

The tax consequences of IR35 puts the individual (in our case Andrea) in the same tax position as an employee but they do not (probably) have any employee rights and they have the expense of running a company.

HMRC have lost many cases over the IR35 status of a contractor but they have won some. The main problem is that it is not always clear whether IR35 applies. Sometimes it obviously does and frequently it obviously doesn’t. But in the middle ground , which is neither black nor white, there are many shades of grey!

The solution to the IR35 problem is to remove the temptation to save tax and national insurance. This will not happen with simplistic questions but by a radical overhaul of the tax system – but that is a whole new topic!

This blog is not a technical article that covers all aspects of IR35. This blog is part of a series for ordinary people thinking about doing an extraordinary thing: setting up their own business. Professional advice should be obtained if you think your business may fall foul of the IR35 rules. We would be happy to discuss this further with you so please get in touch.

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Tax Timing Differences

on Saturday, 18 August 2018. Posted in Startup Advice, Accountancy Advice, Business Advice, Tax Advice, VAT advice, Contractors

Don't spend that last pound!

Don't be caught out with tax timing differences

When you start your own business you move into a different way of being taxed – everything is deferred, your payment of tax is delayed.

As an employee you receive a payslip that details the PAYE and National Insurance (NI) that has been deducted from your gross salary to arrive at your net salary. There will, probably, be other deductions like pension contributions. As long as your tax code is correct then your PAYE should be calculated correctly – as we have warned before: all employees should regularly check their tax codes.

When an employee is paid, their tax and NI has already been deducted and usually will never need to pay any more tax in the future, errors aside.

If you are self-employed or have your own company, both you personally and the company will pay tax in the future. These taxes are based on the taxable profits of the business.

The company has to pay corporation tax 9 months and 1 day after the end of its accounting year. Therefore if the year end is 31 March the corporation tax is due to be paid on the following 1 January. You can read more about corporation tax here.

If an individual has untaxed income: property rentals, self-employment profits or company dividends, these have to be declared on their self-assessment tax return, which covers a tax year: 6 April to the following 5 April. The tax and NI due from the tax return is due to be paid by the following 31 January. Therefore the tax due for the tax year 6 April 2018 to 5 April 2019 needs to be paid by 31 January 2020.

As payments on account have already been discussed in this startup series, you can read about them here. Payments on account are paid each January and July.

If your business is VAT registered then the VAT should be paid one month and a week after the end of the VAT quarter or if you pay by direct debit it will be taken out one month and 10 days after the end of the VAT quarter. Read more about VAT here.

All this means is that you and your business have tax liabilities (for Income Tax, NI, Corporation Tax and/or VAT) to pay an undefined amount of tax in the future. You must set aside some money to pay these future costs. HMRC have to collect these taxes and usually they are very good at collecting them. This is the tax timing difference you must be aware of and is why we warn clients that just because everyone else has been paid and there is £1 left in the business bank account at the end of the month, unless you have set aside some money for tax, you cannot touch that £1!

If you need help with your tax affairs then please do not bury your head in the sand but do something constructive – get in touch with us.

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There is no such thing as a stupid question

on Monday, 27 August 2018. Posted in Startup Advice, Accountancy Advice, Business Advice, Tax Advice

And Finally...

Aysgarth Chartered Accountants the friendly approachable accountancy firm

When you start your own business you enter a whole new world of regulation. Aysgarth Chartered Accountants is a recommended Accountancy Practice that specialises in Small and Medium sized Enterprises [SMEs] and we are here to help you navigate this new world. As a professional firm we put your interests first.

This blog concludes the series we have run on starting your own enterprise. The best way to read the other blogs is to click through to the introductory blog: Things to think about when you are starting your own business and follow the links to the other blogs.

There are a few final things we need to bring to the new entrepreneur’s attention:

Companies House: regardless of whether or not your company has recorded a single transaction, every limited company and LLP have to file a confirmation statement and a set of financial statements. If the company meets the requirements they can file dormant accounts or filleted (previously called abbreviated) accounts. Each company has to have a registered office: an official address for the business, most of our clients use our address and ask us to look after the Companies House filings for them. As part of our service we monitor all our limited company clients’ Companies House record and investigate any filings we were not aware of. This helps minimises the impact of any frauds as does joining PROOF.

Non-cash expenses: your enterprise can incur expenditure that it never pays out in cash. A good accountant will discuss these with you and bring them into your year end financial statements. Such costs may include mileage and use of your home as an office. These expenses help to properly record the expenses of your SME and help to record a more accurate profit and consequently a lower tax charge.

And finally: we are a firm of friendly approachable accountants. We always encourage clients to contact us about anything that is troubling them, there is no such thing as a stupid question. We tell clients that if a problem is worrying them they should get in touch. From our experience most questions have a straight forward answer and our clients are not charged.

This is one of many ways we work for you. We do not force clients to only use our recommended accounting software. We do not confuse clients by issuing Payment Requests and then only issue a VAT invoice once the Request for Payment has been paid. We like to keep everything simple and straight forward and we respond promptly to clients.

If you like our approach then please get in touch, we would love you to join our expanding band of satisfied clients.

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Contractors and online accountants

on Wednesday, 21 June 2017. Posted in Startup Advice, Accountancy Advice, Business Advice, Cloud Accounting, Contractors

Online Accountancy: talking to a brick wall?

Is talking to your accountant like talking to a brick wall?

 

Buying products and services online is often associated with value for money and ease, but many contractors are realising that online accountancy firms are an expensive and frustrating business.

The trouble with web-based accountants is that they treat their clients like numbers on a spreadsheet and add no value to the relationship – leading to serious and costly mistakes. They tie clients into contracts and force them to use of their preferred accounting software. Advice is not forthcoming or proactive, often leaving the responsibility firmly in the hands of the client!

The reality is that many contractors feel ripped off, locked in and resentful of the amount of tax they’re paying! Online apps are all very good if you know exactly what you are supposed to feed into them!

Many contractors who trade via a limited company are turning to Aysgarth Chartered Accountants for our personal approach to accountancy. As a firm we take time to get to know our customers, explain in simple language, all of their responsibilities and support them in maximising their profits and success.

Recently we met with a contractor who had a P60 showing nil. After a short discussion we were able to show him the mistakes with his salary and corporation tax computations. His relief and delight were evident in the feedback we received: “It is evidence in itself of [the accountancy firm's] approach being somewhat lacking, that you were able to explain things much more clearly to me in the space of a telephone call and a few emails in less than a week, than [they could] in a year and a half!"

If there are any freelancers and contractors who would like a bit more hand holding when it comes to accounts and tax, and all via a personalised bespoke service, then please get in touch – we would love to help!

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How rubbish are your accounting records?

on Thursday, 22 December 2016. Posted in Startup Advice, Accountancy Advice, Business Advice, Cloud Accounting, Contractors

And is it your accountant’s fault?

How rubbish are your accounting records?

 

We all know that if you are trying to run your own business and do everything that sometimes the accounting records fall below the required standard. But when you pay a professional, either an accountant or a bookkeeper, to look after your books of account you expect better. How I wish that was always the case.

I have seen instances where businesses have relied on bookkeepers and accountants to keep their Cloud or desktop accounts packages up to date and correct but the fees they have been charged have been a waste a money.

The worse Cloud examples have been on KashFlow, which is probably due to their system being too complicated with the accountants and bookkeepers not really understanding it all. However even on Xero I have seen mistakes. I have also witnessed similar errors on desktop accounting packages like Sage.

These are all genuine examples:

Ignoring the accounts package.
The year end accounts should reflect your accounts package but some accountants forget to put the year end adjustments and journals on to the clients’ accounts. This means that every year the accounts package and the financial statements grow further apart and have little in common. If you run a balance sheet report at your last completed year end does your retained profit figure agree to the year end accounts? If it doesn’t your accountants are not looking after you.

Year end routine.
Every accounts package has a year end routine to run so that it knows the old year’s accounts have been finished. This can be as simple as entering a date or a tick on your accounts package or like KashFlow it can involve running their year end adjustment, which bizarrely is found in reports and not in journals. I could tell you about 2 companies, both of whom used KashFlow, where the previous accountant or bookkeeper had no idea about the year end routine and at any point the client could have entered an old item in a year that had been finished but the accounts package had not closed down.

Setting-up your accounts package
There is one bookkeeper whose work I have seen where they did not realise they were acting for a limited company but had set up Xero for a sole trader. This meant they treated a number of items incorrectly: Directors’ loans are not the same as Owner’s drawings, a personal car cannot be treated as an asset of the business, where was the share capital etc?

Have they done what they said?
I have had an argument with one sacked freelance bookkeeper who was adamant she had filed the client’s VAT returns, despite the fact that HMRC were still showing them as unfiled and we ended up filing them. This was one of many errors that bookkeeper made, but she was always so convincing in arguing her case that she had done everything. I do not mind giving people the benefit of the doubt but once they start to lie it is time to replace them.

Does the bank account balance?
Generally if the bookkeeper or accountant has a bank account balance that agrees to the bank statement you know there should not be too many problems. But if they cannot justifiably get your bank account to balance you should replace them. One bookkeeper, who had not been helped by the accountant, managed to have 3 different bank account balances in various sections of KashFlow!

Summary
So to summarise: if you want accurate accounting records that tie in with your year end accounts do not simply get any accountant or bookkeeper to look after them. Make sure they have experience in that accounts package and keep checking up on their work. We offer a review service when we can look at your accounts and report back to you about the quality of the work: please use the contact us page to get in touch with us to discuss this further.

And if your accounts are a mess then you need to do something about it now. It will require an investment to sort it out but the cost of doing nothing will be more. Again please use the contact us page and let’s have a conversation about it. We are here to support you and improve things for your business.

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No excuse for filing tax returns late

on Wednesday, 20 April 2016. Posted in Startup Advice, Accountancy Advice, Business Advice, Cloud Accounting, Tax Advice

Using technology, being prompt

There really is no excuse for filing tax returns late.

 

Recently tax returns have been in the news with leading politicians feeling the pressure to publish their returns. What did we learn? The Tory politicians had other sources of income and the leader of the Labour party completed his return by hand, forgot to include his pension income and was fined £100 for filing his return late.

There really is no excuse for filing tax returns late. The tax year finishes on 5 April and we have until the following 31 January to file our tax return and pay the tax. That is nearly 10 months. This year our first client’s 2015/16 tax return was filed on 15 April and the second one was filed on 20 April.

That does not mean we can avoid filing tax returns right up to the deadline on 31 January 2017. We do our best to keep our clients on the straight and narrow and if a tax return is filed late we know that it is not due to our incompetence but due to our client not providing us with the information we need. However, we know of some accountants who are routinely disorganised and frequently file their clients’ tax returns late. If you have had experience of that and it wasn’t your fault then you really should move advisers. Contact us to see how we can look after you properly.

We also use technology to speed up the whole process. Politicians have to file a hard copy of their tax returns but most other people file online. 100% of our clients had their 2013/14 tax returns filed online and every year since has been the same. Once the tax return has been completed we put it in a secure part of the cloud, our client approves it and we then file it. This whole process can take minutes and not a single stamp will have been used!

If you like our approach – the use of technology and being prompt – then we would like to have a chat with you to see how we can take away the worry of tax returns so you can focus on something more productive.

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Invoicing - is it all right to use a spreadsheet or word processing template?

on Tuesday, 15 March 2016. Posted in Startup Advice, Accountancy Advice, Business Advice, Cloud Accounting, Contractors

The right tool for the task in hand

When you want to hammer a nail you don’t pick up a screwdriver do you? It is all about the right tool for the right job.

So why when you need to invoice a customer do you send your client an invoice from Excel or Word? Spreadsheets and word processing packages are not the correct invoicing apps for a serious business to use.

The first problem with them is that it is easy for them to contain errors.

Addition errors: My wife recently received an invoice from her music teacher: 2 lessons at £30 each were totalled as £30 in total. Was this an error in the formula or was the last month’s invoice not retyped correctly?

Update errors: It is easy to forget to update fields: sending out invoices in the current month dated last month, not updating the invoice number – how many invoice numbers 347 can you have?

Saving errors: Or what about issuing an invoice and then forgetting to save it or keep a copy? No one will now know about that invoice or will chase it for payment – trying to keep costs down has now cost you a lot of money!

The second problem is that they duplicate time and effort. All those invoices have to be entered on to your accounts package (or worse: accounts spreadsheet). Your poor bookkeeper is now re-typing everything, checking it is all complete: where is invoice 980 or did it ever exist?

The solution: use a proper accounts app (like Xero, FreeAgent or KashFlow) that can produce professional invoices but update the accounting system at the same time. The invoices are more likely to be accurate, will have a proper audit trail and can be easily checked or recovered without the poor bookkeeper wasting hours of time that you are paying them to do a productive job.

Save money by being more efficient and using the right tool for the job! If you want to discuss this further then please get in touch.

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Why Should I Move to the Cloud?

on Monday, 21 September 2015. Posted in Startup Advice, Accountancy Advice, Business Advice, Cloud Accounting

The Cloud

What is Cloud Accounting?
On this website we go on about Cloud Accounting, which is where you access your accounting information securely over the internet. And yes your data is safe and secure. We are used to accessing our bank accounts over the internet and there is no fundamental difference when it comes to Cloud Accounting Apps

There are many benefits of going with a cloud based application.
We can access live data, so when you call us we can log on to your accounts and discuss matters with you whilst reviewing live data.

You are always using the up to date version of the package – there is no having to pay extra for upgrades or having a different version to your accountant.

When the year end accounts are being prepared there is no need to wait for the list of journals to put on the accounts or suspending bookkeeping while we use the live data.

You can access the data anywhere in the world – including on handheld devices.

You do not get charged for the number of users but simply to access the online package.

How easy are they to use?
Even for someone with very little accounting knowledge they are very easy and intuitive, however most accountants will help you to get used to the package or the Apps usually have good support desks and help manuals.

What cloud providers would you recommend?
Xero is our favourite, we love the look and feel of it, but KashFlow is good and improving all the time. A lot of contractors like FreeAgent but from an accountant’s viewpoint we aren’t as impressed but we happily work with clients who love FreeAgent.

SME accounting solution.
Cloud Accounting Apps offer a straightforward accounting solution to SMEs which is so much better than spreadsheets or manual records. Invoices and statements can be emailed out to customers. Bank transactions can be automatically fed into your accounting software – every morning our bank transactions just appear waiting to be reconciled. You can scan every receipt and invoice and link it to the accounting transaction – as an accountant we love that, no need to ask our clients a question about the transactions, if we need to know more information the answer is just a click away!

Cloud Accounting: Why Should I Move to the Cloud? Why wouldn’t you want to! If you want to know more please get in touch.

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We love Cloud Accounting and think it is the way forward for most businesses. We are Silver Partners with Xero Online Accounting Software and Certified Partners of IRIS’s KashFlow. Please contact us for more information on Cloud Accounting and also read our blog.