Articles in Category: Cloud Accounting

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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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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Cloud Accounts Apps

on Tuesday, 24 July 2018. Posted in Making Tax Digital MTD, Startup Advice, Business Advice, Cloud Accounting, VAT advice, Contractors

Recording financial transactions and meeting your legal duties

For Cloud Accounting we recommend Xero

 

Your new business is named and ready to start trading but how are you going to record its financial transactions and meet your legal duties?

In our recent blog on “VAT and the start-up enterprise” we referred to Making Tax Digital (MTD) and the new VAT rules. These proposed regulations confirm the centrality of the digital recording of accounting transactions. Unless you have a very simple and small business this means using an accounting programme. Desktop Apps are rather dated and inflexible. If you have to email backups there will be GDPR issues to consider.

The obvious solution is to use an online accounts app. These Cloud based programmes are brilliant. You, your staff and your accountant can all be working on live data. Most have Apps for phones or tablets, so as long as you can access the internet you could be sat on the beach and still be sending out invoices, reconciling your bank account or posting last month’s depreciation!

We find that with these Cloud products you get what you pay for. If the accounting system is free or cheap then it will be free or cheap for a reason. Our advice is to invest a few more pounds each month – it will save you time and probably money in the long term.

This is why we recommend Xero. It isn’t perfect but in general it is better than the other Cloud packages.

It will email your quotes, invoices, credit notes and statements out to customers. You can attach pdfs, pictures or other documents to transactions. If you have a query you could call us up, we would log on to your data and we could talk it through with you, making sure that everything is posted correctly.

But the best bit is the interaction with bank accounts. An increasing number of banks have direct bankfeeds with Xero (for example Santander and HSBC), other banks have indirect bankfeeds via a third party provider (for example Lloyds, NatWest and Barclays) but some banks you have to download the statement and then upload it into Xero. With the direct bankfeeds yesterday’s bank transactions just appear on Xero the following morning. And once the information is in Xero, then with one click of a mouse you can reconcile the bank account and record a sales invoice as being paid. This is so efficient.

Over the years we have written a number of blogs on cloud accounting but if you want to know more and see how we can work with you on this important topic then please get in touch.

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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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Cookie-Cutter Approach?

on Saturday, 13 December 2014. Posted in Accountancy Advice, Business Advice, Cloud Accounting, Tax Advice, Contractors

perhaps it is time for a change as we are not all from the same mould

Are you an individual or a commodity? And what about your business? We treat our clients as individuals. We go out of our way to listen to and to understand our clients. That means we recognise they have choices, which they will exercise based upon their knowledge. All clients are different.


We will recommend what we think is the best approach but if the client wants to take another way (and it is legal!) we will work with them.


For example, we generally do not think spreadsheets or desktop accounting packages are the best way for most small businesses to record their bookkeeping. We recommend Cloud-based accounting packages, for example Xero or IRIS KashFlow. If a client, however, wishes to use another package or spreadsheets we will not sack them, unlike some other accountancy practices.


Likewise we will recommend the approach for owners of family run businesses to take in order to pay themselves. If the owner-managers wish to take another legal approach then once we comprehend their reasons we will work with them, we will not take our bat home.


If you do not like accountants (or other suppliers) dictating how you should operate then perhaps it is time for a change, time for a different approach, as we are not all from the same mould.

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Why Don’t You Send Statements Out?

on Tuesday, 01 October 2013. Posted in Startup Advice, Accountancy Advice, Business Advice, Cloud Accounting

With modern technology sending statements really is easy and very efficient

Do you send your customers a statement of account? It really is a simple idea and helps credit control.


Using a Cloud Accounting package like Xero means you can email your statements as often as you want. We email ours three times a month: on the 10th, 20th and the last day of the month. We choose which debtors to send them to and it is amazing how often payment is received within a few hours of the statements being sent out.


With modern technology sending statements really is easy and very efficient – a few clicks and they are emailed out to your customers.


Keep the statement simple by listing all the outstanding transactions. There is no need to show all the movement for a month. As businesses rarely send out cheques there seems little point having a statement that can be split into two to become a remittance advice – if the writing is too small it will not be read!

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Cloud Accounting

on Thursday, 14 February 2013. Posted in Startup Advice, Accountancy Advice, Business Advice, Cloud Accounting

Cloud accounting: Xero's dashboard. email info@aysgarthaccountants.co.uk for more information

 

Small and medium sized (SMEs) companies use a number of different ways to record their accounting transactions:

1. Manual books of account: ok, not many do nowadays but I could introduce you to some who do.

2. Spreadsheets are often used and I am always amazed by the mistakes they contain. There are often formula errors, the formatting could be improved etc.

3. Accounts packages which rely on backups being emailed to the accountant.

4. Cloud accounting packages.

We think the last one is the best solution. We can see your records and how your business is doing simply by logging on to the internet. We see live data and there is no reconciliation needed between the year end accounts and your records.

You can process your bookkeeping transactions or keep a check on your business' finances wherever you are – imagine reconciling the bank account whilst on a train!

It also means we can have an intelligent conversation about your finances as we are both instantly seeing the same live data.

There are many cloud solutions available: FreeAgent, KashFlow and Clear Books amongst others but the one we prefer is Xero. It is straightforward to use and causes us to get passionate about it. It looks very smart as you can see from the dashboard above and the bank reconciliation below.

And talking of bank reconciliations: they are very simple. You can either have live feeds from your bank or you can download bank statements into Xero and then you simply click away. Rules can be set up so Xero remembers where to post the transaction but always allowing you the final authorisation.

Xero takes away the problem of paying for upgrades – they are all included in the cost so you and I are on the same version and there are no compatibility issues. And whilst there is a small monthly fee to operate it you can have as many users as you want at no extra cost.

So we love cloud accounting and especially Xero and look to assist more SMEs in their move across to the future of bookkeeping and accounting.

 Xero Bank Reconciliation

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xero-certified-advisor-logo-hires-RGB cashflow-logo

 

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.