Articles in Category: Making Tax Digital MTD

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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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.