As a parent of a school age child it is refreshing to be back into the routine of the school term. Thoughts begin to turn to self assessment tax returns if you’re self employed, along with thoughts of booking next year’s summer holiday.
Wouldn’t it be great if you knew exactly how much tax you have to pay to HMRC? Then you can make a decision about the long anticipated summer vacation? If you use a bookkeeper to calculate and submit your tax return they will be forever grateful to receive your information in the autumn when there is no panic to get the data submitted. Bookkeepers loathe January! They hate the influx of late clients needing self assessment returns done in a rush. We also hate having to work over Christmas. Remember, your bookkeeper is human too 🙂
In addition, doesn’t it make you feel a rather smug sense of self satisfaction when you know that your return is submitted, the tax is paid and when everyone else is panicking in January you can sit back and relax, whilst anticipating your summer break?
A bookkeeper will ensure that you claim all applicable expenses and that your income is declared correctly. This means less likelihood of an HMRC audit. However if an audit is carried out there is far less chance of HMRC finding any discrepancies. Contact us today to see how we can help you.
In breaking news, an especially relevant Twitter poll says that Bruton Young Bookkeeping is one of the top ten Devon Bookkeepers. I am therefore going out to buy champagne 🙂 Recognition is wonderful!
We offer the very best customer service and client support. It is a massive compliment that Twitter users voted for us. As a result it seems that clients value and appreciate our hard work.
I would personally like to thank each and every Twitter user who voted for Bruton Young Bookkeeping in this poll.
There are hundreds, if not thousands of bookkeepers in Devon and we are in the top ten!
The south west news website is a very useful one for local information. The owners live in Devon and Cornwall so know the area very well. The writing is clear and concise. Local information is presented clearly and is therefore easily digestible.
South West News looks great and so it’s easy to read. THere’s a plethora of useful information on numerous topics. I think I’ll need to add it to my list of news sites to keep an eye on.
What is Automatic Enrolment?
The law on workplace pensions has changed. Under the Pensions Act 2008, every employer in the UK must put certain staff into a pension scheme and contribute towards it. This is called ‘Automatic Enrolment’.
Does Automatic Enrolment apply to me?
Automatic Enrolment applies to all employers who have at least one member of staff. It doesn’t just apply to businesses; if you employ someone directly to work for you – like a cleaner, personal care assistant or nanny, for example – you are an employer and will need to ensure that any eligible employees are enrolled into a workplace pension.
To find out if it applies to you, visit The Pensions Regulator’s website and use the duties checker. This tool will ask you a few short questions about your employees, to work out which duties apply to you and when. The duties checker will give you tailored help and guidance through the steps to complete any Automatic Enrolment duties you may have.
Automatic Enrolment contributions are changing
The minimum contributions that you and your staff pay into your Automatic Enrolment workplace pension scheme are increasing. This is also sometimes known as phasing. Minimum contributions are increasing in two phases. The first increase must be in place from 6 April 2018 and the second from 6 April 2019.
You, the employer, must make a minimum contribution towards this amount and your staff member must make up the difference. If you decide to cover the total minimum contribution required, your staff won’t need to pay anything.
|Date effective||Employer minimum contribution||Staff contribution||Total minimum contribution|
|Currently until 5 April 2018||1%||1%||2%|
|6 April 2018 to 5 April 2019||2%||3%||5%|
|6 April 2019 onwards||3%||5%||8%|
Not sure if you’re an employer?
If you deduct income tax and National Insurance contributions from the wages of the person you employ, then you are usually their employer. If you have used an agency to hire the person and the agency pays their National Insurance contributions, the agency is the employer and you don’t need to do anything. Find out how Automatic Enrolment applies to you using the duties checker on The Pensions Regulator’s website.
If you need further guidance on whether you may be considered an employer or not, read our page still unsure if I’m an employer.
What do I need to do now?
*The PAYE reference can be found on letters you have received from The Pensions Regulator about Automatic Enrolment. Alternatively, it can be found on the letter HMRC sent you when you first registered as an employer or from your payroll software package.
Who is The Pensions Regulator?
The Pensions Regulator is a public body set up by the UK Government to regulate work-based pensions. There is information and help available on their website and they write to all employers to provide additional guidance.
Don’t ignore the Workplace Pension. It’s the law.
Bookkeeping, the task that most business owners ha…
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Phillip Hammond’s first budget as Chancellor was delivered on 8th March and delivers yet another hit to the self employed. Class 4 National Insurance will increase from 9% to 10% from April 2018 and to 11% the following year.
Class 4 National Insurance is already a shock for many self employed people but this change will make the impact even worse. As more and more people are becoming self employed it’s easy to see why the government has decided to increase this rate. It is thought that the average cost per week per person will be only around 60p and it will raise £145m per year by 2022.
However the flat rate Class 2 NI contributions will be scrapped from 2018.
See our previous post explaining National Insurance, including Class 4 here
For more information or advice please contact us.
In short the answer to that is yes, you can be employed by someone else and work for yourself.
There are many people who have a full-time or part-time job working for someone else but also have income from work they do outside of that employment.
When you are employed, your tax and national insurance is paid by your employer direct to HMRC after deducting it from your wages. For other income, you will need to register for self assessment with HMRC so that you can declare and pay tax on the money earned from other sources.
To register for self assessment with HMRC, use the following link register for SA
You have 6 months after the end of the tax year in which the income was earned to register. So for example, if you earned casual income in July 2016 you would need to register by September 2017 to declare that income.
When you complete your self assessment tax return form (or ask a bookkeeper to do it for you) the P60 from your employment will be used to give you the figures for the employment section and your other self employed income is declared on separate self employment pages, along with details of any associated expenses.
We are always happy to chat about the registering process, how to declare your income, what is classed as a business expense and many other topics. Contact us for more information.
Small business cashflow
Money in, money out. Cashflow is one of the most important measures of your business’s health. But how do you monitor it?
It sounds simple to track sales on the one hand and expenses on the other – then compare the two. But a massive 65 percent of failed businesses say they closed down because of financial mismanagement, including issues such as lack of cashflow visibility. In other words, they didn’t know if they were making more than they were spending.
Why are people losing sight of cashflow?
Everyone knows a business needs to stay in the black. It’s not a new idea. So it can be hard to imagine why a business would lose sight of cashflow. Until, that is, you’re in business yourself. It’s then that you realise tracking small business cashflow isn’t as easy as it seems.
You have to:
- keep track of all your expense receipts
(which gets really tricky if there are multiple people making purchases)
- record all your sales revenue
(making sure to account for discounts you might have given)
- enter everything into your cashflow Excel spreadsheet or Google Sheet
(including double and triple checks to make sure everything is entered correctly)
You may have to rely on employees or business partners to supply a lot of this information. Their paperwork will sometimes have scribbled notes in the margins, requiring a follow-up phone call. It takes a lot of time, patience and energy before you’re even ready to punch the numbers into a spreadsheet.
Data entry slows you down
Your cashflow Excel spreadsheet or Google Sheet is probably a monster. The number of columns and rows will have grown substantially since you first set out on your own. Plugging in the numbers takes time, and a lot of it. Unfortunately it’s not a job you can rush because you need the spreadsheet to be as accurate as possible.
The large amount of time required results in two common issues:
- The task gets pushed back repeatedly so you go for long periods without knowing your cashflow position.
- Because there are gaps in your data, you’re not able to see how the business performs from day to day.
Mistakes creep in
No matter how much you slave over your spreadsheet, there’ll be mistakes. Up to 90 percent of spreadsheets contain data entry errors. You’ll find the big ones because the numbers will look wrong and so you’ll trawl through to find the cause. It’ll be slow, frustrating work but you’ll probably weed them out in the end. The smaller mistakes are more likely to sneak through, where they’ll add up, bit by bit, to undermine your data. It’s not great for your confidence.
Cashflow information is old before you see it
Even if you’re vigilant, there’s a lag between when a sale or expenditure happens and when it’s entered into your cashflow Excel spreadsheet or Google Sheet. And you still won’t “see” it until you create charts or graphs from those spreadsheets. In this scenario, you’re taking a series of snapshots of your cashflow, and there can be big blind spots in between.
As business picks up – with more sales and more expenditure happening all the time – those blind spots become more significant.
- More things happen in between each cashflow snapshot.
- Cashflow snapshots get further apart because you’re too busy to update spreadsheets.
Cashflow is about more than red and black
There are many reasons why you need to know your cashflow situation. Obviously you have to understand if you’re making money or losing it. That’s the most basic form of cashflow visibility. But there’s more to it than that.
If you can see your cashflow in detail, you can spot opportunities, or troubleshoot problems before they become too big.
If you’re seeing profit spikes during certain periods, you could:
- bring in more staff to help maximise those opportunities
- think of ways to cross-sell or upsell those customers
- consider marketing campaigns that will bring those customers back during slow times
If revenue is flat during certain periods, you could:
- run sales promotions
- experiment with different products or services
- reorganise staff schedules to lower your expenses during those times
Cashflow visibility is a strategic advantage. By understanding how revenue and expenses change from day to day, you can tweak your business model to find what works best for your situation.
Step away from the spreadsheet
Spreadsheets are remarkable tools. They’re by far the world’s most common accounting software. And for micro-businesses with relatively limited activity, they’re a good fit. But as you perform more transactions with more customers and vendors, they get in the way of cashflow visibility, cutting off your view of the business’s health.
To see if spreadsheets are fit for purpose in your business, ask yourself these questions:
- Are they getting hard to maintain?
- How confident are you in the data that’s been entered?
- Do you actually know what your small business cashflow looks like?
There are cost-effective alternatives. Accounting software will eliminate the data entry and give you a daily view of small business cashflow – on your desktop or phone.
Accounting software automatically calculates your cashflow, showing a summary of money in and money out. It will even tell you what you’re owed and which bills are coming due.
Here’s how it works
Cloud accounting software is generally sold on a flat monthly subscription. You don’t need to download anything and you can run it easily off your existing laptop, desktop or smartphone. You just sign up online and get started.
- It can link to your business bank account (and point-of-sale system) to track sales and expenses as they happen, with no data entry from you.
- Because the data comes straight from the bank, it’s clean and accurate.
- Smart accounting software will also send out your invoices, so it shows what you’re owed.
- The system pools all the data to create a dashboard of your financial situation, which is automatically updated every day.
Accounting software probably only needs to save you one or two hours a month to pay for itself. In reality, it will do that many times over.
As easy and intuitive as online accounting software has become, you may prefer to have an accountant or bookkeeper set it up and/or run it for you. They can then share the dashboards with you.
Or you can do it yourself by starting a free trial and following the how-to videos.
Small business cashflow is everything
Money in and money out is the ultimate measure of business health and sustainability. You should watch it carefully, even if that means manually updating your cashflow Excel spreadsheet or Google Sheet. The effort is well worth it.
If, however, you’d rather spend the time on other parts of your business – or with your family – take a look at cloud accounting software. It can automate the process for you. That’s why 98% of users of accounting software recommend it to others.