No VAT invoice = no VAT reclaim so it is important to request a VAT invoice (which shows the VAT number along with other necessary information) and not just the receipt from the card machine.
A good bookkeeper is worth their weight in gold!
I’ve said it so many times that I think ICB (Institute of Certified Bookkeepers) made me a Champion a few years ago to try and shut me up.
The line between accountants and bookkeepers is quite blurred these days. Many accountancy firms use client bookkeeping as a way to train juniors but we prefer to use a properly qualified bookkeeper for most of it.
As a technophile I love machine learning and other AI but bookkeepers are particularly good at detail and spotting anomalies. Accountants tend to view the accounts as a whole to ensure that they tell the true story of the business and to look for ways to help the business to grow or operate more efficiently. We provide telephone/email support to all our clients and their bookkeepers so that we can work together. This helps them to code strange items correctly first time. Depending on the size of client we also carry out regular bookkeeping checks using Xenon Connect or Xavier (some bookkeepers do this themselves)
With a good bookkeeper doing all the data entry and regular reconciliations we can just swan in at the year end, press a few buttons and produce the accounts. Okay, that’s a bit of an overstatement but it certainly makes our life easier if we have ‘clean’ records as our starting point. It also helps us to provide better value for money when we’re not sorting out messes.
Do you use a bookkeeper or do you do it yourself?
Tax Tip
Don’t forget that you can claim some of the costs if your use your home for business.
You can claim £6 per week even if you just use the corner of the kitchen table to do your bookkeeping each week. If you use your home for more than this then contact us for a spreadsheet to see how much you can claim.
Tax Tip – gifts for staff
Trivial benefits are small gifts or other perks that a company can give to staff and directors tax free subject to certain conditions.
- Maximum £50 per gift. If the cost is over £50 then THE WHOLE cost is taxable, not just the amount over £50
- Not cash or a voucher
- Not a reward for work or performance
- Not a part of their employment contract
- Maximum £300 per year for directors
Trivial benefits don’t need to be reported on P11Ds as they are not subject to tax or national insurance.
This is a nice way to look after your team and is separate to employee entertaining.
Tax tip
Cash is king and most small businesses fail due to lack of cashflow. Even if you have a relatively small business you can use accounting software like Xero to:
- Add a link to your invoices for clients to pay by card using Stripe, Paypal, or similar
- Plug a small (usually free) card reader (Zettle, Square, or similar) into your phone for clients to pay by card before you leave site
90 day planning
A lot of businesses don’t bother with a business plan because things change and they’re out of date almost as soon as they are written.
I sympathise.
Although I do like to have a 12 month budget to check that I have enough money to pay the team and to reinvest in the business we rely mainly on a 90 day planning cycle. Things are usually fairly predictable for the next 90 days so we get together as a team. It’s the only thing we try to do in person as we all work remotely the rest of the time.
We loosely follow this agenda:
- Review KPIs for last period
- Check actions from the previous meeting
- Discuss any issues and solutions
- I share my plans to move the business forward for the next 90 days and we all agree what needs to be done step by step, and by whom.
After the meeting
- My PA, Kate, emails me with a summary and the detailed action lists for each of us
- I add my actions to my to do list.
- If necessary I allocate slots in my diary.
- Kate works through all her actions (much more efficiently than me!) and gently reminds/nags me to get on with mine
The result is that, over the next 90 days, we make a lot of progress. Even if we don’t quite get around to everything the business has moved forward a lot from last quarter.
It’s like my running – CONSTANT FORWARD MOTION, no matter how slow.
If you’d like a copy of our budget workbook you can purchase a copy here or drop me a line if you’re interested in group or individual coaching to improve your own business.
36 percent
We submitted 36% of our self assessment returns in January!
Last year I submitted only one in January so what changed?
Well, I acquired Longhill Accounts in June and we spend three months meeting, greeting, and onboarding nearly 200 new clients May – July. For the most part this went through smoothly although some had problems signing up to Accountancy Manager as they weren’t used to technology. Poor rural internet service means that many clients still do things manually as it’s more reliable.
Once they were on board we then had to set each new client up on Xero or Xero Ledger in order to use XeroTax. And, of course, each client takes longer in the first year as we had to familiarise ourselves with them and their business. Because no two businesses are identical.
But we don’t just do self assessment returns, we also has to keep up with limited companies’ accounts and corporation tax, bookkeeping, VAT, and management accounts. So when we had caught up everything that clients had sent in proactively we STARTED to send the annual reminders. Usually we would send reminders in April, June, and September with final reminders going out in October. This year we didn’t send the FIRST reminders until the end of November.
Then Accountancy Manager rebranded as Bright Manager AND CHANGED ALL THE LINKS! So our poor new clients now had to handle a second set of instructions from us (once we realised that this was the problem!).
In spite of all that the team worked their socks off over weekends and evenings in December and January and we finally submitted the last return with 3 days to spare.
But this fabulous team shouldn’t have to work so hard and neglect their personal lives.
We’re busy celebrating now but today we had our quarterly planning meeting to make sure that we have a much better tax return season this year. I intend to go skiing in January 2025 so we need everything submitted before Christmas. Watch this space …
Tax Tip
Get your tax return done early so that you have more time to save the tax due. The deadline for payment is still 31 January 2025. If your income has reduced this year then we may also be able to reduce your July payments on account.
Tax tip
Company cars are not really tax efficient and we often advise clients to buy the car privately and just charge the company for mileage. For one client with expensive taste in cars we even recommended staying as a sole trader rather than a limited company.
This is because cars are treated as benefits in kind and taxed as if you have additional salary. The value of this benefit is based on a percentage of list price (including accessories). The employee pays tax and national insurance and the employer also pays national insurance.
The percentage used for electric vehicles is much lower than for others although this is increasing each year.
As well as the vehicle and fuel for personal use is taxed at a flat rate for the year so work out how much you use to see if it is tax efficient.
HMRC do not make the law
HMRC do not make the law, they interpret it in the same way that accountants and tax advisers do. If we can’t agree on the interpretation then the courts will decide. HMRC is not the final arbiter.
HMRC have all sorts of helpful information on their website for the public to read. This means that it is often dumbed down and vital points can be missed in the interest of simplicity. This means that Google and ChatGPT can lead to ‘interesting’ ideas from clients on how they can save tax which ends up with me correcting them by quoting chapter and verse of whichever act is applicable.
Our clients work hard so we don’t want them to pay any unnecessary taxes but we also want them to sleep at night knowing that they have complied with all laws and regulations.
Too many accountants just rely on the HMRC website and forget to check the correct sources. Proper CPD is really important to maintain professional standards and to give the best advice. We should be better than Google!