Category: Business

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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 … 

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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.

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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. 

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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!  

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New year clear out

You don’t have to wait until the new year to do it (see also Spring cleaning and back to school flurries of activity) but I do like an excuse for a good declutter.

Here are some things you might want to look at:
• Stationery – we run a paperless office and don’t have a printer but it still amazes me how much stationery we have around that might be useful to somebody else
• Poor clients – yes, we have a clear out of these every February after the big tax deadline. You probably have a few clients who could be moved on to make room for more suitable ones
• Inbox – how many emails are you subscribed to that you don’t read. If they’re not useful to you (including this one) then don’t just delete them but unsubscribe
• Wardrobe – not a business one but, unless you already do Project 333 you can probably get at least one bag of clothes and shoes to the charity shop or bin
• Client files – archive any paper or digital files you no longer need

Make space to plan your year with our budget workbook and video.

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Reusing content

Content creation takes both ideas and time so why not make the most of your content and save valuable time by using it in as many ways as possible. For instance, if you are giving a talk you can reuse it as follows:

1. Record it for online use

2. Cut the video into clips for social media

3. Use the audio as a podcast for people to listen to

4. Write it up as several shorter blogs

5. Write it up as an article for your local paper or other publications

6. Use it in your newsletter/e-news

7. Extract quotes for social media

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ICB awards

Last month I was invited to the ICB (Institute of Certified Bookkeepers) awards, also known as the Lucas after the inventor of the double entry system, Luca Pacioli. I love judging the awards as I get to see what the best bookkeepers are doing to help their clients. A good bookkeeper is worth their weight in gold.

I’m also a Champion of the ICB, an honourary position that I was awarded a few years ago. This allows me to use the CICB letters after my name along with my usual FCA.

As well as seeing the best bookkeepers take the stage to collect their awards (including some who had travelled over from the trouble in Ukraine) there were software awards too.

I was delighted when the bookkeepers voted our favourite Xero as the bookkeeping software of the year. We also have client using Freeagent which was chosen as the friendliest software; not surprising as their chief accountant, M, writes all sorts of useful guides.

Which is your favourite bookkeeping software and why?

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Collaboration for the win

I’ve been working away in the frozen North aka Manchester. On one of the days I had a break between speaking engagements so I borrowed a desk from another forward thinking accountant, the lovely Stuart Hurst. We exchanged a few ideas on how we could each improve our accountancy businesses and look after our clients better.

Collaboration beats competition every time.

Who do you collaborate with?

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The beauty of integrated apps

As you know I’ve just been on holiday. We stayed in 3 different towns/cities on the edge of the map! I had to download three different German maps to my satnav in order to drive a total of about 5 hours.

This made me think about how wonderful it is to use integrated applications for business (because I often think about my business when I’m not busy working in it!)

We are a Xero based firm so there are over 1,000 integrated apps available in the official app store and other unofficial ones too. The ones we use most are:

Gocardless – raise an invoice in Xero and it automatically collects the direct debits and matches the payment to the invoice so it saves bookkeeping time too.

Dext/Hubdoc – clients can scan/photograph/email invoices to upload them into Xero (also QBO or Freeagent) where they, or we, can do their bookkeeping. Dext is the most expensive but saves much more time with their OCR (optical character recognition) and machine learning changing the roll of the bookkeeper to checking rather than typing.

Clarity – this is a big hit with clients as we can help them to see their numbers in a simple format and decide how they want to grow their business. The software uploads the latest info from Xero (also Sage or spreadsheet) so that we can discuss the current situation and improvements. It then helps to prepare an action list for the client.

These are the most valuable integrations that we use. What do you have on your list?

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Tax tip

Payments on account can add a large chunk onto the amount of tax that you have to pay. If your income is likely to be lower next year than this year then it may be worth reducing your payments on account and we sometimes do this for clients who are winding up their sole trader business or who are going through a hard time. But BEWARE! If you reduce your payments too low and the final tax bill comes out higher then you will have to pay interest on the shortfall. This is to discourage people from reducing their payments too far. 

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