Tag: accountant

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Les bons comptes font les bons amis 

It’s a French saying that means that keeping good accounts makes for good friendships.  

Usually this means that debts should be settled promptly. I’ve written before about how important this is in the business world whether you’re the one paying promptly or ensuring that your clients pay you on time. 

But it could also be used to talk about the quality of your accounts and the importance of keeping them up to date. And this is why I’m (broadly) in favour of MTD (Making Tax Digital) which finally goes live in April with the requirement for maintaining digital records and making quarterly submissions to HMRC.  

The benefits I see are: 

  • Up to date information for decision making, debt collection, and just knowing roughly how much tax is due, and how much the business owner can take for themselves. Anybody who has dealt with the extortionate rate of ‘penalty’ tax on overdrawn directors’ loan accounts will understand the importance of this. 
  • Faster year end accounts when seeking finance or renewing mortgages. 
  • Processing bills faster with the use of technology just by taking a photograph or forwarding an email. No more mourning over lost receipts, without which VAT can’t be claimed. 
  • Tools to store receipts electronically and saving the need to print out paper invoices which frees up space and is much better environmentally 
  • Faster cash collection with recurring invoices, prompt invoicing from a phone, connecting to direct debit software, or card reader apps on your phone. 

And I believe, with such a tech savvy nation, this is the time for it. Most people have a smart phone on which to take photos of their children or their receipts to upload into bookkeeping software (the receipts, not the kids although we don’t mind seeing pics of the latter too) to be processed by the business owner or bookkeeper with the help of AI suggestions.  

Up to date record keeping will allow accountants to provide much more proactive support to clients and, as somebody who likes to see my clients thriving, I’m looking forward to it. No more websites with the empty promise that ‘we’re PROACTIVE accountants’; it’s about to become reality. 

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Accountant: therapist or dentist? 

When I set up my first accountancy business one of my old school friends, now living in USA, told me that a visit to her accountant felt like a visit to her dentist. As I’m one of those people who is terrified of the dentist (in spite of never needing treatment) I was determined that my business would be nothing like that. 

When we had offices I invested in a decent coffee machine and we ensured that clients could charge their phones while visiting. 

When we used to provide monthly envelopes for clients to send in their invoices for bookkeeping I chose some that felt quite velvety (even though they were four times the price of the others) so that clients would have a bit of niceness. 

We send welcome gifts of chocolates from a local business (obviously we had to sample them first!) and birthday cards by a local artist. 

Now we are busy building an app for clients to calculate how much tax they need to save and how much is available for dividends. 

What can you do to make your clients’ experience smoother? 

Business confidence monitor 

The Q3 ICAEW Business Confidence Monitor is here and shows the increased tax burden are holding back business and economic growth 

ICAEW Business Confidence Monitor | ICAEW 

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The Club Tropicana business model 

Apologies, I’ve forgotten where I first heard this description, but according to Wham, at Club Tropicana drinks are free! 

And many businesses appear to be adopting the same model. We often do it ourselves. 

We give away free books, free webinars, free speaking gigs, newsletters like this, blog posts, free discovery calls, etc. Because we don’t value our time enough.  

So this week I’d like you to work out the time and cost of everything that you give away for free. And then compare it to the number of new clients that you have acquired in the last 12 months. What is your cost of acquisition per client? Or per £1 of turnover? 

Most of this fails to convert, not because it isn’t useful, but because we’re targeting the wrong people (if they’re relying on your free stuff they’re probably ‘tyre-kickers’ and not likely to pay for your prime products/services) or because we’re too British about money and sales to give a clear ‘call to action’  

So here is our big, fat CALL TO ACTION 

Accountants and bookkeepers: go to our website and choose one of our courses or book some coaching (individual is the best value but we have group coaching for those on a budget) 

Business owners: stop wishing for a better business and book yourself a Clarity Business Advice session where we can pull up your numbers, identify where you can improve profitability etc, and send you away with an action plan (and maybe book some coaching too) 

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Don’t call it ZERO! 

One of my pet hates is people who call XERO Zero. 

I can understand it when business owners make the mistake but accountants and bookkeepers who claim to be expert enough to assist clients do it too. 

And too many of these accountants don’t understand Xero’s full functionality and use it like any ordinary desktop (some even ask their clients to print out the reports at year end rather than logging in themselves). For these people Xero is just a big cost whereas, for us, it can really help a small business to punch above their weight in terms of both management information and business efficiency. 

I’ve been using it since a random client came to me using Xero for their bookkeeping back in 2012. And I liked it so much that we became Xero partners in 2013. 

Being a Xero partner means that we get full Xero training FREE of charge. Xero pay the cost for us to get the most of their software. In turn we can pass that on to our clients which we do through online videos as well as advice on how they can use their Xero better and/or take advantage of many of the add ons to save them time. 

So, in our experience, Xero is worth a whole lot more than zero. 

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No more Google! 

Why are you googling when you have a dedicated accountant on tap? Someone who can give you good quality personalised advice. 

Whether it’s ‘my mate at the pub’ or ‘my colleague on the golf course’ there’s nothing more annoying to accountants than their clients taking tax ‘advice’ from unregulated sources. 

As a qualified accountant I have to stay up to date with the latest legislation every year, to spend time understanding my client’s circumstances, and to refuse or refer work that I’m not personally qualified and experienced to carry out. But that doesn’t stop ‘Dave at the pub’ from offering his personal insights. 

Depending on the advice my usual response is that it’s not applicable to my client’s particular circumstances, not viable, or it may even be illegal. It may even refer to US tax legislation rather than UK! Even HMRC’s own website is so heavily dumbed down to be accessible to lay people that it can not always be relied upon. And it certainly isn’t personalised. 

I’m often asked to do live budget commentaries but I always refuse these as I prefer to listen, make notes about the clients each aspect will affect, and then read the full supporting documentation. Only then will I start to offer advice.  

I’m very much in favour of HMRC clamping down on unregulated tax advisers. Let’s make sure that accountants offer the best service possible by staying technically up to date and taking time to understand our clients and their financial circumstances. 

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10 questions business owners should ask their accountant

  1. What was my turnover this month? How does it compare to previous months/years/budget?
  2. What are my main sources of income and how can I grow them?
  3. What is my gross margin and how does this compare to others in my industry?
  4. How much cash do I have in the bank? How much do I need to pay out in the next week/month?
  5. What is my working capital and how can I improve it?
  6. How much tax (corporation tax, VAT, PAYE) do I have to pay and when?
  7. What are the key financial ratios that I should track and why?
  8. How can I collect money from customers faster?
  9. What is the best accounting software and processes for my business?
  10. How can I grow my business or make it more profitable or increase the value for my retirement?

Do you have regular reports/conversations that show this?

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An accountant you can trust

The latest Edelman Trust Barometer was published on Wednesday to coincide with Global Ethics Day and revealed a significant increase in trust in Chartered Accountants in the wake of ongoing economic uncertainty.

The research, commissioned by ICAEW in conjunction with Chartered Accountants Worldwide (CAW) and other professional bodies, found that globally trust in Chartered Accountants has reached 85% and is the only profession – aside from nursing – to have seen an uplift in trust.  In England, 89% of respondents said they trusted Chartered Accountants

What a fabulous accolade, thank you to everybody who trusts chartered accountants like Minerva.

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Tax Tip

Director’s responsibilities

Whilst it might feel good to be the director of your own company you have several responsibilities as directors under the Companies Act 2006:

  1. To act within their powers (in the articles of association etc)
  2. To promote the success of the company for the benefit of its members as a whole ie not benefitting one member above the company eg by allowing one director/shareholder to take out more dividends/loans that the company can afford
  3. To exercise independent judgement – you can take advice but must decide for yourself
  4. To exercise reasonable care, skill and diligence eg using a chartered accountant or professional bookkeeper if you don’t have those skills in house
  5. To avoid conflict of interest
  6. Not to accept benefits from third parties
  7. To declare interests in transactions
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How to buy yourself more time

Having taken over a small practice I have been able to see the time saved by good practice management software.

We use Accountancy Manager but any decent practice management software will offer similar services

  1. A simple spreadsheet upload of all client standing data and services so everything is in one place (the PA from the new practice kindly provided this in the form of multiple spreadsheets which we merged)
  2. Engagement letters generated based on the services provided
  3. Engagement letters and accounts signed online
  4. Clients can update any missing information and changes of address in their standing data
  5. Automatic requests for missing data eg proof of ID or a UTR
  6. Recurring tasks set up automatically for each service
  7. Adding our own internal deadlines for tasks eg 3 months for accounts and 2 weeks for VAT returns rather than the 9-10 months and 5 weeks for the statutory deadlines.
  8. Automatic records request emails generated from those tasks and deadlines (all templates can be modified to suit your personal style)
  9. Time recording as the new practice still uses hourly billing
  10. Marking a task as complete automatically sets up the next occurrence
  11. Automatic links to Companies House to keep deadlines etc updated
  12. Generating confirmation statement reminders and submitting from within the software (a small handling charge on top of the Companies House fee)
  13. Tracking emails between clients and team members so they don’t have to CC me on everything
  14. Central repository of all information which helps as all the team are part time and even I am juggling two businesses.

It hasn’t been perfect (I’ll share my learnings/improvements separately) but it has been relatively smooth.

This technology has freed me up to ‘meet and greet’ the new clients as tech is still no replacement for human relationships.

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5 minutes a day keeps the accountant at bay

I’m starting an initiative for business owners to do their bookkeeping in FIVE MINUTES PER DAY rather than leaving it all to the end of the year.

If you’re on Xero or similar software this would be:

  1. Raise all your sales invoices and quotes. (Don’t forget to add a button to the invoice template if you take card payments. Remember to set up recurring invoices for regular clients. And don’t forget to turn on invoice reminders)
  2. Mark any accepted quotes so that they can be converted into invoices
  3. Forward electronic receipts to your Automated Bill Entry on Xero or Dext
  4. Take photos of any other receipts using Hubdoc or Dext
  5. Reconcile your bank by matching against the sales invoices or purchase bills/receipts. (You can set up recurring transactions for regular bills)

All this can be done through apps on your phone. When bookkeeping is this simple it’s not just kids who will be glued to their phones.