A while ago our local post master observed my kids spending their pocket money and reported back to me. Apparently they figured out that if they pooled their money they could get a big packet of sweets between them which was even better value. Collaboration for the win!
Years later, when they were old enough, he gave each of them a job as soon as he had a vacancy. Watching their behaviour over the years had given him some idea of how they would get on with customers.
In our business we rely on each member of the team using our different skills collaboratively to provide the best service to our clients.
But it’s not just internally that we work together. We extend our support to clients’ bookkeepers. They can contact us through the year with coding or other queries. In return we benefit by getting neater records coded as we like them so the year end is faster. Sometimes we get early warning of areas we can advise our mutual client. We’re always happy to explain any year end adjustment journals so that Xero (or other software) records are better each year.
We also work with software providers to ensure that any new software is properly set up to give both year end and management information. Or with IFAs and mortgage advisers to provide the best information to help our mutual clients with nonbusiness finances.
How could you collaborate with others to increase the size of the pie?
Should I be a limited company?
There are all sorts of reasons for incorporating and most of these are unchanged but two things have changed or are about to change.
1.Corporation tax increases combined with National Insurance reductions mean that the level and which it is tax efficient to incorporate have increased to around £100k* profits
2.At the moment small companies do not have to publish full accounts at Companies House. In future they will need to show their profit and loss account. This means that sensitive commercial and personal information will be in the public domain. For sole directors their salary will be available for anybody to see.
There may still be reasons, tax and otherwise, why business may choose to trade through a limited company so personal advice is more important than ever.
*This is a guide and the actual level still depends on individual circumstances.
10 questions business owners should ask their accountant
- What was my turnover this month? How does it compare to previous months/years/budget?
- What are my main sources of income and how can I grow them?
- What is my gross margin and how does this compare to others in my industry?
- How much cash do I have in the bank? How much do I need to pay out in the next week/month?
- What is my working capital and how can I improve it?
- How much tax (corporation tax, VAT, PAYE) do I have to pay and when?
- What are the key financial ratios that I should track and why?
- How can I collect money from customers faster?
- What is the best accounting software and processes for my business?
- 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?
Tax tip – Don’t forget to get the VAT invoice!
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
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.
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!
Software efficiencies
When you started up your business you probably ran it using a spreadsheet or a Word document. But now you’ve filled your time and you’re trying to grow you need better to software to ensure that everything runs as efficiently as possible. Here are some things that I use in my businesses:
Marketing – I use Active Campaign as both my CRM (customer relationship management system) and to email things like this top tip to our clients and prospects. Active Campaign links to forms on our website and to our scorecards.
Process management – Minerva Accountants has lots of beautifully repeatable processes so we use Bright Manager (formerly Accountancy Manager) to manage those processes, client documents, file client emails (so anybody on the team can see all the communication), and automated reminders. My coaching and consultancy business has fewer repeatable processes but it is much smaller so I manage my to do list on Trello
Cash collections – as far as possible we use recurring monthly invoices on Xero and collect payments through direct debit using Gocardless. Any invoice on Xero is automatically fed to Gocardless and, when payment is made, the receipts are matched to the invoices on Xero. Clients can also pay by card using Stripe which also matches the invoices. These save hours of debt collection time and bookkeeping in a small business.
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?