November 21, 2017

Take a holiday, but make a back up!

 

WellingtonConsulting_SocialMediaGraphic_Holidays_180717-01Many smaller business owners either don’t get round to taking a holiday, but when they do I guarantee that most will take their laptops and iPads with them. But what happens if it gets lost, broken or stolen while you are away?

 

 

Not a problem, we all make back-ups… right? But…

 

  • Are the programs you use for work on another computer?
  • Where is your customer list held?
  • Have you made copies of all the information your business needs to operate?

 

Do you back up? And do you keep that back up somewhere safe?

 

I only ask because you really wouldn’t like me to tell you how much it would cost to try and recover or (more realistically) recreate your data. It takes time as well as money and that is without measuring the distress and disruption to your business. At least the costs of recovery would be allowable against tax!

 

On a happier note, the evenings are still light, woolly jumpers are a distant memory and the heating bills are lovely and low. If you haven’t done so already, you still have time to gather together the information for your tax return and find out how much tax you need to pay by 31st January. If you wanted to, you could start paying money to HMRC now so as to spread the cost. And did you know they pay you interest if there is money sitting in your tax account for taxes not yet due?

 

Happy holidays.

 

 

 

 

WellingtonConsulting_SocialMediaGraphic_Holidays_180717-01

Have you got 31st July in your diary?

tax, self-assessment, HMRC, 31st July, accountant, herefordshire, monmouthshire, gloucestershire

Have you got 31st July in your diary?

 

We may all have put this matter to one side, filing the reminder letter in the unshrinking in-tray, but staying on top of our taxes is vitally important to all small businesses and those who are self employed.

The key is to not fear them or forget them!

 

I know you are busy, time so often our enemy and much better spent delivering our goods and services, but time has to be taken to keep our business affairs in order and avoid any nasty penalties. And if you don’t have the time, engage with someone who has both the time and the expertise.

Diary dates.

So, let’s start by reminding ourselves of the key dates for your diaries regarding taxes:

  • 5th October – registration date for individuals who are self-employed
  • 31st October –paper tax returns completed submission deadline
  • 31st January – online tax returns submission deadline
  • 31st January – deadline to pay taxes you owe
  • AND if you paid more than £1,000 tax on 31st January 2017, you may have more to pay by 31st July 2017.

How do you know if the July 31st deadline is applicable to you?

HMRC state this: ‘If you are self employed and earn enough to pay over £1,000 in tax and you have not already settled all tax due for the year to 5th April 2017, you will need to make a payment by 31st July this year.’

Also, if you have rental income or large amounts of investment income such as dividends, you may also be affected.

There is further information on the gov.juk website, or if you are unsure talk to your/an accountant.

You still have time.

If you haven’t already completed your tax returns, don’t panic! You can still avoid HMRC’s late filing penalties just start taking action now.

  • Gather together all your receipts, bills, bank statements, mileage logs, sales invoices and takings summaries
  • If you have already entered these into a spreadsheet or accounts software, such as QuickBooks Online, well done. It will make your life easier, and you will have a better handle on how the business is doing.
  • Gather other details of income such as bank interest, rental income (and related expenses), P60s and P45s and P11ds from any employment or pension you have. Also pension payments if you can deduct those from your tax bill
  • If you are married, discuss with your spouse whether there is benefit in reallocating some of the personal allowance to the other spouse (10% can be moved although some rules apply)

Decide if you are going to feel brave and prepare your own tax return. If so

And if you would rather have help making sure you are declaring everything and claiming all you can, call me and we can get things sorted.

Penny Lowe, Wellington Consulting

Visit my website to find out more about how I can help you and your business >

Business Advice From Berkshire : How Easy it it to change accountant?

How easy is it to change accountant?

I have been asked this twice in the last week, so I thought I would explain the process.

Before changing, decide what you don’t like about the existing one which is causing you to consider moving. It is their fault or yours? This might sound harsh but if you find their bill high, is it the rates they charge per hour or, do you have to be chased and ask them to work miracles with an incomplete box of bills and till rolls? The reason I ask is what is going to change if you change accountant.

forecast

Another reason quoted for wanting to change accountant is that the existing firm only put together the accounts and tell you how much tax to pay. They do not advise or get involved on a more regular basis. Why is this? Is it because you are trying to keep your bills to a minimum and therefore just asked for the minimum legally required, or is the firm not set up to do more than a production line approach to your accounts? Even if you have decided to change accountant, you still need to answer these questions so you don’t replicate your unhappiness with the next one.

Having made your decision you can then proceed:

Step 1 – Find an alternative accountant who a) you feel happy with and that you find approachable; b) can provide the breadth of services you require; c) has the capacity to take on the work you want doing within the timescale you need d) that is open about their method of charging; e) that can provide references unless you have approached them through recommendation of a friend or business colleague; f) that is a member of one of the accounting bodies. This does not have to be Chartered or Certified (unless you have a big company that needs an audit) but some recognised organisation that you could complain to or contact if you are having difficulties. Mine is the Association of Accounting Technicians where I am registered as a Member In Practice and get checked up on by visits to my practice. I also have a registered ‘understudy’ in case I get run over by a bus. This means clients will get looked after until a long term solution is agreed. Ideally go and visit a couple of accountants so you can compare and contrast. Don’t forget to let the unsuccessful candidate know.

Step 2 – Notify your existing accountant that you no longer require their services and give them the details of your new accountant. This gives them authority to disclose the information. Let your new accountant know the details of the old accountant and that they have been notified of your intended move.

Step 3 – The new accountant will write to the old accountant asking for all relevant information and if there is any reason that the new accountant should not act for you. The old accountant should then send the new accountant ‘everything’ relevant. They may delay sending the information if there is an outstanding bill. They are entitled to do this.

Step 4 – The new accountant will send you an engagement letter setting out what services they have agreed to provide and any contractual type things such as payment terms.  You usually have to sign and return a copy. If not already done, you may also be asked to complete a form 64-8. This is sent/submitted to HMRC and gives HMRC  the authority to talk to the accountant about your/your business affairs.

And that’s it. Your new accountant does what is needed/requested and you pay them. Regarding timing, any time of year is possible but half way through the accountant preparing your annual accounts will cost you a little more as work may need to be done twice. The new accountant may want to redo the bit the old accountant had started. Payroll is better transferred in April but can actually be done at any time.

Let me know which of your questions I haven’t answered!

Business Advice from Berkshire: Embrace new technology

I tend to be hesitant to embrace technology, but once I try it, I often treat it as any other tool. One example is to use video to put across your message. I made a video to promote my book Understanding Accouts for the UK Business Owner (www.understanding-accounts.co.uk) when it first came out and that video took a lot longer to make than this.

Well, I have given it a go, and here is the result of my first attempt!

Click on the link below – its very short and to the point.

WCON 1

Business Advice from Berkshire – What lessons have you learned?

Having exhibited at The Business Show at Olympia recently, it gave me the opportunity to speak with many business owners and would be business owners.

Two topics kept re-occurring. The first was that many accountants are not good at communicating with their clients and the other was that successful businesses keep a careful eye on their figures. I believe both the above to be true, but what I found interesting is the number of times I heard them being said to be over the two days of the show.

Penny WellingtonTaking the first point, difficulty in communication, what can be done to address this? If you go on holiday to a country where a different language is spoken, you know it makes sense to learn a few words even if only to be polite and be able to say thank you. The more vocabulary you learn, the easier it is for you and the natives. In many countries, the local population have learned English which means we can take the lazy approach and still be understood without having to put in too much effort. Is it possible to take this approach with your accountant? Learn a bit about their language and what they are doing and it will be much easier for both of you.

The second topic really leads on from the first. By taking an interest in the figures – and by this I don’t mean you actually have to do them – you can monitor the current position of the business and realistically plan for the future. Many business owners would like to be in this position, but expect to do so without learning the basics.

If you do decide to learn the language – and a bit about the culture – I can guarantee it will make a difference to your business. Remember Finance for Business Owners is one of the courses I offer. I also work with larger businesses where the Finance Director believes ‘nobody understands him’. This can be true as the MD is too afraid to ask questions in case he can’t understand the answer. A course in language and Book coverculture can mean everyone can get the most from their holiday – oops I mean work on shaping the business and growing the profits.

Get in touch to book a bespoke course, or for the dates of the classroom courses. Also share your own thoughts on your learnings.

What Costs can you control ?

Do you know what benefits you get from the costs your business incurs? Do you know what it is paying out for, and to whom? As time moves on, so does the needs of every business – and business owner. Are there alternatives to what you are currently spending your money on that could give you a greater benefit?

A simple example may be when do you upgrade a computer system further rather than biting the bullet and replacing the systems? Although it may seem painful at the time, I know many accounts staff who spend time and frustration waiting for their system to do things – or rebooting when they have asked it to do too much. For some reason it is often forgotten how much time the accounts department spend at the keyboard – or waiting for their computer to give them an answer! How does that come back to costs? The tasks that they can’t do as they do not have time may be costing you money. Payment of unpaid invoices not being chased meaning the money is in your customers’ account – not yours. Relationships with suppliers strained as their bills are not getting processed as quickly as they might. This may lead to early settlement discounts being missed or the opportunity for direct debit discount not being investigated.

I am not intending waving a flag to help the accounts department, just asking that you acknowledge the contribution that they make to the business. As a business owner, you don’t need to enter the figures and chase the debts – that can all be delegated. What you need to do is understand the figures. It is not the calculation that matters it is what you do as a result of the answer. Don’t be put off by the numbers, others may like those better than you. In the same way you may or may not enjoy driving a car, the fact you can – or can hire someone – makes most locations accessible to you. You can then choose whether you go there. The important thing is you have the choice providing you have the knowledge.

If I can be of any help contact me - oh and big news on the Book Next Week !

What are your costs of distribution?

A cost that is often overlooked when deciding on prices, or considering profitability is the cost of getting your product or service to the customer. Whether it is you travelling to a meeting at your customer’s location or the cost of postage and packaging, they are each costs you would not incur if you had not made the sale.

What bought this home to me was the cost of distribution of my, soon to be launched, book. I could buy padded envelopes from W H Smiths at 99p each (or 3 for 2) or I could buy 100 for under £10 with free delivery on 300 or more. That was just the first cost. There was then the cost of postage. I am glad I have a franking machine but it still over £1 second class.

The costs can mount as much and more when delivering yourself. Parking at the station, the cost of the train fare, taxi to and from at the other end. I know that today I will spend more on taxis than the pre-booked train fare but this is still cheaper than driving at 45p per mile – and I can get some work done on the train. This cost of travel can make quite a dent in the daily rate. I know I am doing more work locally and from my office. I have no travelling costs or time involved so I don’t have t have the conversation about why they should pay for me to go to them. To be fair, my daily rate is less when they come to me as I know I can do chargeable work when I would otherwise have dead time while I was in the car.

If you have engineers or technicians on the road, just consider what the costs are. I am not saying you shouldn’t offer the service, I am saying make sure you build in the cost when calculating the price. The idea of being in business is to make a profit, not just deliver a fantastic service. If you don’t make a profit, you will not be able to continue which means that people will be deprived on the quality products and services you offer. If you do not get the figures right, you cannot continue.

When should you outsource?

The four reasons why you might outsource are:

Lack of skill
Lack of equipment
Lack of capacity
Cheaper than doing it yourself
The one thing you cannot outsource is the responsibility for completion and quality. That is down to you.

The reasons I have chosen this topic are twofold. Firstly I am writing a book ‘Understanding Your Accounts for the UK Business Owner’. I have outsourced the publication and PR as I do not have the capacity (or the skill) to find appropriate individuals to work with. I know that this may not be the cheapest option, but if my time is available to charge to clients, I can make the money to pay for those with appropriate skills, knowledge and contacts.

The second reason for my choice is I have recently been passed a client who thought they could manage without an external accountant to compile their company accounts and corporation tax returns. Basically they had a go and then buried their head in the sand. It didn’t go away and they ended up with a £20,000 tax bill. Having done the work, the bill should be nearer £2,000 including interest for late paid tax. What they will have to pay are the penalties to Companies House and HMRC. These will be nearly £1,500 in total and could have been avoided. Recognising that you need help or advice and acting can save you money – or at least stop you wasting it.

When considering outsourcing, make sure you are happy with the quality and ability to deliver from your chosen supplier. Having clearly specified your requirements and time frame don’t forget to get progress reports to ensure they are on track. In the meantime make the most of what you can do that you are not outsourcing as you have decided you can do that better and/or more cheaply without compromising the core work.

Have you completed your Tax Return ?

You may see advertising regarding submission of your tax return by 31st October. This only applies if you (or your accountant) are doing it on paper. If you submit via HMRC web site you have until 31st January 2013 but I wouldn’t recommend you leave it that long.

I am a great believer in keeping on top of the figures. One figure is how much tax you owe. If you know in advance you can make sure you plan to have sufficient funds available so the earlier you can complete your return, the more time you have to plan.

Tax return sooner rather than later If you don’t currently need to submit a self assessment return, you can choose to optionally submit one. The benefit is that you declare each year what income you have and any claims such as pension contributions that can reduce your tax bill and you then pay the correct tax each year. Last week I had one client who had been sent a tax return this year for two years ago and ended up with a tax bill of £3,500. He had changed employments during the year and the tax codes had not been updated. With company cars, medical insurance and other factors affecting your tax bill. This could happen to you.

 

Earlier this year I acted for a client who had been self employed for many years and submitted his own tax return. When we reviewed what he had done/hadn’t done the tax bill should have been more. We were able to declare his errors before penalties were applied, and he was given time to pay. Claiming your loan repayments for your holiday home as an expense against business profits is not correct. If you are not sure about something, find someone to ask. Although HM Revenue and Customs offer advice, you need to ask the right question to get the right answer – and then they have been known to change their mind. You never know, it may be a repayment you can claim before Christmas rather than a tax bill to pay in January.

Would you like a no-obligation chat about your tax obligations and returns ? Contact me and lets simplify your tax affairs