September 26, 2017

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 – Are your Accounts in order ?

Earlier this year I wrote an article with the above title. Earlier this week, I was sent a copy. It had been reproduced in The Entrepreneur Magazine (November 2013 edition page 53).

The content is still true today. If you would like to get hold of a copy of the text, drop me a line and I can send it to you – or you could buy the magazine!

thumbsWhy do I mention this? Well, a client of mine, having signed the accounts emailed me and asked – what about the other £10,000 of dividends I took in March, where do they show in the accounts? I have looked at his bank statements, and can only see £2,500 taken during March. The answer is that it was June he actually withdrew the amount – his emails also confirm this. I do feel better now.

What this tells me is that he has looked at the accounts, he has understood them and although he leaves entering the transactions to me, he is aware of what has gone on. The only thing I would say is he could do with looking at them a little more often. How often do you look at yours? As we are nearing Christmas, he would like to know how large a dividend he can take. Although I can advise on the basis of profits to date and potential tax bill as a result, I do not know whether his main contracts are coming to an end, how much work he will be doing over Christmas? It is this sort of information that he, being closer to the business, knows which I don’t without quizzing him. What I can suggest is that he might consider not drawing some money now and waiting for his personal tax bill which will be due the end of January. Even as director of a company, his profits are high enough to potentially push him into higher rate tax when salary is added to dividends. Do you know how much you need to put aside for the end of January?

Book coverBy keeping your accounts up to date, you and your accountant can do tax planning. Another client asked how much he could back date in pension contributions to reduce his tax bill, having explained I was not an IFA and could not advise on pensions, I suggested he saw one soon rather than later. More opportunity for planning if you know where you are now.

I am looking forward to hearing what you have spotted in your accounts. Remember, if you want a copy of the printed article, let me know by dropping me an email or leave a message below.

How you can increase your productivity

We all wish we had more hours in the day, the question is where can we find them?

If someone said that it had been decided that the world would now operate on a 25 hour day, what would you do with the extra hour? It might only be an hour per day, but that equates to 7 hours in a week, which is actually nearly another ‘working’ day.

Birmingham-20121029-00114Would you use it to sleep, to work or to spend more time with your family? The answer may give you a view on how well balanced your life is. I know because I recently did the same exercise – the difference was that I was not being given an extra hour, I just wanted to fit more into my day without impacting on sleep or family.

The answer – review what you do each day by considering the outcomes, If you tend to lie in, does it leave you refreshed and inspired, or do you lie there because you are trying to avoid the inevitable? What could you outsource to free up time for the things you enjoy, and that bring in money. Whether this is meeting prospects or delivering your product/service. The chances are if you don’t like doing something it will take you twice as long – procrastination plus production!

Over the last three months I have outsourced two tasks and I am really grateful to those who have taken them on. The tasks are not yet concluded but nearing completion. Watching others progress them reminds me of how big a task they were and how much better it has been to outsource to somebody who enjoys doing it. To be given text to approve rather than write from scratch is quicker, more satisfying and I know it is moving off my to do list

gravatarSo, could you start work an hour earlier? Spend an hour less on Facebook or at the coffee shop? Could you set up standard templates for replying to emails, or could they even be automated?

Let me know below where you are going to find extra time and what you intend to do with it – even if it is only half an hour a day.

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 !

Are you working to a budget ?

Budgets are not just for large firms. Every business can benefit from creating a budget. They can benefit further from using that budget to plan cash flow and monitor progress.

 

Tax return sooner rather than laterWhen you sit down to create a budget you validate the overall strategy for your business. If you have not written down your plans, it may be that creating the budget forces you to actually deicide what you are trying to achieve and then, if you have the resources to do it. One critical resource is manpower. Although you can take on more staff or freelancers to help out, they will need training which will divert other members of staff from their primary staff. This is not a problem, providing it is built into the plan.

 

The other resource to consider is cash. Can you afford to buy the stock to fulfil your projected orders? This leads me nicely to propose that, following the preparation of a budget, you should also prepare a cash flow. As with all plans, if you know there are going to be times where cash is tight, it is not a problem if it is part of the plan.

 

Having created your budget and planned your cash, the next stage is taking action, and then monitoring. There is little point preparing a budget if it sits on the shelf. I am a strong believer in working with businesses to create their budgets. If they know how the projections were arrived at, they can validate them as they go, and have the understanding to update them if needed.

 

The title of this was not do you have a budget, but are you using the budget you prepared. What is your answer?

How do I choose a Good Accountant ?

What is your definition of good? For the person I was with today it included: someone who understood QuickBooks accounting software, has experience of factoring, doesn’t just delegate to junior staff, was prepared to ask questions and communicate. The last accountant but one got the sack – having worked with the firm for a day I would suggest much of this was due to poor communication rather than poor work. The last one walked out at the end of the first day. This was because the ‘books’ needed sorting out before he could move forward. The last 4 months they have tried to manage without, so there is some sorting still to do. I am sure they will be back on track within a month. What will they do then?

 

Last summer I was asked to profile my perfect client. When I showed the list of good points to the first few people, they agreed that I was describing their ideal customer. Clear on what they wanted, quick to pay, kept to an agreed timetable, refer new business your way etc.. However, they went on to say, that they would not fulfil all my criteria. It reminds me of the saying ‘do unto others as you would have done to you’. If you profiled you perfect client, would you fulfil your own criteria?

 

So, in summary, decide what you want from an accountant, discuss this with them and, most importantly, give them a chance to do it. If you or your accountant haven’t yet filed your tax return, give them all the information and help they need. If you need to get an accountant, or are going to change, start the process today as they will want to get authorisation from you to speak with HMRC and this takes time. Remember, you are not the only client they have.

Like to chat a little further ? Im happy to advise

How has the weather affected your business ?

The one thing we can be sure of is change. What was drought earlier in the year, is now replaced by floods. Although these are extremes, they are not entirely unexpected. From a business perspective, the question is how much will they impact on your business?

Some years ago, I had a client near Gloucester lose his earlier year records when his garage was flooded. As he could not then prove payments made in cash to HMRC, he had to pay up £2,500 again. He did once have the payments book but he had binned it with the other soggy papers.

That was costly, but what have you in place if your computers gets water damaged? How quickly can you get replacements with the right programmes? How quickly can you restore your data up to the previous working day? How many sales and customers could you lose if this happened? It doesn’t have to be just floods that cause wet computers!

If you don’t currently have off site copies of your data, I would urge you to do so. If you are a small business, it may simply be a manager taking an external hard drive home every week. Better than this is web hosting. Even better is automatic backups so it is not reliant on someone remembering to do it – even when they are on holiday.

We haven’t yet had much snow, but put plans in place now so your business doesn’t take a dip as staff can’t get to work, customers don’t know if you are open or not and delivery times are extended/suspended due to the weather and the holiday period. Have a good one.

Happy to speak to you about how I might help

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.