November 22, 2019

Your Books Under the Microscope

Last week saw a letter from HMRC asking for all the information that had gone in to the accounts for the tax return to 5th April 2012. I wrote and asked what format, as the letter said they had technical people that could help with computer system.

I had a pleasant phone call from HMRC to say could we print everything out and bundle it up for him. I explained the invoices were Word documents filed per month, the payments were in a spreadsheet per month so would he like a CD with the information. No, we needed to print out each sheet and send everything in a single package. Everything includes my year end adjustments for own use and disallowed items, bank statements for the period as well as the signed accounts.

I have spoken with the client and I think they are going off to Tesco to get some more reams of paper. We have agreed to meet up in a fortnight to make sure we have everything required and box it all up. HMRC have given us a month to get all the information to them and the member of staff at HMRC admitted he was in no rush to receive it as he had a plenty there already. I didn’t ask what the turnaround time would be!

How well would your records stand up to such scrutiny? When the accountant returns your books and says you need to hold onto them for current year plus six, do you know exactly where you have stored them? I have previously had a client who’s garage was flooded some years ago so he binned the soggy papers. He ended up with a large tax bill as he couldn’t produce proof of some payments. Do make sure your storage facility is waterproof and mouse free.

It is possible to get insurance against such investigations. This will cover the extra time your accountant has to spend in talking to/writing to HMRC. It does not cover lost papers or invented figures so make sure you can justify your payments out and be able to demonstrate the completeness of your sales.

It is not just HMRC who may want these figures, I had to produce 3 years sales invoices to an insurance company to justify my claim for loss of earnings against the other party after a road accident some years ago.

Need guidence on your record and data keeping ? Contact me for more information.

Grow your business by understanding your accounts

Most business owners are not accountants. This may sound obvious but understanding your accounts is one skill that every business owner needs if they are going to succeed.

 

Employing an accountant is a good idea, but an even better one is for you, as the business owner to understand what the output that you pay for actually means.

 

At a meeting last week, a client said that they realised they needed to be more involved when the area manager ask them about sales figures – they were fine with that. They were then asked about the overheads, what size was the electricity bill typically? How much did they have to pay for waste removal? They realised that all this information went into a carrier bag and was passed to their accountant. Although all the information was input into an on-line system so they could see it whenever they wanted – they had purely focused on sales and never looked at the rest.

 

If you have not bothered, or were too scared to ask, I suggest you get a copy of Understanding Your Accounts for the UK business owner by going to www.understanding-accounts.co.uk and purchasing your own copy. This book explains what the figures mean, which to worry about by using plain English and examples.

 

IT has taken me a while to produce the book but it was released 7th February 2013 so is up to date and purely focuses on the UK.

 

So … Enjoy Accounts and Grow Your Business

What are you planning for next year ?

Many people start a year with New Year’s resolutions, but they often do not achieve them. Are you going to be one of those?

I would suggest the main reason for failing to achieve is that you can see the goal you want to achieve, but don’t plan a route to get there. If you want to travel to any destination, you wouldn’t just expect to arrive without the journey. How you choose to travel is a matter of for you. The decision will be based on research, preferences and practicality – and possibly budget.

One question I have long asked myself is why do many business owners put more effort into choosing a car than the decisions that affect their business? So, my simple request to you is decide where you want your business to be this time next year and then put the effort in to planning the route including check points to ensure you are on track. If you do this you will get there.

Happy Christmas and a Successful 2013

What if the unexpected happens?

Contingency planning is not just for large firms. Over the last week I have been working with several clients who had exactly this.

For one I am working with the loss adjustor for loss of earnings following a fire. Another client currently has a compensation claim progressing for loss of business following their road being closed for new water pipes to be laid. The third is a breakup of a partnership. Could any of these happen to you?

Disaster recovery I can helpThe easiest and cheapest one to guard against is the partnership breakup. A simple partnership agreement which sets out how the profits are to be split during the partnership, what should happen if one partner is ill and unable to fully contribute, how the business is to be valued if a partner wants to leave – or a new one join, how a partner leaving is to be paid out to list a few points. All these can be covered and agreed at the start. It makes any breakup much less painful. My client did have the good grace to admit I had suggested it when they started and they now wish they had spent the time creating one.

If you are a limited company, the same applies. If there is another director, or you choose to take one on, what are there powers, are they to have a contract of employment? If you are looking for investors, have you got a shareholders agreement? This can cover the same things as the partnership agreement mentioned above.

If you are a sole trader or sole director you may feel this doesn’t apply to you. If something did happen, who is going to wind up your business affairs? Just because you are not able to continue does not mean that your suppliers and customers will go away. These matters would all need sorting out.

When you next have five minutes, have a review of what would happen if … put something in place and with luck it will never happen!

Like some help with planning your unthinkable contact me