1. Use free online accounting

Pandle is online accounting software helping to save business costs for many small businesses. It’s an online accounting service which has a completely free version which has most features a small business needs from accounts software. It also has a Pro version which comes with automatic bank feeds. We can get Pandle Pro for our clients for just £2.50 plus VAT per month.

With online accounting, you can log in from anywhere to access and update your accounts.  There’s no need to update the software or backup your data because they do this for you. You can give your accountant access to your account, then they can log in at the same time as you, to view, fix, and advise you throughout the year, then easily and quickly produce year end accounts. You should also save business costs on your accountant because you’re making their job easier. See more benefits here .

Why pay hundreds of pounds on software installed onto your computer, or waste hours messing about with spreadsheets that don’t give you many instant reports?

2. Do your own bookkeeping

Online accounting has made it so much easier to do your own bookkeeping, you don’t even need to enter anything. You can either sync directly with your bank accounts, or you can download your transactions from online banking, then upload them to the software. All you need to do is tell the software where to put each transaction. 

You can then produce many useful professional reports as often as you like, helping you run your business smoothly.

Save business costs on a bookkeeping service, by quickly and easily doing it yourself.

3. Use Online accountants

In the age of ‘cloud-computing’ it has become easier and cheaper to set up and run your own business. Some accountants are taking advantage of this, moving from traditional offices to a more cloud-based service. They are probably based away from the high street or even at their homes, communicating online and meeting via videocalls. With much lower overheads, their fees should be much lower, yet you should get the same standard of service if you use fully qualified and experienced accountants. So you save business costs while still getting a great service.

Combined with the use of online accounting, some of these ‘new breeds’ offer a fixed price menu of services, payable in easy monthly instalments. So you know exactly what you will be paying, unlike the more traditional method of charging you by the hour, where the accountant can be rewarded for working slower!

Why pay hundreds of pounds more for an accountant working in a nice high street office?

CloudBook Online Accountants have been online accountants since 2013 and can help you save business costs

• Fully qualified & 20 years experience
• Doing everything online to keep our prices low
• Fixed fees & instant quotes  from £20pm
• Free help setting you up with online accounting
• 100% satisfaction guarantee
• We also do bookkeeping, VAT, payroll, and just tax returns

Starting a business is never easy. Recent statistics suggest approximately one in ten startups fail in the first year, and by year 5 less than half have survived. It’s never too soon (or too late!) to ask an accountant for advice when starting a business, and before starting up is best. For example, it’s not always best to start off as a company, and you could be missing out on a potential tax refund by assuming it is.

Good advice early on can save tax, accountants fees, and quite a few headaches. Not to mention helping you survive the first year, then year two and so on. A couple of the main reasons cited for startup failures are overspending on advertising, and getting the pricing wrong. So it’s crucial that you have a good pricing strategy and that you have, and stick to, a realistic budget. Of course you will need accurate bookkeeping records from the start to help monitor the spending against the budget, and online accounting is ideal for that. As we help many different types of business, our experience can also help you check there are no flaws or missed opportunities in your plan.

Many of our clients received our free advice and free help to setup a self employed business or company, and register it with HMRC. We even setup and train our clients on online accounting for free. Our range of business startup helpsheets below are written in plain english to help you start a business successfully. If you have any questions please contact us. We are happy to advise anyone looking to start a business, or have already done so.

Business Startup Guides

Go to our Resources page, Business Centre, Business Helpsheets, Business Startup Helpsheets, to find the following business startup pages:

• Franchising
  The advantages of choosing a franchise, what to look out for when choosing one and the legal aspects to consider.
  
  
• How to Get a Grant
  From the realities of getting a grant, how to get one and the pitfalls to avoid.
  
  
• How to Raise Finance
  A review of all the main ways you can do it and get your bank to say YES
  
  
• The 5 Key Qualities Needed to Succeed in Business
  Find out what helps make a successful entrepreneur.
  
  
• Top Tips to Consider When Starting a Business
  The main things to consider when starting up.
  
  
• Which Business Structure Should You Use?
  A comparison of sole traders, partnerships, Limited Companies and Limited Liability Partnerships.
  
  
• Writing a Business Plan
  How to do it and a checklist of what to include.
  
  

What is a directors loan account (DLA)? How do I use a DLA? Also, how do find out how much is in my DLA? Then what happens if I don’t repay my DLA? These are all questions every company director should know the answers to. If not, read below.

CloudBook Online Accountants, since 2013, are specialists in online accounting such as Xero, QuickBooks, and Pandle. To get the most out of your software you need experts like us to help you throughout the year. We include help with the the software in our cheap monthly fixed fees.

Directors Loan Account

What is it?

A DLA is where you categorise non-business transactions between a company and its director. The balance in a DLA shows how much the company owes the director (credit balance). Or how much the director owes the company (debit balance). If a director owes money to the company, you can call this an overdrawn directors loan account.

How do I find my DLA balance?

If you use online accounting software (you should!), run a report called a Balance Sheet or Trial Balance. You should find a line for the Directors Loan Account, or Shareholders Loan, or Owners Funds. or something like that. On a Trial Balance, if it’s in the debit column, that’s bad – you owe the company money (overdrawn DLA). If it’s in the credit column, the company owes you money, which is good. On a balance sheet, if it’s a positive balance in the Creditors/Liability section, that’s good. But if it’s positive and in the Assets/Debtors section, that’s bad. Obviously, reverse those if the balance is negative.

If you don’t use online accounting, you’ll have to take the DLA balance from the last set of accounts prepared, then adjust it for all the DLA transactions since then. Good luck! Did we mention online accounting?!

Tax on an Overdrawn Directors Loan Account

It’s important to know how to record a DLA properly and to check its balance. The reason being, is that an overdrawn DLA at a year end can cost the company 33.75% tax (was 32.5%) on the balance. So, let’s say a director owes money to the company at the company’s year end. The director has 9 months following the year end to repay the loan back to the company. If it’s not repaid, the company will pay tax at 33.75% of the balance still owed to it 9 months after the year end. A company receives a refund of that extra tax, 9 months after the year of repayment (or reduction).

Another tax implication, is if a loan to a director (or any employee) exceeds £10,000. If it does, interest needs to be charged at the official HMRC rate. Otherwise, that loan is taxable on the director as a ‘benefit in kind’ and they’ll pay 20% or 40% tax on the interest that should be charged.

How do I use a Directors Loan Account

Company transactions

If a company makes a payment to a director, that is not wages, expenses or dividends, because it’s not for a company cost, categorise the payment to the DLA (debit).

Also, categorise a payment/bill (debit) to the DLA if the company pays for something on behalf of the director because that’s like giving the director money. For example, personal expenses put on a company credit card.

You should categorise income (credit) to the DLA if the company receives money on behalf of the director because that belongs to the director not the company.

If you don’t pay the full amount of dividends directly to a director/shareholder, you should categorise them (credit) to the DLA. The transaction date becomes the dividends payment date.

Director transactions

If a director pays out of their own pocket for the company’s costs, or incurs expenses on behalf of the company, the company should debit the expense category and credit the directors loan account.

If a director receives income on behalf of the company, the company should record that amount as a credit against sales/vat/debtors and a debit against the DLA.

Actual loans between the director and the company are also DLA transactions. So categorise them to the directors loan account.

Online Accounting Software

Recording a Directors Loan Account is easy when you use online accounting software. There are many other benefits to using online accounting software which you can read about here. We are Xero Accounting specialists but we don’t make you use any particular software – choose your favourite! We can also help you use your choice of online accounting software to record a DLA. See some other online accounting software we support and you can see our fixed fees here.

The self assessment tax payments dates are simply the 31st January and 31st July, but how much you have to pay can be complicated. Below, we explain how much you have to pay on the self assessment tax payment dates.

How the self assessment tax payment dates work

There are two self assessment tax payment dates you need to pay your tax by. The method of payment usually involves one balancing payment and two payments on account of your tax liability as follows…

• one balancing payment on 31 January after the tax year
• one 50% payment on account on 31 January during the tax year and
• another 50% payment on account on 31 July after the tax year.

The payments on account are based on the net income tax and national insurance liability of the previous tax year. That’s your net tax payable after deductions for PAYE paid, but before any payments on account are deducted.

You can ignore capital gains tax of the previous year when calculating the payments on account. You pay all CGT as part of the final payment due on 31 January following the end of the tax year.

A final payment (or repayment) is due on 31 January following the tax year.

There is a 5% surcharge on any taxes that remain unpaid after 28 February, and a further 5% on taxes not paid after 31 July. For the most up to date details on self assessment tax payment penalties see here.

An example of self assessment tax payments…

If your net tax liabilities are the following:

• 2020/21 is £0
• 2021/22 is £2,000
• 2022/23 is £5,000
• 2023/24 is £800

… you will need to make the following payments by:

• 31/01/22: £0 (remaining balance of 2020/21 £0, no payment on account required)
• 31/07/22: £0 (no payment on account required)
• 31/01/23: £3,000 (remaining balance on 2021/22 £2,000, plus half of 2021/22 as a payment on account towards 2022/23)
• 31/07/23: £1,000 (half of 2021/22 as a payment on account towards 2022/23)
• 31/01/24: £5,500 (remaining balance of 2022/23 £3,000, plus half of 2022/23 as a payment on account towards 2023/24)
• 31/07/24: £2,500 (half of 2022/23 as a payment on account towards 2023/24)
• 31/01/25: refund of £4,200 (excess payments on account)
• 31/07/25: £0 (payment on account not required)

Can you avoid tax payments on account?

You don’t have to make payments on account if…

• income tax and NIC liability for the previous year (net of tax deducted at source) is below £1,000 or
• if your tax deducted at source (e.g. PAYE on your payslips) was more than 80% of the income tax and NIC liability for the previous year.

Reduce your tax payments on account

You can also apply to have the payments on account reduced if you expect your liability for a tax year to be less than the previous year.

Contact us if you’d like any help with reducing your self assessment tax payments or with your tax returns.

Online accounting software has revolutionised the way accountants provide accountancy services. Businesses should get a better and cheaper service from their accountant by using online accounting software. It makes it easier to do your accounts, both the bookkeeping and then converting the online bookkeeping records into accounts. Read about 10 of the many benefits of getting your accounts online below.

In fact, HMRC will soon make it mandatory to use online accounting software, by requiring quarterly submissions of data. Making Tax Digital is already here for VAT registered businesses. It will soon be required for Income Tax, then Corporation Tax. Don’t worry if you’re not yet using online accounting software. We can help you move onto any one of them that you choose. Such as the free Pandle or the easy to use Xero.

Still need convincing?…

10 benefits of using online accounting software. 1-3:

• Do your accounts on the beach…
  Because online accounting software is in the cloud, it means you can log-in to do or view your accounts from anywhere, at anytime. At your customer’s site, in a pub, or even on the beach!

• Let the software do all the hard work…
  Import your bank statement, or easily set up an authorised feed from your bank account or Paypal to the secure online accounting software.  All you need to do is tell it what each transaction is for. So you don’t need to manually enter anything, but if you choose to do it this way, the software can automatically check and compare your records with the bank statements. There are also free apps that will read images of receipts and invoices and enter the data onto the software for you!

• Advice when you need it, not a year later…
  You can give us secure access to your online accounting software. So we can both look at your accounts and deal with any issues. In fact we’ll ask to look at your accounts regularly to see how you’re doing, and offer relevant timely advice.

More benefits of using online accounting software. 4-6:

• We don’t want your records!….
  At your period end, we don’t need you to bring in your records. We’ll just log into your online accounting software and view what we need to produce your accounts etc. We’ll let you know if we do need anything e.g. a scanned bank statement. Of course if we do your bookkeeping, we will need some form of records.

• FREE or low monthly charges…
  Wave Accounting Software is free, and we all love a bargain, but what’s the catch? Well you might notice some small discreet adverts, but they are tailored to your business, so they may even be useful. Others we also recommend charge a low monthly fee from between £5 and £19, so spreading the affordable cost over the year. Also, there are free trials and no tie in periods, so if you change your mind, no penalties.

• Easy to use software…
  You don’t need to be wizz on computers, or an accountant, or even a bookkeeper to use online accounting software. The providers we recommend have designed their software to be so easy you shouldn’t need help with it. But just in case you do, they all offer free support, and being local we are never far away. We’ll also help you get going with it, for free.

Even more benefits of using online accounting software. 7-10:

• Safer & securer than other records…
  Your accounts data is stored by the software providers on secured, monitored, and constantly backed up servers. Data security is a top priority, and some providers claim to be as secure as your online banking. Still not convinced? Ask yourself this: How secure are your paper records? – are they kept in a fireproof safe? Do you password protect and backup your spreadsheets? – are they encrypted when you email them? Do you backup your current software data daily? – is the backup stored securely offsite?

• Instant reports for your business…
  Each of the online accounting software comes with a bundle of reports so you’re likely to find what you need. So at the click of a button you can view all sorts of things about your business such as what you owe, who owes you, how much profit you made.

• Get off to the best start, not a false start…
  By logging into your accounts from anywhere, we can fix any errors there and then. Which means your reports are always accurate, and start off from the correct position. So there’s no need to wait for the year end adjustments from your accountant several months later, we will have already adjusted your online accounting software.

• Not low, NO maintenance bookkeeping…
  There’s no need to start a new page, or a new cashbook. No rolling forward of spreadsheets from one year to the next. There are no software updates to buy and load, this is done automatically. And no messing about sending records to and from your accountant, or trying to get software backups to restore onto the accountants’ version. So you just login and go – easy!

How we can help you

We are online accounting software specialists. We’re committed to giving you a better service for less, by utilising all of the benefits of online accounting. Plus we’re not tied to any particular software provider such as Xero, SageOne, or Kashflow, so you’ll get honest independent advice on which is best for your business. If the free one, Wave Accounting, is all you need then why pay for something else?

All of our accounts clients get free help moving to online accounting software, and free help throughout the year. See our fees, or contact us by clicking the buttons below.

Is it time to do your annual accounts? You might be wondering: what do I need to give my accountant to do my year end accounts? If you’re using old methods of bookkeeping, and a traditional accountant, read further down below…

Or if you use CloudBook Online Accountants…

…and use online accounting you might not need to do anything! We are accountants who specialise (since 2013) in online accounting, working with free online accounting software such as Pandle as well as better software that charges a monthly fee, like Xero. We can just log in to view your accounts, take what we need, and request any further information required such as year end bank reports. It’s so much easier, and quicker, and it saves you accountancy fees! See our low monthly fixed fees or read about all the other benefits of using online bookkeeping including doing your bookkeeping on the beach!

You don’t have to wait to save on accountancy fees or benefit from online accounting software. If you use spreadsheets or accounting software, we will still be able to do your accounts this year, probably for the same low online accountancy fees. Then we’ll help you move to online accounting software.

What do I need to give my accountant to do my year end accounts?

This helpsheet provides you with an overview of the information to provide to your accountant (a traditional one) to enable completion of your end of year accounts. Of course, the more you do, the less amount of time they have to spend on the routine compliance aspects of your affairs, so the lower your accountancy fees or more time is available to assist you with developing your business. Or use online accounting which does much of this for you and, as online accounting specialists, we can help you onto it for free.

However, every business is different and you should discuss your own requirements with us.

Between us we can decide what you can prepare for us and what we will prepare ourselves. Talking helps to eliminate any misunderstandings.

It’s also helpful to agree a time schedule for when you will provide the records and for when we will have your accounts ready for discussion.

Basic ways in which you may find you can help…

• Adding up and balancing your books such as cross casting of column totals. Online accounting does this for you.
• analysing your payments and receipts. Online accounting has automatic rules to do this for you.
• filing your invoices in sensible system so that relevant invoices can be easily found. You can attach them to a transaction with online accounting.

If you’re feeling more adventurous, you can also assist by

• preparing a bank reconciliation that reconciles the balance on your bank statement to that derived from your records after adjusting for unpresented receipts and payments. Online accounting does this for you.
• using control accounts for key nominal accounts such as debtors and creditors that reconcile to your year end list of debtors and creditors. Online accounting does this for you.

By using reconciliations and control accounts on a regular basis during the year, you help to ensure there are no errors in the records.

Records to provide to traditional accountants

Not every business will have all of the following records but if you do, you should provide them to us covering the year (plus one month after)…

• A back up copy of your accounts software disc for the year if your records are computerised. Let us know the exact software and version and make sure you have a spare copy. With online accounting we just log into your account from anywhere.
• Your cash book.
• Petty cash records.
• Sales and purchase day books.
• Any ledgers that you keep.
• Bank statements.
• Purchase invoices.
• Sales invoices.
• Cheque books and paying in stubs.
• Copies of VAT returns covering the year together with any workings.
• Your payroll records for the year together with details of PAYE calculations for payments to the Inland Revenue.
• Copies of any new loan or HP agreements taken out during the year.
• Details of any business income or expenditure that didn’t go through your business bank account.
• Anything else you feel may be relevant – if in doubt, include it.

Schedules to provide to traditional accountants

In addition the following schedules will assist your accountant in completing your end of year accounts:

• A list of fixed asset additions with copy purchase invoices provided.
• A year end stock list. This should be at the lower of cost and net realisable value.
• Details of work in progress at the year end.
• A list of debtors at the year end, their age and an indication of any that unlikely to pay. Online accounting does this for you.
• Sales ledger control account reconciliation. Online accounting does this for you.
• Reconciliations for all bank and cash accounts. Online accounting does this for you.
• A list of trade creditors at the year end and their age. Online accounting does this for you.
• Purchase ledger control account reconciliation. Online accounting does this for you.
• Details of PAYE owed at the year end.
• Details of VAT owed at the year end.
• Schedules of key and tax sensitive profit and loss accounts such as repairs, sundry expenses, entertainment, etc. Online accounting does this for you.

How We Can Help You

We can help you avoid all of the above by moving you to online accounting for free. There are many benefits to online accounting, and some of the online bookkeeping software is completely free. It also means we can work with you throughout the year, giving advice and providing reports when you need it most, not after the year end when it could be too late. Your year end accounts and tax become easier and quicker to do, so you pay less fixed accountancy fees.

In this post we’ll explain how to do a VAT return in Wave Accounting.

What is this free Wave Accounting?

Wave provide good free online accounting software. It’s paid for by small adverts at the side of the screen that you’ll hardly notice. Wave Accounting is a Canadian company who have built free accounting software mainly for Canada and the USA. But it can also be used in the UK and you can certainly work out what should go onto a VAT return in Wave. AS explained below, on anything other than the normal VAT scheme, you will need to adjust what is shown on the VAT return in Wave.

Accounting for VAT in Wave

VAT is a sales tax and that’s what it’s called in Wave Accounting. You’ll first need to set up your VAT rates by going to Settings (cog button), Sales Taxes, then Add a Sales Tax. See the image below for the settings you’ll need for the standard UK VAT rate at the time of publishing this post.

You may also need to set up other rates for your VAT return in Wave such as zero rate (0%) and the EC Reverse Charge rate which is explained below. Once you’ve set up the rates of VAT in Wave, you can then start adding or claiming VAT in Wave as follows:

Sales invoice and Bill: once you add a line to a sales invoice or bill in Wave, simply select the appropriate VAT rate. Wave will work out the VAT for you based on the percentage entered.

Transactions: add or select the income or expense in Transactions, then click on show details. The Taxes box will appear so you can select the appropriate VAT rate as shown below.

Running a Report for your VAT Return in Wave

The report you’ll need to do your VAT Return in Wave is the Sales Tax report. Just select the start and end dates for the period that your VAT return needs to cover then click on Update. Any transactions on which a VAT rate has been selected will appear in the report. The report is separated into a section for each VAT rate.

The summary report shows the totals and the audit report shows every transaction. The Payable columns are for income and sales (excluding VAT) and VAT on income and sales. The Receivable columns are for expenses and bills (excluding VAT) and VAT on expenses and bills. Then the difference between the two VAT amounts is the net VAT payable or receivable.

Normal Accruals VAT Return in Wave

The normal accrual basis VAT scheme is where you calculate and pay/claim VAT at 20% based on the date your customers are invoiced or the date you are billed. If you are on the normal accrual basis VAT scheme, you can use the VAT Return in Wave as it is.

Normal Cash VAT Return in Wave

The normal cash basis VAT scheme is where you calculate and pay/claim VAT at 20% based on the date your customers pay you or the date you pay suppliers. If you are on the normal cash basis VAT scheme, you need to adjust your VAT Return in Wave. The adjustments are shown below. You’ll need the Aged Receivables and Aged Payables reports both at the start and the end date of the VAT period.

Flat Rate Accruals VAT Return in Wave

Currently, calculating flat rate VAT in Wave isn’t possible. But you can easily find the VAT inclusive income amount you need by running a Sales Tax Report and adding the Payable amounts for before tax (net) and tax (VAT). Don’t forget that all income needs to be included in the flat rate scheme calculation, so you may want to use a ‘Zero’ rate or a ‘No VAT’ rate on income where VAT isn’t charged so that it appears in the report. Once you have your total VAT-inclusive income, just apply your flat rate percentage to calculate the VAT payable.

Flat Rate Cash VAT Return in Wave

Use the same workings for sales as shown above in Normal Cash VAT Return in Wave. Then add the net and VAT amounts, then apply your flat rate percentage to calculate the VAT payable.

Submitting your VAT Return

Currently, you can’t submit your VAT Return in Wave. So just like some other leading software, you have to log into your HMRC account and enter the amounts manually.

We can do your VAT Return in Wave for you

Our Quarterly package from just £40 plus VAT per month includes VAT returns as well as Accounts, Tax Returns, Management Accounts and general support and advice. Contact us for more details.

CloudBook Accountants are BeanBalance accountants. BeanBalance is free online accounting software that you can use to do your bookkeeping and more. Do you use BeanBalance and need an accountant to do your accounts and tax returns? CloudBook Accountants can use BeanBalance to do those for you.

Why do I need an accountant for BeanBalance?

Free online accounting software like BeanBalance and Wave are great at helping you do your bookkeeping. If you know what you’re doing you may even be able to use BeanBalance to do your VAT and Payroll. Otherwise, you will need an accountant to check your VAT and Payroll before submitting to HMRC. You will definitely, despite what BeanBalance suggest, need an accountant to produce the reports required that comply with the latest laws and regulations (e.g. accounts, tax returns). Then submit the necessary reports to HMRC and if applicable Companies House. CloudBook Accountants can use BeanBalance to do your bookkeeping, accounts, tax returns, payroll and VAT returns.

What does BeanBalance do for me if I still need an accountant?