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:
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.
Cutting costs to improve profits will not necessarily work if the quality of what you offer suffers. However a good financial information system will provide you with relevant information to help you make cost cutting decisions. Using an online accounting so your accountant can help with this and keep the information accurate throughout the year, will also help. The following are proven ways to cutting costs and reducing expenses…
General Ways of Cutting Costs
- Sometimes, a high volume profitable business could make cost savings
but the volume of their business actually hides that fact that there is
room for further cost savings. You need to measure in detail, not
globally in order to identify all areas you can save costs.
- It is sometimes necessary to spend money in order to save money in
the long term. For example, investment in machinery or redundancy
- Controls can help to reduce costs. For example, portion controls, stock
controls, cash controls.
- Measuring the efficiency of individuals or departments can identify
where there is room for improvement.
- Having budgets helps to identify when costs are out of control of
something is going wrong. The best way to budget is not “what did we
spend last year and add 5%” but by starting from zero and deciding what
you should be spending in each area.
- The lowest price isn’t always the best price when quality suffers.
- Changing the sales mix, for example in a restaurant can reduce wastage
of products with a limited lifespan. A limited menu will help sell more
of those items.
- Consider joining a buying group in order to take advantage of
consolidated buying power.
- Review all your standing orders and direct debits. Unless these are
reviewed on a periodic basis, some can continue that you no longer
- When making capital expenditure are all sources of finance considered
- Never sign up at the first meeting. Take time to consider however good
the deal looks.
- Always ask for a free trial.
- Do research to make sure you buy the right product.
- Always read the small print on order forms.
- Try to reduce frequency of purchases.
- See if any items can be outsourced or a subcontractor used to save
- Weigh up the costs and benefits of all items.
- Take advantage of free consultations from professional advisors.
- Offer to settle bills early in exchange for a discount when you buy.
- There are hundreds of grants available for businesses to offset against
expenditure. Check you’re not missing any. Business Links are a good
source of information on grants.
- Many government agencies offer free or low cost business advice when
you are starting out.
- Are the advantages and disadvantages of buying outright, HP or
leasing capital equipment reviewed before each decision?
Specific Examples of Cost Cutting
And For Some Specific Expenses For Cutting Costs…
- Labour costs can be controlled by controlling overtime with planning
and scheduling, labour saving equipment and improved layouts (e.g.
drive through windows). Improved employee retention reduces
- Move employees onto yearly hour contracts to improve productivity.
For example, rather than 48 weeks, 5 days a week, 7 hours a day, change
the contract to 1680 hours a year. Then you can use staff more in busy
periods rather than paying overtime. It gives staff blocks of time off and
they don’t have to sit around doing nothing and being bored.
- Can any of your staff be moved onto a self-employed basis to save
employers national insurance costs as well as holiday pay, sick pay and
maternity pay costs?
- Phone costs – least cost routing can reduce phone bills by as much as
- A small business could do away with a separate fax line and use a fax to
email facility whereby faxes appear in your email. Type “fax to email”
into a search engine and many providers will come up.
- Advertising – send camera-ready artwork with a cheque for 20% of
the rate card price and a letter authorizing them to cash the cheque and
run the advert whenever they have space. Many publications have space
left they need to fill and something is better than nothing.
- Consider an appeal against your rates assessment. Many are higher
than they need be.
- Rents can be negotiated in times of property crashes. You could ask
for a lower rent in exchange for a longer lease.
- Are bank charges and interest payments reviewed for accuracy? There are
software programs that will do this and consultants who offer a checking
- Leasing and interest costs should be reviewed regularly to see if
better terms can be obtained.
- Bank Charges…
- Always negotiate the charges with your bank.
- Use BACS – charges will be cheaper than paying by cheque.
- Don’t have more accounts than you need.
- Most banks offer free banking for at least a year and maybe 18
months to small businesses. Have you considered a change of
- Finally, the largest expense is often tax so use a great accountant who
will slash your tax bills, will advise you on cutting costs, and one who uses online accounting such as the free Pandle to save you accountancy fees! See Our Prices or get an Instant Quote.
Whilst fiscal responsibility is OK don’t waste all your time looking for ways of cutting costs.
The costs of holding stock are…
- The money spent on it that is tied up and could be used
- The risk of the stock reducing in value if it becomes obsolete or
- The risk of theft or damage.
- The cost of storage.
- Having to manage and organise it.
Stock levels need to be minimized without running out of items so that
you can’t supply what the customer needs. You therefore need a stock
control system to get the balance right.
As such, the best stock level to hold is normally one that keeps the level of stock
necessary to support your normal level of trade. By doing this you will be
able to supply what your customers want most of the time while cutting costs.
Also, the following tips will help with stock control…
- Produce sales forecasts so that you know what stock levels to hold to
meet that demand.
- Speed up your production process as much as possible by
developing good supplier relationships.
- If you never run out of stock, you’re probably holding too much.
- Form reciprocal relationships with non-geographically competing
businesses to supply each other if you run out of stock.
- Monitor your re-order levels.
- Reduce duplication of stock holding that occurs with multiple stock
holding locations. So try to keep stock in one place as much as possible.
- Try to buy stock on sale or return, which will allow you to hold more
stock without any risk or cost. Having a preferred supplier may make
this more possible.
- Apply Pateto’s 80/20 law to stock – concentrate on the 20% of stock
lines that probably make 80% of your sales.
- Only go for bulk discounts if they are beneficial after considering the
cost of holding the extra stock.
- Regular stock takes on the same day each week can help to determine
Our sole trader vs limited company calculator shows how much tax you can save trading as a limited company. The link to our sole trader vs limited company tax calculator is below. Just complete the first 3 boxes, then go down and click calculate my tax. But first, remember there are factors other than tax to consider when comparing a sole trader vs limited company. See below for most of these factors.
Still Save Tax Despite The Dividend Tax
Dividend taxes increased in April 2016 by 7.5%. This slightly reduces the tax savings made by incorporating. However, you still save tax trading as a limited company until profits are very high. Also, you can save even more tax using a company by splitting the ownership of it. Then you can split the dividend income you take from the company. For example, if you and your spouse own 50% each you would normally share the income 50% each.
Dividend taxes increased by a further 1.25% in April 2022. But self-employed national insurance also increased 1.25%. So it made no difference to how much you can save by trading as a limited company.
Let’s look first at the different types of business structure you can choose.
This is the simplest form of business to start. You simply carry on business on your own account. As a sole trader you pay income tax and Class 4 National Insurance on your net profit. You can employ people including your spouse. But you must only pay them for the value of the work they actually perform.
A partnership is two or more people carrying on business together with a view to making a profit. The partners in a partnership are all joint and severally liable for partnership debts. So if anything goes wrong, each partner’s personal wealth is at risk. Personal tax bills are based on the share of partnership profits. It is advisable to have a partnership agreement to document the business arrangement between the partners. This would include how you share profits and how partners will join and leave the partnership. Even a husband and wife partnership should have a written partnership agreement. You can use this to show HMRC that both parties have a right to share the profits.
A limited company is a separate legal entity from its owners. These are the basic facts…
- The limited company owns the business, not you.
- The company must have at least one shareholder.
- Also, it must have at least one director. But, there is no longer a requirement for private companies to have a company secretary.
- The shareholders do not have to be directors, but they usually are also directors in small companies. A company must treat directors as employees of the company. But they do not have to draw a salary from the company. Instead they could take a dividend as a shareholder.
- If you are the only shareholder, you will have sole ownership of the company.
- The company pays corporation tax on its net profit after salaries but before dividends.
- Company Law governs a company.
Main disadvantages of trading as a Sole Trader vs Limited Company…
- A sole trader is just an individual in business. Limited Companies may appear more credible and substantial although in reality, this is not necessarily the case.
- Sole traders are personally liable for the business for an unlimited amount. So if anything goes wrong, a sole trader’s personal assets (e.g. house) are at risk. If anything goes wrong in a company, only the company’s funds and assets are at risk. So it offers protection to the shareholders’ personal assets. If a company can’t pay its creditors, the creditors can’t normally come after your personal assets. However, banks etc often require personal guarantees from the shareholders or directors when dealing with small limited companies.
- A Limited Company has better borrowing potential than a sole trader. That’s because it can use current assets as security by creating a floating charge over its assets.
- It’s more difficult to share or hand over a sole trader business with other people. Different people can hold different proportions of shares in a limited company. This means you can easily pass shares onto the next generation. Also, you can pay different amounts of dividends to different shareholders
More disadvantages of trading as a Sole Trader vs Limited Company…
- A sole trader owns all of the business so pays tax on all of the net profit. In a company, you can have different classes of shares with different rights. Such as non-voting shares for someone who only wants to invest some money into the company. Also, if you want to pay each shareholder a different dividend rate. For example, a wife owns 50 A shares and a husband owns 50 B shares. So they own the company 50% each. But they can choose to pay dividends on one type of shares and not the other. So the wife could take all of the dividends. However, there is a trap, so take advice to avoid it.
- Having a limited company can create significant tax advantages. That’s because it pays tax on its profit at just 19%. This is a lot lower than the higher rates of personal tax (40%). However, when you take money from the company you usually pay tax on it. For example, you pay tax at 0% or 8.75% or more when you take dividends from a company.
- If a sole trader leaves profit in the business there is no tax advantage. He/she pays tax all of the profit made. A shareholder can leave profit in a limited company by paying less dividends or salaries which will save the owner tax.
Main advantages of using a Sole Trader vs Limited Company…
- Accounts are optional for a sole trader. Although you may need accounts for mortgages etc. A limited company must prepare and file annual accounts at Companies House. These are available for public inspection as is other information about the company. There are plans to make a small company’s profit and loss account available to the public.
- A sole trader does not have to comply with Company Law. Directors are personally subject to company regulations. Directors receive fines and/or a criminal offence for failing to comply.
- Sole traders can just cease trading and inform HMRC. It’s more complicated to wind up a company.
- You usually pay slightly less accountancy fees as a sole trader. A limited company generally involves higher accountancy fees as there is paper work to deal with.
- Sole traders can offset losses against other income to save tax e.g. employment income. You can’t offset a limited company’s losses against the owner’s other income. But you can offset the losses against future or past profits to save tax.
We can help you
Remember there are factors other than a Sole Trader vs Limited Company tax calculator to consider. This calculator now includes the new dividend tax rates which started in April 2016. Ask us for further advice on whether you should trade as a sole trader vs limited company. We offer a free company incorporation service for all of our clients including new ones. Our accountancy fees are from £50pm for companies.
Sole Trader vs Limited Company Tax calculator
Click >>here for our Sole Trader vs Limited Company Tax Calculator<< Then go to Tax Calculators, Incorporation Calculator, complete the first 3 boxes, or just the first box if you’re a sole trader, then go down and click Calculate.
Would you like to register as a limited company?
Talk to us. We’ll help you consider the other factors not just the result of the sole trader vs limited company tax calculator. We’ll advise you on whether you should trade as a sole trader vs limited company. Ready to choose between a sole trader vs limited company? Contact us about our accountancy services from £20pm. Or go straight to our free new company registration form. We don’t charge to register your new company. But there’s a £12 fee payable to Companies House and you’ll have to start paying us towards your company accounts.
Do you want to remain or be a sole trader?
We can help you too. Our sole trader services start from £20pm including accounts, tax return and reviews. Or if you do your own accounts we can do the tax return for you from £50pa.
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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.About Us Our Prices Instant Quote
As we’re online accountants working from home, one question that nearly always comes up is: what expenses can I claim when working from home? Whether you have a self-employed business, or you are an employee (director), it’s worth checking that you’re claiming the correct amount of expenses when working from home.
Types of Working From Home Expenses
Self-Employed Expenses (not companies)
If you use part of the home solely for business, even for a short amount of time, you can claim a proportion of all the relevant costs listed below. Alternatively, you can claim a new fixed amount, which is £10 per month for working 25 to 50 hours per month, £18 for 51 to 100 hours pcm, or £26 for over 100 hours pcm. You can read HMRC’s guidance on that here.
Employees and Directors
Employees (including company directors) working from home can claim in a few ways. There’s a flat rate claim of £6 per week (was £4 until March 2020). Or you can claim a proportion of heating and electricity and business calls. Or directors could effectively sub-let part of their home to their company using a licence agreement. With a licence agreement, directors can claim more costs such as mortgage interest or rent.
Employees would normally claim their expenses when working from home (e.g. £6 per week) directly from their employer who should reimburse the amount claimed. If not, employees who have to work from home can claim tax relief for the costs instead. If you don’t prepare a tax return you can claim the costs on form P87 from HMRC.
Which Working From Home Expenses Can I Claim?
The fixed rate of home working expenses (e.g. £6 per week) is set at a level to cover all of your home-working expenses. So you wouldn’t be able to claim anything in addition to the fixed rate. Otherwise, here are the costs that you can include in your calculation.
Only the self-employed or licence holders can claim these costs
- Rent or mortgage interest (not capital)
- Council tax
- Home insurance (if no separate business policy)
- General repairs & maintenance (e.g. roof)
- Telephone & broadband rental
All home workers can claim these costs
- Business telephone calls (all)
How much of my expenses can I claim for working from home?
You probably won’t have separate business and home bills for most of the costs above. So you will need to calculate how much of each cost you can claim. You would usually calculate the claim by floor area (or rooms in use) and/or time, but it could be more appropriate to use other factors such as number of people, or proportion of business telephone calls. There are no strict rules on how to do this, because each case is different.
For example, if your business use of the home is one room out of 5 usable rooms, you could claim one fifth or 20% of the costs. If you use that room for personal reasons half of the time, you should only claim 10%. But if 20% or 10% isn’t a reasonable estimate of the use of any of those costs, you could use a better method such as hours occupied in the office compared to the whole house.
Capital Gains Tax Trap
If you claim that part of your home is used exclusively for business, the principal private residence exemption for capital gains tax will not apply to that part of the house for the time it was in business use. However, if you have a little personal use of the part of the home used for business, it will normally qualify for the exemption.
What evidence do I need to claim expenses when working from home?
If you are claiming the fixed rate expenses (e.g. £6 per week), you don’t need any evidence or workings for your costs. You should keep a note of at least once each tax year when your employer required you to work from home.
For other types of claim, you should keep your home bills and your workings safe for at least 7 years. That’s in case HMRC want to see evidence of what expenses can I claim when working from home.
It usually pays to know exactly what expenses can I claim when working from home. So that you know that you are claiming the most homeworking expenses possible. It’s usually not the flat rate, so estimate and claim your actual business use of home expenses. But be aware that it is more restrictive for employees and directors. As always, keep your workings and invoices to support the claim.
If you have any questions or comments please contact us. At CloudBook Accountants we provide proactive advice like this to our clients throughout the year. Plus it is all included in our monthly fixed fees from £20 per month. Get an instant quote from our website now.About Us Our Prices Instant Quote
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.
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Should you apply for voluntary VAT registration ?
If your taxable turnover is below £85,000 you don’t have to register for VAT. However, you may be eligible to apply for ‘voluntary VAT registration’ and one or more VAT schemes.
There can be advantages in registering for VAT such as…
- increased business credibility;
- potential savings if you have zero-rated sales but you can still reclaim VAT on your purchases;
- savings if you mainly supply other VAT registered businesses so they don’t mind being charged VAT. You can then reclaim VAT on your purchases;
- Potential savings on the Flat Rate Scheme , but only if you have a favourable flat rate for your industry. Watch out if you don’t buy many goods – you may have to use 16.5%.
However, you do need to weigh up the benefits against the hassle factor of completing VAT returns. Plus you’ll need to do a little cashflow planning to pay the VAT due every quarter. If you supply the general public you will probably not want to register for VAT as this simply puts your prices up by the rate of VAT.
There are various VAT schemes, mainly for small businesses…
- Cash accounting – If your taxable turnover is under £1,350,000 a year you can arrange to account for VAT on the basis of cash received and paid. The normal scheme is based on the invoice date or time of supply.
- Annual accounting – You can complete one VAT return per year rather than four if your turnover is under £1,350,000. You must also make nine payments on account throughout the year, and a balancing payment with the VAT return.
- Flat rate scheme – This is for businesses with a turnover of under £150,000. It saves on administration because you just pay a set percentage of your VAT inclusive turnover based on your business sector. The normal scheme accounts for VAT on each individual “in and out”. The Flat Rate Scheme can reduce the VAT you pay in some situations. See our Flat rate scheme calculator and guide for more details.
- Retail schemes – These apply to retailers and offer an alternative if it’s not practical to issue invoices for a large number of supplies direct to the public.
When you must register for VAT
When your sales for the past 12 months exceed £85,000, you have to register for VAT within 30 days of going over. Not within 30 days of noticing! So, at the end of every month, you need to work out your total sales for the 12 months leading up to the end of that month. If it’s over £85,000, you have to register for VAT by the end of the next month and start adding VAT to your sales from then on. You’ll also be able to claim back VAT on your costs, so you may be able to lower your sales price.
How We Can Help You
We can assist you with Voluntary VAT Registration by…
- helping you register for VAT
- advising on suitability of VAT schemes
- assisting with completion of VAT returns
- setting up your accounting system to deal with VAT
- helping remotely with any disputes with HM Revenue & Customs
- providing VAT planning advice for complex transactions such as when buying property.
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.Contact Us Our Prices About Us
Advantages of paying wages to your wife/husband etc
Should you pay wages to your wife/husband/partner/children to save tax? Your spouse/civil partner may have no income at all, and almost certainly your children don’t. This means they are wasting their tax free personal allowance of about £12,500 every year. Even children are entitled to a personal allowance!
Let’s say you pay your wife wages of £9,000 per year. If they have no other income they usually pay no tax or national insurance on that. Also you may be able to reduce your business profits and tax.
If you pay just 20% income tax and 9% Class 4 National Insurance on your business profits this could save you about £2,600 on each salary. And how many children do you have to pay wages to?
Also, try to pay wages above the NI lower earnings limit for the year. This is about £6,500. This will help towards securing a full state pension.
Pitfalls of paying wages to your wife/husband etc
STOP! It’s not quite that simple. To pay wages to your wife/husband/partner/children like this you need to follow the following rules…
- It must be for work actually done. Now it’s going to be tough to argue your 2-year-old son is working for you but many spouses/civil partners do work and mature children may also help out. Maybe they do the books, answer the phone, stuff envelopes, etc. Keeping out of your way so you can get on doesn’t count, as valuable as it may be. Draw up a list of their responsibilities to help your case. At the moment they might do it for free, maybe because it’s a family business, but they can be paid for it. If you make your spouse a director, all the responsibilities imposed by Company Law by taking on this role must be worth something. You can also pay a family member a wage where you have property that you rent out and the individual manages the properties.
- It must be a reasonable wage rate appropriate with what they actually do. How much would you pay someone unrelated to do the job? The national minimum wage level is at least a good place to start but pay a higher wage if you can justify it.
- You must actually pay the wages. It’s no good the accountant just putting it through the accounts at the end of the year. Pay it, ideally through the bank rather than cash so that it’s easy to prove it’s been paid. Also, don’t forget to record it in your accounting records.
Children under the minimum school leaving age can only work a limited number of hours per week and local by-laws may restrict them further.
You must comply with any PAYE procedures as you would do for normal staff, including RTI and Auto Enrolment.
We can help you decide whether or not it is reasonable to pay wages to your wife/husband/partner/children. We can also run the payroll for you so that you comply with all the HMRC RTI payroll regulations. Contact us for more details, or get an instant quote for payroll, accounts, tax and more on our website.Contact Us Our Packages About Us