Author: Paul Cooper

Small is beautiful they say but is it right for your business ?

The media like to sell us an image of businesses that grow,join the global business community, expand into new export markets.We all know the local hero who employs hundreds of people ,has a finger in every pie and cannot miss an opportunity.
When you run your own business there is no shortage of advise available about how to build a small empire but is it really worth it financially and are the lifestyle sacrifices worth the rewards ?
Whilst growing a business can give us motivation and larger potential earnings keeping a business small can also have its advantages,

Lower overheads , less running costs ,and maintaining equipment are obviously advantages.The bigger the business the more work space needed or IT equipment to keep your network running.

The more staff you have the more time you spend on HR issues, hiring and firing all takes you away from your core focus.Training,Pensions,Health and Safety the list is never ending.Also when you start to delegate keeping the same levels of service or products is a major issue, how can you be sure that all parts of the job are completed correctly and to the expected standard.Are interactions with clients monitored? Have you built the business on “brand you” and will that alienate some customers if you lose that personal touch ?

A small business can plan and change strategy more easily, be quicker and more flexible when responding to market trends.Department stores on the High street are a fair example.

The bottom line for many large organisations is not always one of huge profits, they have often had to borrow to fund expansion and sometimes it is the case that smaller businesses have higher profit margins.You are able to keep in touch with all areas of the business.

Staying small can suit your lifestyle better, work and meetings can be arranged to suit your diary and decisions can be made without consulting numerous managers or shareholders.You can also take pride and celebrate your own triumphs.

Keeping a business small but profitable might not make you a famous entrepreneur or local hero but it may just be the best option.

Around 11 million people in the UK filed a tax return last year, 90% of those were filed online however for those who file on paper the deadline of 31 October is once again fast approaching.

Penalties for late filing can soon add up-

A fixed £100 penalty is issued if the return is not received by the deadline even if the tax is paid on time or there is no tax to pay.

If the return is still outstanding after 3 months additional daily penalties of £10 per day up to a maximum of £900 are issued.

Six months late and a further penalty of 5% of the tax due or £300 will be issued.

This is repeated if the return has still not been received after 12 months.

Some points to remember when completing the paper form to avoid it being rejected by HMRC are,

Any mistakes should be crossed through and the correct details entered next to the box

If you ask someone else to complete the form for you it is your responsibility to ensure the information is correct and you must sign and date the form.

And lastly ensure it is posted in plenty of time to reach HMRC by 31 October !

If HMRC receives your form by the deadline they will calculate what is owed and send you a calculation by 31 Jan 2019

Should you intend to submit your self assessment tax return online for the first time make sure you leave enough time to enrol and activate your online account beforehand.Also if you need the help of a bookkeeper or accountant its best to start that process as soon as you have all the information , as they may have limited capacity to take on new clients as the deadline approaches.

As an authorised agent I am able to prepare and submit self assessment returns online on behalf of clients and can offer a free no obligation meeting.

As we all get busier and in the light of HMRC introducing Making Tax Digital in 2019 more small businesses are changing over to cloud based software to keep on top of their finances.

There are many obvious advantages, the main one being ease of access.The data can be accessed on a laptop or mobile phone app and can be viewed by an accountant or bookkeeper if authorised by the client meaning less paper chasing at the year end.

Price is another advantage for small businesses concerned about cashflow. Packages such as Xero and Quickbooks offer a monthly subscription and often an introductory discount is offered for the first six months, updates are automatically included in the price as well, you can usually scale up should your accounting needs increase for example if you become VAT registered and need to account for and submit returns directly from the software.There are even some freebies on offer from the banks such as Freeagent.

The most popular providers offer support packages and online forums where you can look at how users have dealt with similar queries.

Being cloud based there is no need to backup data as this is done automatically and password protected.

The main concern for businesses however is lack of control over their data.It could be on the server anywhere in the world.Also if the internet connection goes down work hours are lost and so is the benefit of having information at your fingertips.

It can be slower to enter multiple transactions on the cloud and not all packages offer more advanced accounting procedures such as accruals and prepayments or multi currency transactions.

So if you are considering moving to a cloud based package or starting a new venture and deciding how best to set up your bookkeeping its worth looking at different packages and seeing which one works best for your needs.Some offer a 30 day free trial so you can try before committing to the monthly subscription.

Currently the packages most popular with my clients are Quickbooks and Xero, I am however able to offer assistance with other packages including cloud based Payroll software.

Following the case of Plumber Gary Smith vs Pimlico Plumbers. The status of workers has come under more scrutiny than ever by HMRC.

Mr Smith’s contract described him as a self-employed operative which meant that he was not entitled to employment rights including holiday and sick pay. Mr Smith had tried to reduce his hours following a heart attack however , he was let go from his duties as he had no legal rights to argue. The Supreme Court ruled that Mr Smith could claim employed status for a number of reasons , including the company exercising their rights of control over when he could work and how much he was paid. In addition, he used the companies van for assignments and Pimlico Plumbers could not therefore be regarded as a customer.

Other companies such as Uber have been under the microscope claiming their drivers are self employed so they escape having to pay the minimum wage,  holidays, pension scheme as well as the employers national insurance.

HMRC IR35 legislation was introduced with the aim of reducing contractors  insisting that workers be self employed. The revenue was losing out on employers national insurance. IR35 sets out circumstances where individuals could be deemed to be employees of a particular client rather than freelancers or contractors. HMRC are quite fierce in their determinations to move more contractors onto payroll , so there are four main areas they will look at;

• Control – Do you have control? Are you in control of what services you perform where and how? for example appearance , uniform , starting and finishing times.
• Financial risk – An employee has no financed risk in performing their job, as a self employed contractor you are effected by late paying clients purchasing tools
• working obligations – Do you and the contractor have the risk of dismissal at short notice, a notice period indicates the employee/employer relationaship
• working equipment – Does it belong to you? If the contractor provides tools or such things as laptops he is buying the assets and therefore the financial risk is on the contractor. Employees normally expect their equipment to be supplied for them.

The status of your employment is not a choice but determined by the above factors in the eyes of HMRC and if you are engaging workers it is best to check the contract to see how it relates to the circumstances above.

If you are a contractor in the construction Industry you will need to ensure that the Subcontractor gives you his UTR number, which you will need to verify with HMRC to determine whether he is to ahve 20% deducted on labour or has gross pay status.

I have been assisting contractors with CIS issues for many years and am able to advise the best way to stay compliant and keep the tax man happy !

You may have heard the term

Making Tax Digital , on HMRC notices or maybe not ? but if you run a business which is VAT registered you soon will.

The government is introducing a new system of reporting taxes due on a real time basis. The aim being that business and individuals will be aware of their tax obligations as they become due making financial planning easier. There will also be savings to HMRC through streamlining processes and reducing unpaid taxes.

Individual tax payers will be able to access their personal tax account through the Government Gateway login. You may have already signed up for this service if you have needed to provide information on certain issues such as tax credits, pensions or P60s. The idea being that all online information will be able to be accessed in one place.

Plans for Making Tax Digital have been sketchy however it is now announced that by the year 2020 self employed tax payers who need to report profits or losses will be required to submit quarterly tax reports and a final return.Some self assessment individuals will be removed from the obligation of completing returns.

For VAT registered businesses Making Tax Digital comes into effect From April 2019, as the business owner you will be required to,

Keep your business records digitally

Provide your VAT return information to HMRC through Making Tax Digital software

Should  you be using online software such as Sage online ,Xero or Quickbooks you will find online support to use the updated software.

For those presently using manual or spreadsheet systems to calculate VAT a  plan will need to be developed to become Making Tax Digital compliant. Bridging software may be available for spreadsheets however this is not yet fully developed. In any case Making Tax Digital May initially involve more time and cost in training.

I am currently assisting several clients to prepare for the new legislation when it comes into force next year and would be happy to answer any queries you may have.

As the tax year has ended employers now need to comply with all the end of year payroll procedures by dates set out by HMRC.

If you are employed under PAYE on the last day of the tax year 5 April your employer is required to give you a form P60 by the 31 May, but why is this important ?

The P60 summaries;

Your total pay from all current and previous employments for the tax year

Total amount of tax deducted via PAYE

National Insurance Contributions

Student loan and statutory payments such as maternity/Paternity pay

This is a key document required for a number of reasons ;

If you are required to complete a self assessment tax return you will need to enter these figures should you need to complete the employment section within the return

Should you need to reclaim tax overpaid from the Inland Revenue this is your proof of deductions

Applications for means tested benefits will require the P60 figures

Also credit or loan applications may ask you to produce your P60

So there are many reasons why it is important to ensure you get a P60 from your employer and to request one if it is not produced by the due date 31 May.

If you run a limited company and draw a salary you will need to issue yourself with a P60.

Understanding how the benefits you receive from your employer are taxed can be confusing.

Your employer will calculate the tax owed and take this from your salary by decreasing your tax code -reducing your tax free allowance.They will issue you with a P11D which should be kept for at least 2 years.Although the employer will be dealing with the tax due it may be helpful to know what the main taxable benefits are and how the rules apply.

The most common benefit effecting employees would be the use of company cars for private use and commuting.

The amount of tax due depends on a variety of factors including the type of car, cost, emissions, fuel type and whether any contribution was made towards the purchase of the car by the employee. The HMRC site has an estimator tool which can be useful -www.-gov.uk/tax-company-benefits/taxoncompany-cars

Loans from an employer over £10,000 which are interest free are taxable . The rate of tax will be payable on the difference between the Bank of England rate and the employer rate charged.

Living accommodation over £75,000 in value provided is taxable if it is not necessary for the job eg a pub manager.

Medical Insurance premiums are taxable as a benefit.

National Insurance due on taxable benefits is paid only by the employer

There is some good news though some benefits can be received tax free including

Meals in a staff canteen

Mobile phones

Workplace parking

Childcare vouchers in a workplace nursery.

And finally if you have been receiving a benefit in kind with one employer and then moved employment and no longer receive it, its best to check your tax code is correct as HMRC won’t know about the change and may still be penalising you for a benefit you no longer receive.

• As the tax year comes to an end you may be wondering what tax changes will effect you from 6 April 2018 ?

For those employed under PAYE the personal allowance will rise to £11850, which means you can earn that amount in a year or £998 per month -£228 per week before you pay income tax at a rate of 20%

All tax codes ending in L will rise by 35 so 1150L becomes 1185L as above

Minium pension contributions for workplace pensions increase  to 5%  meaning if you pay into a pension your employer will be paying 2 % and your contribution as an employee  will increase to 3%

Minium wage for over 25s increases from £7.50 per hour to £7.83 per hour.

Statutory Sick Pay is increasing from £92.05 per week to £145.18 per week.Satuatory Maternity Pay and Student Loan Thresholds are also increasing.

If you work under the CIS scheme you may be due a tax refund. This can be claimed on your self assessment tax return once the tax year has ended on 5 April. The contractor will issue you with certificates of tax deducted at source which will need to be entered on the tax return.

Should you need assistance I can provide this service together with help with registering as self employed if required.

At least spring is just round the corner!

Hello and welcome to my blog. I will be using this space to update my clients on bookkeeping and tax news which may be relevant to their business, and any other information which may be useful.

You might be asking why do I really need a Bookkeeper, If I keep a record of my Income and expenses that will be sufficient to complete the on line tax return right ? well possibly but ,

How will I know how long my customers take to pay me ?

How am I doing compared to this time last month/year ?

Do I know which products are most popular and what is the profit margin ?

And most importantly am I ready with solid records should I get a tax or VAT inspection ?

Using the services of a professional bookkeeper means you keep on track with how your business is performing in different aspects, making it easier to plan future cashflow.You can discuss how you would like to view the information, many software programs allow access to the business records for the client and bookkeeper.You can log in on line to view the entered information at any time.

HMRC are regularly updating regulations relating to Individual tax and Employers responsibilities. Professional bookkeepers attend regular training to comply with new regulations. Saving you time which can be spent concentrating on increasing sales..

As a registered agent your bookkeeper will be able to liaise with HMRC on your behalf regarding any queries.Ringing HMRC can be a very time consuming and frustrating task .

Also you may miss out if you are not aware of new tax breaks like the marriage Allowance.

So there are many reasons why using a professional bookkeeper can be beneficial.

The best bookkeepers are recommended, but should certainly be qualified,have a range of experience and hold indemnity insurance.

Should you need assistance with any aspect of keeping records for your business, completing a self assessment tax return or becoming an employer please contract me on 07982682746 for a no obligation chat.

Caroline