In the old days, all your accounting was done on a disc. You would buy the software on a disc and install it onto your computer. It was self-contained, which meant that as long as your computer was working, everything would run smoothly.
Unfortunately, there were downsides. What if something went wrong? The system may well not have been supported, so if something did go wrong, you had to bring in outside experts to sort things out. Every two to three years, you’d have to make a decision about whether or not to buy an updated disc. And when it came to submitting figures to your accountant, you had to download the information and send it on a separate disc, risking it being damaged or lost in the post. And if your accountant only ever saw your figures once a year and you’d been inputting them wrong, it wouldn’t be picked up until there was a year’s worth of corrections to make to the annual accounts. The downsides of disk-based applications have led to the introduction of cloud accounting.
These days, more people are switching to Cloud accounting, but mainly because there is no disc alternative any more! The switch happened fairly seamlessly and most people have adopted the new system quite happily. However, there are some people who are still wary of the Cloud; if you’re one of them, it might help to understand the advantages.
Tax Tips for Individuals
In this month’s tax update, we will discuss some tax tips for individuals.
Please note that the rates referred to throughout the blog are noted for the 2017/18 tax year which runs from the 6th April 2017 – 5th April 2018.
It will be key to think about any of the options discussed in this blog prior to the end of the current tax year, being 5th April 2018. (more…)
If you’re setting up a small business from scratch, you know that money is going to be tight. That’s why most entrepreneurs begin by trying to do everything themselves in order to keep costs down. But there are some compelling reasons to seek professional help from an accountant from the very beginning, which may end up saving you a lot of money in the long run.
Firstly, an accountant can help you get the structure right, especially when it comes to tax. For instance, often when a couple set up a business together, one of them will continue working in a full-time job until the business takes off. An accountant will help you set up an equal shareholding which will help keep finances ‘in the family’ when it comes to dividends. This can be especially helpful in cases where doing this can keep you under the 40% tax threshold.
Maybe you’ve just set up your own business and are looking for a new accountant. Or perhaps your accountant has just retired and you need to look for a new one. What you need to bear in mind is that hiring the right accountant for your business isn’t a simple process. Who you choose to look after your accounts is crucial, especially if you have plans to expand as you will need to look for someone who will come with you on your journey to success – an accountant who will not just help you with your tax return, but also advise you on your business, and get more involved in the financial side of things the bigger your company gets.
Word-of-mouth – sometimes called ‘earned advertising’ for a good reason – remains one of the most powerful marketing tools there is, with around 84% of people relying on it as a trustworthy source of information. So one of the best ways of choosing a new accountant is to ask your business contacts for referrals. If they’re happy with theirs, they’ll be happy to give you a recommendation. If you don’t get any joy from referrals, ask the people you meet at networking groups. Who knows, you may already know someone from an accountancy firm who’s a member of one of your groups – if you already like and trust them, then it’s definitely worth setting up a meeting to talk about how their company can help you.
Welcome to HB Accountants Monthly Tax Update for July 2017. In this month’s update, we will be outlining the Common Reporting Standard (‘CRS’) and what it means for our clients and contacts. (more…)
Networking is a hugely popular activity for entrepreneurs and managers, and there are many compelling business reasons why you need to spend more time, if you don’t already, you need to spend more time at your local group.
Networking groups attract people from all sorts of businesses, so the likelihood of finding new client leads and even opening up new opportunities is very high. And if yours is a B2C business, well, every single person at every single networking group is a consumer in their own right. If they like you, they’ll buy from you – so networking has got to make good business sense.
It’s not what you know, it’s who you know
You must have heard of the phrase ‘people buy people’. You could have the best product or service in the world, but if people don’t know about you, why would they buy it from you rather than someone else? By getting to know people at networking meetings, especially if you’ve earnt their trust and respect, you’re more likely to come first to mind when they realise they need/want what you provide.
If you have a growing business, you may well have taken on a bookkeeper to help you do the accounts. But grow the business a bit further and you will need to supplement the bookkeeping role with the services of an accountant.
The problem is that there is an in-between time when you need a management accountant, but cannot afford to employ someone on a full-time basis. This is when you need the services of a virtual financial director – a qualified accountant who will spend as much time and energy on your business as you need, but who will work only for the amount of time you need them.
In its 2017 annual Audit Quality Thematic Review, the Financial Reporting Council found nearly a third of audits carried out “required more than just limited improvements”. In reporting about the review, the Financial Times pointed out that recent high-profile accounting scandals “raise questions about whether auditors are being appropriately sceptical when they scrutinise company accounts”, quoting a £4m fine the FRC had charged Deloitte for its audits of Aero, and a £3m fine against PwC for its audits of Yorkshire-based sub-prime lender Cattles.
Relationship-building with clients
We understand that as the majority of companies start out small – many as sole traders – directors prefer to use the services of a sole practitioner accountant or a small accountancy practice. It’s understandable that the accountant and the client will build a very good relationship with each other, with a lot of trust and loyalty on both sides.
As a business expands, it is inevitable that the director will want that relationship with the accountant to continue – and so it should. The problem for the accountant is that if the company is ever in a position to need auditing, it could become problematic if they don’t have the training and experience to undertake the task.
Many accountants in this situation are hugely reluctant to introduce their client to another accountancy firm as there is a risk that their client could be poached by a larger company. Quite often they muddle through with their own audit – but without the specialist training, experience and accountability, it could leave them vulnerable.
If you run a charity, you’ll know that when it comes to doing the accounts, there are more complications than a ‘for profit’ business. Charity Accountants do understand these complications and the most effective ways to address these without any interruption to your operation.
The accounting requirements for charities are onerous and apply to even the smallest charity. Visit the Charity Commission for England and Wales’ website for the rules around reporting, accounting and audits depending on the size and type of charity.
When it comes to finances, there is a basic requirement to submit accounts and returns to the Charity Commission, as well as a trustees’ annual report, a set of accounts and an annual tax return. The accounting process needed also depends on the type of charity, whether it’s a Trust, a Charity Incorporated Organisation (CIO) or a charitable company limited by guarantee.
Under company law, all businesses must prepare annual accounts, as well as annual tax returns, to file with HMRC and Companies House. Many start-ups and small businesses hire an accountant to write these reports and leave it there, but when a company begins to expand, they tend to hire a management accountant to not only generate quarterly or monthly management accounts, but also to make the accounts more meaningful for the future success of the organisation. Below is a management accounting guide for small business owners:
With management accounting, the more frequent production of reports enables managers and directors to use the up-to-date financial information to help them make better-informed business decisions and maintain effective control over corporate resources.
After the production of each report, the accountant will help clients to analyse the figures in order to work out how well, or otherwise, the company is doing. The frequency of analysis can help flag up the products and services that bring in the greatest amount of money, and those that aren’t living up to expectations, as well as help, identify and control wastage, improve cash flow and reduce expenses.
The regularity with which management accounts are generated depends on the individual company. Most will only want quarterly figures, but larger companies tend to do theirs on a monthly basis.