Updated: 22 April 2020: Following emerging issues about the Coronavirus Job Retention Scheme (CJRS) from HMRC, the ICAEW has released amended guidance. We have updated our “top 10 questions answered” to include these amendmentsContinue reading
We’re part way through the Covid19 lockdown. Easter is over and at the time of writing, we do not know exactly when quarantine will be eased. As the days stretch before us business owners, who may or may not be currently trading, there is time for many to give your company a MOT: to get prepared for the future, whatever this may bring.Continue reading
If your company accounts will be late because of the impact of Covid-19 you can take advantage of the immediate 3-month filing extension for company accounts.
However, you MUST apply before your filing deadline.Continue reading
1. Make use of technology
Today, businesses have a myriad of resources available to make managing accountancy records convenient and simple. I’d urge businesses to make the most of cloud computing and automation. This is especially valuable now that the Government’s requirement for Making Tax Digital is a reality for the majority of businesses, and flexible working rights have all increased the demand for secure, flexible ‘on-the-move’ cloud-computing solutions.
- Measures announced
- Looking ahead
- Income tax
- Making Tax Digital (MTD)
- Changes to Entrepreneurs’ Relief
- Other key changes for 2019/20
- Considering capital allowances
- What they said…
The Making Tax Digital (MTD) reforms represent a fundamental and unprecedented change to the UK tax system, which will ultimately impact all UK tax payers.
MTD has been delayed for all other taxes until at least 2020 but it is a requirement for all VAT-registered businesses with a turnover above £85,000 per annum to submit their VAT returns digitally, using MTD-compatible software, from April 2019.
MTD means that VAT registered businesses with turnover over the £85,000 threshold will need to submit their VAT returns digitally using MTD-compatible software. However, MTD also means businesses will need to keep their records in a digital format which enables information to be provided to HMRC directly from their accounting system or via bridging software, through application programme interfaces (APIs) which can also receive information from HMRC.
If you are a VAT-registered business with turnover of the £85,000 threshold you will need to keep digital records. If you keep your records on a spreadsheet you will need to have digital links, through MTD-compatible software, from the spreadsheet to HMRC. If you use an accounting package but prepare your VAT return using a spreadsheet, from April 2019 the accounting package and the spreadsheet will need to be linked digitally.
Many accounting software package providers will provide the application programming interface (API) links and there will also be third-party bridging software solutions. However, you will still need to keep digital records of the underlying transactions.
Under MTD, digital records of all sales will have to be kept, broken down by VAT liability (ie, the value of standard-rated, zero-rated, exempt and outside-the-scope supplies). As of now, only a total of all sales is required for the VAT return. It is also necessary to retain other information, such as all adjustments for business entertainment, car leasing and reverse charges on imported services, and summarise purchases broken down by VAT liability.
For VAT returns submitted on or after 1 April 2019, you will be required to submit the information which completes the existing nine boxes on the VAT return digitally using MTD-compatible software. However, you can also choose to voluntarily submit supplementary data on a periodic basis, such as in relation to the total adjustments made or total supplies made at different VAT liabilities.
HMRC has stated that when deciding whether to carry out a VAT inspection on a business, it will take into account whether the business has provided supplementary data, there are no queries, HMRC is less likely to carry out a VAT inspection.
HMRC has confirmed that there will be a ‘soft landing’ period between April 2019 and March 2020, when there will be no financial penalties for record-keeping failures. However, there must be a digital link between your accounting records and HMRC from the outset on 1 April 2019.
Keeping accounts up to date and accurate is a vital part of running a small company, but, when it’s not part of the core business, owners tend to find it difficult in terms of motivation and execution.
That’s why accounting software packages are so popular. They make it easier for you to keep your accounts in good order, and will also help your accountant do your books at the end of the financial year quickly and more efficiently.
In no particular order, here are some of the many accounting packages on the market.
We use Sage One, which is software that has been designed for small businesses. Its cloud-based and will take care of your accounting and payroll needs, at the same time as helping you stay in line with UK taxes, regulations and laws.
This package is aimed at the self-employed and small businesses, helping you to keep track of expenses, invoices and transactions, with the capacity to help the self-employed complete their HMRC self-assessment.
An online solution for small business accounting, without the need to install any software and the consequent worry about upgrades.
AccountEdge is Mac-based software that will help you with all aspects of accounting including billing, sales, purchasing and contracts.
Whether you employ an accountant or do your own books, FreeAgent can help you keep on top of all aspects of your accounts wherever you are and whatever device you’re on.
In addition to basic accounting, with FreshBooks, small business owners can accept online credit card payments, and also invoice in any currency. Compatible with Mac and PC and works on all devices.
An accounting package to help you with your bookkeeping, covering double-entry accounting, bank reconciliation and financial statements, with the capability to import/export information.
Time-tracking software to help you keep your projects on time and on budget. It also integrates with other accounting tools.
Cloud-based accounting software package that takes care of your bookkeeping needs, connecting to your bank account and allowing you to monitor your cash flow.
An invoicing package that helps you deal with your payments, expenses, time tracking and team management.
Helps with all your basic accounting needs and gives you a real-time view of your cash flow from any device, allowing you to reconcile accounts at the push of a button.
Wave is free accounting software for invoicing, accounting and expenses, with pay-as-you-go services for payroll and credit card processing.
A simple package for small businesses, it calls itself “accounting software for business owners who dislike bookkeeping” and aims to make the process less painful.
Contact us if you are looking for an accountant or you wish to get advice on the most suitable accounting packages for your business.
If you run a small business, are a sole trader or even a freelancer, you’ll undoubtedly need more help with your accounting than you can probably afford. By using a specialist accounting package, your accounts can be organised in a way that’ll help you make sense of them. And if you keep your day-to-day accounts in good order, you could save money on accountants in the long run.
Here’s the HB Accountants’ beginner’s guide to the features available with some of the best packages specifically for small businesses.
Sage is possibly the best-known accounting package, and is the one we use. Sage One is a cloud-based accounting and payroll software. Sage’s UK products are specifically designed with small businesses in mind and have a number of features that keep you in line with the UK regulations, laws and taxes.
AccountEdge is a complete small business accounting and management solution for Mac users. It will help you with sales and purchases, payroll, inventory, invoices and managing contacts.
FreeAgent provides UK freelancers and small business owners with online accounting software. It brings everything together, from invoice and expense management to VAT, payroll and self-assessment tax return filing.
With FreshBooks, small business owners will be able to track time, log expenses and invoice clients and is accessible from any device (desktop, iPhone, iPad and Android).
Claiming to “make time tracking easy (and almost fun)”, Harvest works on your laptop, iPhone and Android. It will analyse data, set budgets, track your project’s progress, track billable and non-billable time and run reports.
This package helps you track time, expenses, mileage, invoicing and accepting payments. The Hiveage dashboard gives you a clear overview of your income and expenses.
For small businesses and the self-employed, Intuit QuickBooks helps you track your income and expenses, separating business and personal transactions. It will show you how much to set aside for tax, calculate mileage deduction and will download banking transactions.
An online package for Macs, PCs, tablets and smartphones, Xero will help you reconcile, send invoices and update you when they’re opened, create expense claims, as well as importing and categorising your bank transactions.
With Wave’s software, you can track sales, expenses, bill customers, receive payments, and pay your employees. It will automatically import bank transaction information, scan receipts, generate reports and insights to give you a simple understanding of how your business is doing.
Intacct is a package designed for business expansion, with automated processes that can become more complex as your business grows. It allows for multiple users in multiple locations, streamlining the order-to-cash process and securely processing transactions.
Paychex Accounting Online
Paychex claims to provide an accounting package for people with no accounting experience with its intuitive and user-friendly design. It provides true double-entry accounting, bank reconciliation, a full activity stream, financial statements, and import/export capabilities.
Kashoo is an online accounting package enabling small business owners to control the company’s bookkeeping all from one place. It allows you to import bank details, keep track of invoices, expenses, cash flow, payroll, tax reporting, and audits.
Billed as “accounting software for business owners who dislike bookkeeping”, Less Accounting was built on the premise that all you need is to see who owes you money and bill them, record and categorise expenses, then hand all the information over to the person doing your tax returns.
This package was designed for business owners, not accounting professionals. It enables you to do online invoicing and general accounting from any of your devices, with nothing to install and no upgrades to download.
Easy-to-use cloud accounting software for businesses. Zoho enables you to invoice clients, accept online payments, track expenses, connect to your bank account, share transactions and capture customer feedback and product accounting reports.
If you’re a small business looking for an experienced and trusted Hertfordshire Accountants, contact us for more information.