What We Do Part 1...Bookkeeping

Welcome to first in our series of Blogs about “What we Do”. This week we're starting with the joys of Bookkeeping - the foundation on which accounts and tax returns are prepared. It's a legal requirement to keep accurate bookkeeping records!

Bookkeeping

®NoStress is just that – a monthly bookkeeping and accounting package that saves you from all the hassle. You drop everything into our office and we do the rest, providing you with a financial summary within days of receiving your month-end documents so that you know how well your business is performing. We also give you our professional insight of aspects you may wish to look at or considering doing differently to save money. This type of review is invaluable in the current economic climate! We also complete all of the necessary year-end accounts and tax returns as part of the package. It’s very simple really and ideal for busy entreprenuers who don’t have enough hours in the day for the numbers side of things.

DIY – Do It Yourself. Some people are fortunate enough to be good with numbers and are happy to take care of updating the books themselves regularly. That’s great! If you need a helping hand, we can provide you with a simple template for you to enter your income and expenses and show you how to reconcile the bank account. You then pop your template to us when you’re ready for us to prepare your year-end accounts or sooner if you want us to review how well the business is doing. If you’re already using your own accounting software such as Sage or Quickbooks then we can work with that too!

Too busy for anything – For those really busy people, the shoebox is the next best thing. Safely tuck all your invoices and receipts into the faithful shoe box and drop it into us every year. It’s not the most efficient method of keeping your books up to date as you’ll have no idea how profitable the business throughout the year. However, if that system works for you we can look after shoe boxes too!

Online – If you’re interested in the freedom and flexibility that online accounting software has to offer, we support most of the popular packages including Kash Flow, Clear Books and Freeagent. Some accounting software systems now have their own Apps so shop around and see what works for you best.

There really is no excuse for not keeping your books up to date! Based on the edge of the Cotswolds, we work with a wide range of clients located across the UK either in person at our office or virtually by communicating electronically. Whatever works best for you!

Is your bookkeeping system working for you? Are you confident that your books are correct? If you're maintaining your own accounting records but you're sometimes unsure if you're doing things correctly or experience confusion as to how certain transactions should be posted, we also offer a personal review service to ensure the validity of your accounting data. Perhaps your accounting system isn't delivering what you want it to? We can help by providing professional guidance to ensure that your accounting system is working effectively for you and providing you with everything that you need.

Meanwhile, if there's anything you'd like to know, please contact us now on (01386) 764741 or drop us an email to hello@accountancyoffice.co.uk. Alternatively, pop by and Like our Facebook page or Tweet us!

Introducing...What We Do.

Welcome to the first in our series of “What we Do” Blogs. Each week we'll tell you more about you diverse range of professional services we offer to small businesses and how we can help you!

Why are we doing this?
Firstly, the perception of accountants is often that of dull bean counters. People seem to dread visting their accountant and conjure up images of grey haired men in pin striped suits talking in a different language with a calculator in each hand! This is a very outdated perception and we’re rather different from that! Our aim is provide small businesses with a highly personal yet affordable bookkeeping and accounting service. Most importantly, we keep it simple!

Secondly, annual accounts and tax returns may not be the most exciting topics of conversation but they're essential - not only for you to stay legal and avoid fines but for your business to survive and thrive! However, there is so much more to the accounting services we provide to our clients and hopefully that will become evident as we go along!

So, what do we do?

We'll explain in more detail in each weekly Blog but here's a snapshot of "What We Do"...

• Bookkeeping
• Management accounts
• VAT Returns & Tax Return
• Annual accounts
• In House Payroll services
• One-to-One Training & Support
• Business Start Up Advice
• General Administration
• Credit Control

What's in it for Me?

Accountants are all the same - right? Wrong. Choose your accountant carefully, look at what they can offer you overall and consider their qualifications, experience, fees and accessibility. Ideally you should develop a long lasting relationship with your accountancy provider and business advisor so take time to get it right. Ask around your family, friends and associates for recommendations.

Here's what we offer our clients:

• We only look after small businesses, providing dedicated support when needed to the self employed and owner managed limited companies.
• We are fully qualified, UK based accountants and bookkeepers who are members of recognised professional bodies, giving you peace of mind.
• Cost effective services - pay for the services you need at a low cost, fixed monthly fee.
• Discounted fees for new business start-ups.
• Regular promotional offers and discounts.
• Access to a dedicated accountant with free email and telephone support.
• Earn cashback through our referral scheme.
• Regular money-saving tax tips newsletters and updates.
• Flexible appointment times for those who wish to visit the office in person.
• We save you time and costs by completing your financial records effectively and promptly.
• Minimise your tax, paying only what is necessary and ensuring all tax return deadlines are met.

Keep an eye out for our first "What We Do" Blog next week where we'll be looking at the range of bookkeeping services we provide, tailored to meet the individual needs of the business. One size does not fit all!

Meanwhile, if there's anything you'd like to know, please contact us now on (01386) 764741 or drop us an email to hello@accountancyoffice.co.uk. Alternatively, pop by and Like our Facebook page or Tweet us!

Gift Aid and How it Works

There has been a lot of coverage in the press recently about tax relief for charitable donations.

When you make a donation to a charity or to a community amateur sports club you can make a declaration that your donation is made under Gift Aid. This declaration can be made in writing, online or over the phone, but in all cases it should include your name and address details, the name of the recipient charity, and a statement that you have paid sufficient UK tax to cover the 20% tax the charity will reclaim from the Tax Office.

Say you make a donation of £1,000 to a charity and make a Gift Aid declaration for that gift. This results in a gift of £1,250 in the charity's hands as they can reclaim basic rate tax (20%) on the gross equivalent of the gift. In this example, 20/80 x £1,000 = £250.

You have to declare with your gift aid declaration that you have paid at least £250 in UK income tax or capital gains tax in the tax year in which you make the gift.

If you pay tax at 40% or 50%, the thresholds at which those higher rates are imposed are extended by the gross value of your gift, which gives you additional tax relief for your gift. For example, the 40% threshold is currently £34,370, so if you make donations under gift aid that total £1,000, these are treated as gross gifts of £1,250. Your 40% threshold is extended to £35,620, saving you 20% tax on £1,250 = £250. So overall it would have cost you £750 for the charity to receive £1,250.

It is not possible to completely eliminate your tax bill by making donations under gift aid. Such gifts would only reduce your tax bill to 20%.

If you have any questions about Gift Aid donations please get in touch.

What is a VAT Receipt?

If you're VAT registered you will no doubt have been advised by your accountant to always obtain a VAT receipt (or invoice) from your suppliers. Many of our clients provide us with what they believe to be VAT receipts but in actual fact they're not. So....
What is a VAT receipt and why do you need it?

A VAT receipt will be provided by VAT registered suppliers to you, the customer. It will show details of the sale including the tax date, the suppliers VAT registration number and the amount paid for the goods or services. Most importantly, it will show the amount of VAT that the supplier has charged to you (if applicable). A VAT receipt can be in either paper or electronic format.

Delivery notes, letters or email correspondence are not valid VAT receipts and you cannot reclaim VAT using these documents.

To reclaim VAT on the purchases that you've acquired for your business you need to have a valid VAT receipt (or VAT invoice) as proof of the purchase and that you've paid VAT on that purchase. If you don't have a valid VAT receipt you cannot reclaim the VAT.

What should the VAT receipt show?

A valid VAT receipt should include all of the following details:

• A unique invoice number
• The seller's name or trading name and address
• The seller's VAT registration number
• The invoice date
• The tax date (the date of supply which is also known as tax point - if different from the invoice date)
• Your name or trading name and address (i.e. the customer)
• A description of the goods or services supplied to you

Simplified VAT receipts

VAT receipts with all of the above detail are not always necessary. Retailers can issue less detailed invoices for sales under £250 (including VAT) and are not required to issue an invoice unless the customer requests it. These need only show:

• The seller's name and address
• The seller's VAT registration number
• The date of supply (tax point)
• A description of the goods or services supplied

If the sale includes items at different VAT rates then for each different VAT rate the  simplified VAT receipt must also show:

•  The total price including VAT
•  The VAT rate applicable to the item

For example, if you buy an electrical item from Tesco for your business (such as a new computer) the price you pay will include VAT at the standard rate (20%). If you also buy postage stamps for your business whilst you're in the store, these won't include VAT because they're exempt from VAT. As the sale includes items at different VAT rates, the VAT receipt must show the different rates.

Modified VAT Invoices

Retails who provide goods or services for more than £250 including VAT may issue "modifield invoices" if their customer is in agreement. This will show the VAT inclusive amounts (rather than the VAT exclusive values) for each standard rate or reduced rate item.

At the foot of the invoice, it must show separately the total:

• VAT payable on those items
• Value of those items excluding VAT
• Value of any zero rated items included on the invoice
• Value of any exempt items included on the invoice

Electronic Invoices

You can issue, receive and store your VAT invoices in electronic format. You don't need to tell HMRC if you plan to issue, receive and/or store invoices electronically.

Financial Penalties

You may be liable to a financial penalty if you do not issue a VAT invoice when asked to do so by a VAT registered person.

Companies House Annual Return...what is it?

Many of our limited company clients find it difficult to understand all of the stautory filings that are required when running a limited company. It can be very confusing but we're here to help and will always remind our clients in advance of any impending reporting deadlines with polite reminders!

These are the essential aspects that a limited company typically needs to worry about:

- Annual statory accounts
- Annual corporation tax return
- Payroll for Director/s
- VAT returns (if VAT registered)
- Self Assessment Tax Return for the Director/s
- Annual Return (AR01)

There is a large amount of red tape involved when running a limited company but it is important to remember that the annual return is a completely separate document to the annual company accounts.

So what is the annual return?
The annual return is "a snapshot of general information about the company's directors, secretary (where one has been appointed), registered office address, shareholders and share capital". Every company in the UK must submit an annual return to Companies House detailing any legal changes that have occurred within the company over the previous twelve months usually from the date of the anniversary of the company.

If you don't know when the company annual return is due you can check this on the Companies House website. The easiest and cheapest way to complete the annual return is to use the WebFiling service via the Companies House website. The associated filing fee is £14. To use WebFiling you must first register for two codes:

•A Security Code (which is sent by email and linked to your email address).
•An Authentication Code (Which is posted to the registered office address).

If you don't wish to file online or don't have the facility to, then you can obtain a hard copy of the form from the Companies House website and once completed it can be returned by post. The filing fee for paper forms is £40 (ouch!).

With effect from 1 October 2011 Companies House implemented some changes to the filing of the annual return. They appear quite complex (and possibly quite pointless!) but essentially you will need to enter a new classification code for your principal business activity. The new regulations also contain changes to shareholder details, one of them being that unlisted companies must provide a 'full list' of all shareholders on the first annual return following incorporation; and thereafter on every third annual return. Any details of transfers of shares that have taken place during the year will be required for intervening annual returns.

The Director/s and secretary of the company are personally liable to deliver the completed Annual Return Form to the Companies House on time. If not filed on time, late filing penalty payments may apply.

Student Loan Notices

This article appear in our October 2011 newsletter and is reproduced here for our Blog readers:

As an employer you are required to collect repayments of student loans your employees took out through the Student Loan Company (SLC) while they were studying, during years after September 1998.

You are told to start making SLC deductions by a form SL1 from the Tax Office (HMRC). HMRC is currently tidying up the data it holds on employers who collect student loan repayments. You may receive an unexpected SL1 notice for a current employee from whom you are already collecting SLC deductions. Alternatively you may receive SL1 notices for employees who have left your employment. In both cases you should simply file the SL1 notices and take no further action.

If you have a SLC loan yourself and are self-employed, the SLC loan repayments should be collected through your annual self-assessed tax bill, which is generally split over three payment dates. You need to tell us about your student loan, so we can ensure the right boxes are completed on your tax return form.

If your self-employed profits are less than £15,000 per year, you are not required to make any SLC repayments. This also applies if your salary is under £15,000 or you have a number of jobs from which you earn under that threshold in each.

Must you Register for VAT?

There is a myth in certain quarters that every legitimate business is required to be VAT registered. This is not the case. Your business (as a sole-trader, partnership or company) does not have to become VAT registered until the total sales for 12 consecutive months exceeds £77,000. However, this total does apply to all the businesses you run as a sole trader. You can't artificially divide your businesses to avoid registering for VAT.

Once your business is VAT registered you must charge VAT at the appropriate rate (normally 20%) on your sales. You also have to submit regular VAT returns, either quarterly or monthly, which means you need to keep your records of sales and purchases up to date. If this all sounds a bit too much to cope with there are a number of schemes you can sign up to which are designed to make VAT reporting much easier for small businesses.

One of those schemes is the flat rate scheme for small businesses. When you use this scheme you don't have to worry about your purchases. You just have to total-up your sales each quarter and pay over a flat percentage as VAT to the Taxman. The percentage used will depend on your trade sector. If your business makes very few purchases you can benefit significantly from being within the flat rate scheme.

Some people prefer to keep their total sales below the compulsory VAT registration threshold, so they don't have to charge VAT and submit VAT returns. They do this by turning down work that would take them over the VAT threshold. This is not illegal, but the Taxman is very suspicious of businesses who manage their sales in this way.

If you use this strategy to avoid VAT registration, you need to be able to prove all your sales are correctly recorded and declared. Later this year the Taxman will offer a limited amnesty to those who have sales over the VAT threshold but who have not registered for VAT. Once that amnesty period is over he will start to actively investigate traders who report total sales just below the VAT threshold. Contact us for further information if you are interested in taking advantage of the amnesty.