Accounting Tips That Will Keep Your Small Business on track

accounting tips

The life of a small business isn’t easy, your day is packed with jobs and other activities that need to be done, but they may not always be how you would like to be spending your time – keeping on top of your accounting is generally one of the least favourable tasks! But there are some steps you can take right now that are both easy and can set your business up for plenty of success.

Here are some small business accounting tips so that your finances are always on track…

 

  1. It’s not personal, it’s business:

Always keep personal and business transactions separate. Instead of throwing everything into your personal account, take the simple step of opening a new bank account for all of your business stuff. You will be more organised, your personal finances can stay personal and your business transactions will be easier to find in your business account. No more wasting time shuffling through endless receipts.

 

  1. Keep it Tidy

Some people like a bit of clutter and others can’t work if their documents aren’t neat, tidy and organised. That might be great in your personal life but when it comes to your books, try and keep them in good shape so you’re not wasting time looking for them when they’re all over the place.

 

Neat and tidy records mean you waste less time searching and more time doing, well, whatever else you want to do. When those sneaky tax deadlines are getting closer, you’ll be glad that you took a little bit of time to make sure that you kept your records neat, tidy and a lot more organised.

 

  1. Remember and Stick to Tax Deadlines

Speaking of those sneaky tax deadlines, whatever will help you remember that the tax deadline is approaching, do it. Phone reminders, a countdown – anything. A looming tax deadline can be quite stressful, especially if you’re rushing because you forgot and any mistakes made can take longer to process.

 

It’s really quite a simple step. Set a reminder beforehand so you give yourself enough time to actually complete your tax returns without any mistakes and the rest is a breeze. HMRC won’t be on your case, your records will be accurate and you can forget about it until the next deadline.

 

  1. Keep All of Your Receipts

Keep any business-related purchase receipts so that you can claim for any business expenses. It all depends on the type of business yours is as if you’re working from home, then you can claim back some domestic bills, for example.

 

It can be anything from stamps to stationery. Keep hold of any business-related purchases or expenses and file them in those neat and tidy records we mentioned earlier.

 

  1. Go to a Free HMRC Workshop

Find out if there’s a workshop being held in your area and tag along or check out their e-learning tutorials so that you gain some more knowledge on aspects that actually matter to you.

 

It can be introductions to VAT, setting up a limited company, online filing and that’s just scratching the surface. You might just find something really useful to you which can be a massive help.

 

  1. Budget for Tax

Even though you might be rolling in the big bucks and made a profit, not all of the money is yours as you’ll need to hand some over to the taxman. A good rule to follow is that you budget for this as you go along so that you’re not massively shocked at the end of the year.

 

If you have a savings account or something similar, set a little bit of your income aside so that you can easily pay off your tax bill without any worries and enjoy the rest of your profit.

 

  1. Get to Grips With Tax Rules

When it comes to tax, it’s important you know exactly which ones apply to you and your business so you know which types of tax you’ll actually need to pay. Income tax, National Insurance, Corporation tax, VAT and business rates – do your research into all of them so you know what you need to pay.

 

  1. Create Profit and Loss Statements

A profit and loss (P&L) statement basically gives you a snapshot of the financial health of your business. It’ll summarise the expenses, costs and revenues of your business during a specific time to satisfy HMRC and their requirements.

 

It should include information such as your gross profit, net profit, operating profit and your profit before tax. This makes it a lot easier to show revenues, costs and how much profit your business has made, usually over the last 12 months.

 

  1. Use a Digital App

There’s an app for pretty much everything nowadays, so it comes as no surprise that there are bookkeeping and accounting apps you can download to keep your incomings, outgoings and taxes properly organised. This makes it a whole lot easier for you to manage your financial records.

 

With the Making Tax Digital deadline approaching, you’re going to need to take relevant steps towards using technology which makes it easier for you to get your tax right and keep on top of your affairs. This helps make your entire process more effective and efficient. The best part is that using the right software means you don’t even need to be the most tech-savvy business owner out there. Some are designed to stay simple and sleek so that only the features that matter to you are used and you won’t be overwhelmed when tax season approaches.

 

Overall, it’ll give you more peace of mind that everything is organised and ready to submit, leaving you more free time to focus on making more of a profit.

If you need to get back on track with your accounting, please do get in touch with us here at DNA Accountants we are always happy to talk business.

DNA Accountants

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It not often we blow our own trumpet…

Accountant Surrey Small Business

…but we will make an exception in order to share these lovely words from a client we have helped over the past few months:

 

“As a contractor, I’ve experienced nothing but mixed advice, late notifications and three years of challenging my previous accountants!

Due to the high levels of debt I continually seemed to be in with HMRC, a friend of mine recommended Gillian at DNA to me. After an initial conversation with Gillian, I felt for the first time I was talking to someone who knew what they were doing. After meeting Gillian face to face this opinion only grew. Gillian’s initial assessment of my position was spot on and even better for me she had a plan to turn my situation around.

Since February 2019 and following Gillian’s every instruction I am now seeing a clear way forward knowing what to do and when. Better than this Gillian has worked her magic with HMRC which was nothing short of a miracle and has completely removed the massive stress this was putting me under.

I simply cannot thank Gillian and everyone at DNA enough.”

 

As a business owner, your job is to focus on what you do best and the thing that brings you the most income, that often isn’t liaising with HMRC, which often ends in people being bamboozled by their demands. That’s where we come in because that’s exactly when we went into business!!

So don’t struggle on alone, get yourself a good accountant and let them do their thing.

 

DNA Accountants

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Are you about to commence your start-up journey?

start-up journey

You’re starting a company – that’s great news! You’ve had an amazing commercial idea and you’re following your passion to create your own business. Good for you! But do you know what happens next? Follow this advice and your start-up journey will be a success…

You should assess the types of business entity based on your available time, commitment and resources, and consider long-term goals for your business. Although you can change your ownership type at any time, you should decide carefully, at the beginning of your start-up journey because the form of business you choose will affect the way you file paperwork, face personal liability, pay taxes and, if necessary, file for bankruptcy protection.

Sole Trader

One person owns and manages a sole tradeship, which means you are responsible for all debts incurred.

Advantages: Easy. Inexpensive. Complete control of operating decisions. Generated income goes to owner to keep or reinvest. Easy to dissolve if the business does not go as planned.

Disadvantages: Unlimited liability. Funding difficulties. Less attractive to prospective employees.

Tax requirements: Sending a Self Assessment tax return every year, paying Income Tax on your profits and Class 2 and Class 4 National Insurance.

Limited Company

A limited company is an organisation that you can set up to run your business – it’s responsible in its own right for everything it does and its finances are separate to your personal finances. Any profit it makes is owned by the company after it pays Corporation Tax. The company can then share its profits.

Advantages: Higher take-home pay, claim on a wider range of expenses, entitled to the Flat Rate VAT scheme, personal assets are covered and you have complete control of your business.

Disadvantages: A certain amount of paperwork involved, accounts need to be filed every year, costly if contracting for a short period of time and not ideal for contracts less than £25,000 per year.

Tax requirements: At the end of its financial year, your limited company must prepare full (‘statutory’) annual accounts.

You then use this information to:

  • send accounts to Companies House
  • pay Corporation Tax – or tell HM Revenue and Customs (HMRC) that your limited company doesn’t owe any
  • send a Company Tax Return to HMRC

Partnerships

In a business partnership, you and your business partner (or partners) personally share responsibility for your business. You can share all your business’s profits between the partners. Each partner pays tax on their share of the profits.

Advantages: Businesses as partnerships do not have to pay income tax; each partner files the profits or losses of the business on his or her own personal income tax return. This way the business does not get taxed separately.

Easy to establish.

There is an increased ability to raise funds when there is more than one owner

Disadvantages: Each partner is individually liable for the debts and obligations of the business; if the business does not have enough assets to pay back business debts, creditors can take the personal assets of the partners.

A partner cannot transfer an interest in the business without the unanimous consent of the partners.

Partnerships can potentially be unstable because of the danger of dissolution if one partner wants to withdraw from the business or dies.

Tax Requirements: The nominated partner must send a partnership Self Assessment tax return every year.

All the partners must:

  • send a personal Self Assessment tax return every year
  • pay Income Tax on their share of the partnership’s profits
  • pay National Insurance
  • The partnership will also have to register for VAT if you expect its takings to be more than £85,000 a year.

If you are about to commence your start-up journey, please do get in touch with us here at DNA Accountants we are always happy to talk business.

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Don’t delay – Submit your tax return today!

tax return

Sole traders across the UK will notice letters from the taxman dropping through their letterboxes in the days ahead, reminding them that the tax year has ended and it’s now time to file their Self-Assessment Tax Return. Of course, the deadline for filing is 31st October for paper returns, or 31st January (2020!) when filing online. No sense doing today what you can put off until tomorrow, and tomorrow, and tomorrow…right?

Maybe. But maybe not.

Submitting your tax forms correctly and on time can be a confusing business. To take some of the strain out of filling out your returns we’ve put together this handy guide:

How do I know if I need to submit a tax return?

If you fall into one of the following categories, it is likely you will need to submit a tax return:

  • If you’re a director of a Limited company
  • If you’re self-employed or a sole trader
  • If you’re renting out a property
  • If you or your partner receive child benefit and your income is more than £50,000

What should I do before I submit my tax return?

Although the deadline is just around the corner, you still have time to complete your tax return. We have compiled a list with a few tips to try and help you do it more efficiently and quickly.

  • Understand your financial year – your tax return is in relation to income and gains for the financial year between 6th April 2018 and 5th April 2019
  • Prepare all the correct documents you need
  • Make sure you organise your paperwork
  • VAT – don’t forget to separate your VAT from your income
  • When collating information be as accurate as possible
  • Don’t miss the deadline if you want to avoid penalties

Can you help with my tax return?

Yes,  of course, we can! Here at DNA Accountants, we understand that filling in a tax return can be complicated and confusing. It is a time-consuming process and difficult at times which is why we are on hand to help. But if you choose to go ahead and make the submission yourself, then “Don’t delay, submit today!”.

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Are you aware of this latest telephone scam?

scam

Scams are pretty common these days, whether it’s a suspicious looking e-mail, text or a direct message via social media, if we haven’t received one, we certainly all know someone that has and we are all getting better at spotting them and more importantly, avoiding them. However, there’s a new scam doing the rounds that can potentially catch people unaware, because it stems from a voicemail purporting to be from the UK Government’s HM Revenue and Customs (HMRC)!!

The scam involves leaving a voicemail message telling the recipient that HMRC are filing a lawsuit against them for alleged unpaid bills, knowing the scare tactics will take you by surprise, the message then leads into the seemingly familiar HMRC options of “’press 1 to speak to a caseworker and make a payment” – but as you can probably guess by this point – it is most certainly not an HMRC representative at the end of the line.

Caller ID can detail that the call is being received from 0300 numbers, which are official HMRC numbers, but these have been cloned for the purpose of these scam calls.

The callers, who are targeting both mobile and landline numbers, suggest that the recipient owes money to HMRC (they have been reported to be intimidating and aggressive) and will often threaten arrest, a spokesman for HMRC team has said.

The nature of the scam is so convincing that finance expert Martin Lewis – founder of Moneysavingexpert.com – and Kay Burley from SKY News have used their TV forums to speak out, warning the public to be vigilant.

So how can you try and keep yourself safe from these fraudsters? Follow these helpful tips from HMRC…

  • Genuine organisations like banks and HMRC will never contact you out of the blue to ask for your PIN, password or bank details.
  • Do not give out private information, reply to text messages, download attachments or click on links in emails you weren’t expecting.
  • Forward suspicious emails claiming to be from HMRC to phishing@hmrc.gsi.gov.uk  and texts to 60599, or contact Action Fraud on 0300 123 2040 to report any suspicious calls or use their online fraud reporting tool.
  • HMRC will never ask for payment in the form of a voucher, such as Amazon, Google Play or iTunes.
  • If you are uncertain of the caller hang up and call HMRC directly to check – you can confirm our call centre numbers on GOV.uk  if you are unsure.
  • For tax credits, we do not include your details in any voicemail messages.

Anyone in doubt about a call they receive can call HMRC back from a different phone and if using a landline always listen for a dial tone before making a call.

Should you be unfortunate enough to receive one of these calls you can report it to Action Fraud on 0300 1232040 or www.actionfraud.police.uk.

If you receive a call reported to be from HMRC but are unsure you are getting the correct information from them, do not be embarrassed to terminate the call and ask your accountant to call them back on your behalf, we deal with them on a daily basis and can verify that you are or are not being approached for legitimate reasons – Stay Safe!

 

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Tax can be taxing!!

Tax can be taxing

Accountants all across the country breath a sigh of relief when February rolls around – the tax return madness is over and we can get on with making you more tax efficient, rather than trying to beat the HMRC deadline.

If you left your tax return to the last minute this year, then our top tips below may ensure you are more organised next time, take a look…

 

  • Firstly – Do you actually need to submit a tax return?

You need to do a return if you: are self-employed; you received £2,500 or more in untaxed income, such as from renting out a property; your income (or your partner’s) was more than £50,000 and one of you claimed child benefit; your income from savings or investments was £10,000 or more before tax; you made profits from selling things such as shares or a second home and need to pay capital gains tax; you were a company director, unless it was for a non-profit organisation and you didn’t get any pay or benefits; or your taxable income was more than £100,000.

 

  • Have you registered?

If you have never filed a tax return before, you will need to register first – which can take up to 20 working days.

 

  • Get your paperwork in order:

Dig out all the bits of paper that you need, such as P60/P45/P11D, PAYE coding notices and tax certificates for investments. For self-employed income, you need your bank statements, sales invoices and so on.

If you are renting out a property, claim all revenue expenses associated with the letting including letting agent fees, mortgage interest, ground rent, replacement of furniture and appliances, but not capital expenditure such as improvements to the property.

If you are letting out a room in your own home, is it more tax-efficient for you to claim the annual £7,500 (£3,750 if you share the income with your partner) Rent a Room Scheme allowance?

If you use your car for business and your employer pays you less than the HMRC maximum approved mileage rate (45p for the first 10,000 miles and 25p a mile above this), you can claim the excess.

If you are a member of a professional body required for your employment, you can often include the cost of the subscription as an allowable deduction.

Don’t forget to include your state pension figures. Although the state pension is paid gross, it is still taxable and needs to be included on your tax return.

 

  • Avoid the most common errors!

Don’t leave things out – this is probably the most common mistake is to miss something out – maybe a source of income you have forgotten about, and estimate if you have to! If you have some paperwork outstanding that’s not going to get to you in time, you can submit an estimated return and update it when the paperwork arrives. You won’t pay a fine for this – whereas you will if you wait for the paperwork in order to submit the return.

 

  • Don’t confuse your numbers!

Another common error is, say, mixing up net with gross.

 

  • Do you know your tax code?

Thousands of taxpayers may well be paying too much (or too little) tax as a result of having the wrong tax code!

 

  • Don’t forget gift aid!

Include all the gift aid donations you have made during the tax year to claim any higher-rate tax relief. If you donated £100 using gift aid, the total value of your donation to the charity was £125, so if you pay tax at 40% you can personally claim back £25.

 

  • Don’t forget to pay what you owe!

The deadline for paying any tax owed is also 31 January. Payments can clear on the same day if you pay by debit card, but will sometimes take a day to go through. If you pay by BACS or direct debit it can take three days, or five days if this is the first time you have paid HMRC by direct debit – so keep this in mind.

 

If you need help with anything tax-related, then please do get in touch with us here at DNA Accountants we are always happy to talk business.

DNA Accountants

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Will You Pursue Your Business Idea in 2019?

small business 2019

Many would be business owners take the opportunity of a new year to pursue their entrepreneurial dreams. If you are going to use 2019 to launch your new business then it’s important to remember that finances are a necessary part of running a small business, so to get some insight on effective procedures that entrepreneurs can adopt to improve their money management we’ve compiled our top five tips for all small business owners:

 

  1. Don’t mix business and personal expenses.

There are so many reasons not to mix your business and personal accounts, including tax issues, personal liability, and jumbled accounting records, just to name a few. When things get tight, resist that urge to secure your business finances with personal funds. It may give you that quick fix you need at the time but it will no doubt create a mess that you are only going to have to deal with at a later date.

The best way to maintain a clear separation of your expenses is to set yourself a personal budget and a business budget. Try and adhere to them strictly and separately so that credit cards and loans for your business don’t get used for your personal finances and vice versa. Your bookkeeper and accountant will be eternally grateful if you separate the two when it comes to managing your books and paying your taxes.

 

  1. Negotiate with vendors before signing!!

Sometimes you have to do some digging or shopping around for a good bargain. When making purchases from vendors or contracting with suppliers, try negotiating for a better deal.

Also please don’t forget to examine purchase terms like late payment penalties when making a decision. You don’t want to be caught out at a later date.

 

  1. Pay your bills on time, every time.

Treat your business bills as you do your personal finances. You don’t pay personal finances late so business payments shouldn’t be any different.

Credit card and loan payment late fees can cost you dearly, but paying small late fees on vendor and utility bills consistently adds up, too. The same goes for taxes: paying too late can result in serious penalties.

It can be beneficial to set up monthly reminders to make sure there are no business bills falling through the cracks. For young businesses especially, the profit-loss margins are thin. Avoiding late fees could be the difference between ending the year in the red or in the black.

 

  1. Be a little Frugal.

Okay, we aren’t expecting you to become an extreme couponer like the ones on American tv shows to save money on ordinary business expenses but we do suggest that you follow through on rebate offers for office equipment and supplies, buy furniture and major equipment secondhand, and go green to save money on utilities.

 

  1. Spend some time on an accounting refresher. 

Being a small business owner doesn’t automatically make you a money whizz/expert, but you’ll still have to make big money-related decisions for your company and understand how cash moves in and out of your small business.

 

The more you understand your business finances and cash flow, the better prepared you’ll be to make smart money management decisions. And, while these tips will get you started, nothing replaces being proactive and hands-on when it comes to managing your money—no matter how big or small the financial challenge. If you need help with your business finances then please do get in touch with us here at DNA Accountants we are always happy to talk business.

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Ditch the gifts and do some good this Christmas…

gift aid christmas small business

At this time of the year many business owners and employees do tit-for-tat giving at Christmas – gifts to clients, gifts to contractors plus the office secret Santa, the result being, generally a whole lot unwanted tat. An alternative for individuals is to use the funds to make a gift to charity. UK taxpayers making charitable donations have the option to pay via Gift Aid. This allows charities to reclaim the tax from HMRC on donations, meaning any donation is increased.


The charity requires your name, address and a declaration that you’re a UK taxpayer and this can be done by telephone or in writing. Charities reclaim the tax at the basic 20% rate which, due to the way the numbers work, means they get 25% more than you donate (so if you give £10 the charity gets £12.50).

A higher-rate (40%) or additional-rate (45%) taxpayer is able to claim tax relief on the difference between the basic-rate and higher-rates (for example, 20% or 25%). For higher-rate taxpayers, on £10 that’s £2.50 and for additional-rate taxpayers, it’s a further £3.12. Higher and additional-rate taxpayers can claim the extra tax relief when filling out their tax self-assessment form; they could opt to donate this extra tax to charity.

A taxpayer may treat a Gift Aid donation before January 31 as being made in the previous tax year provided the total donations do not exceed the total chargeable income and gains. The claim must be made on or before the date the Tax Return for the previous year is submitted and no later than January 31 following the end of the tax year.

Also, everyone can donate to charity through their business. For a limited company, it’s the business that receives the tax benefit. For donations that count as “personal”, it’s the charity that can get the tax relief unless you’re a higher rate taxpayer, when you get a share too. It’s not just money that can be donated however each type of donations has its own specific rules and limitations.

So get inspired, choose your favourite charity or local sports club and you can support them through your business!

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Autumn Budget 2018 – how it affects your business…

autumn budget

This time last week we were absorbing the Chancellors Autumn Budget 2018 and overall it contained a lot of positives for small business owners. Here are the key points from the Chancellor’s speech and how they may affect you and your business…

  • Personal tax allowance will be raised to £12,500 for basic rate taxpayers, and £50,000 for higher rate taxpayers in 2019
  • £675 million will be put towards a Future High Streets Fund
  • Business rates bills for businesses with a rateable value of £51,000 or less will be cut by a third over two years
  • Annual investment allowance will be increased from £200,000 to £1 million for two years
  • Small businesses will now only have to contribute five per cent to the apprenticeship levy
  • New mandatory business rates relief for all toilets made available to the public, whether publicly or privately owned
  • A £30 billion package for England’s roads, including repairs to bridges and potholes
  • Fuel duty will be frozen for the ninth year in a row, saving car drivers around £1,000and van drivers around £2,500
  • Beer, cider and spirits duties will be frozen, though wine duty will rise with inflation and tobacco duty will continue to rise by inflation plus two per cent
  • The VAT threshold won’t change
  • The national living wage will increase to £8.21

Other main areas concerning small business are…

Personal tax allowance

The personal tax allowance is the amount you are allowed to take home without paying tax. Anything you earn above that is taxable at a varying rate dependant on your total income. The chancellor announced that personal tax allowance will be raising to £12,500 for basic rate taxpayers, and £50,000 for higher rate taxpayers in 2019.

Up to £8,000 of savings for independent businesses

The Chancellor also declared he will be cutting the business rates bill for the smallest of small businesses. Businesses with a rateable value of £51,000 and under will see their bill cut by a third over a two-year period.  According to the Budget announcement, this will lead to up to £8,000 worth of savings.

Green taxes on UK small businesses

While the Chancellor made mention of the environment in his Budget announcement, there was only one tax announced – companies manufacturing plastic that is less than 30% recycled material will face a levy.

He also said that he had considered a plastic cup tax, but decided that it wouldn’t make a substantial change. He will, however, continue to monitor progress, and may introduce another tax if things don’t improve.

If you need to speak to an accountant about any of these points and how they affect your company, get in touch – we’re always happy to talk business.

DNA Accountants

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Be Careful of This Phone Scam…

Phone Scam

In these days of hackers, cybercrime and phishing scams we are all very aware of the risks online from scam artists intent on getting their hands on our money. But are we as vigilant when it comes to telephone contact? Apparently not!!

Fraudsters pretending to be from HM Revenue & Customs (HMRC) are expanding their unscrupulous activities after years of sending out fake emails to now calling unsuspecting victims and some are duping their targets into paying them thousands of pounds.

There is currently a telephone scam where a recorded message is left, allegedly from HMRC, stating that HMRC are bringing a lawsuit against the individual and is going to sue them. The recipient is asked to phone 0161 8508494 and press “1” to speak to the officer dealing with the case. This scam is becoming widely reported and seems to be targeting older people. Please do not reply to the message – ever!!

HERE are some tips from HMRC on how to avoid being taken in by the fraudsters:

Recognise the signs – Genuine organisations like banks and HMRC will never contact you out of the blue to ask for your PIN, password or bank details.

Stay safe – Don’t give out private information, reply to text messages, download attachments or click on links in emails you weren’t expecting.

Take action – Forward suspicious emails claiming to be from HMRC to phishing@hmrc.gsi.gov.uk and texts to 60599, or contact Action Fraud on 0300 123 2040 to report any suspicious calls or use their online fraud reporting tool.

Check – If you think you have received an HMRC related phishing/bogus email or text message, you can check it against the examples shown in this guide.

Contact HMRC directly – You can find the list of genuine numbers to call HMRC here.

If you are uncertain of the caller, hang up and call HMRC directly to check – you cannot be too careful, or contact your accountant who will be more than happy to speak to HMRC on your behalf.

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