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Are you ready for the payroll year end?

One of the most important things to get right first time is your yearly payroll returns to HMRC, so planning ahead can ensure that you don’t end up paying a fine for a late or incorrect submission.

You are required by law to submit returns by May 20th, to enable HMRC to monitor National Insurance and PAYE deductions from your employee’s wages. This is to ensure that your calculations conform to all current government taxation legislation. As the legislation changes every year, it is crucial that you are up to date on the latest specifications for businesses, regardless of size.

By setting aside time early to complete P14/60s and ensure that your payroll details contain the correct PAYE information will help you to avoid a fine for incorrect submissions. Ensure that your P11 figures are correct by using accredited payroll software and ensure that you have not made any processing errors.

If in doubt, ask…

You can submit your returns on time by utilising the HMRC online submission facility. You do need to register with HMRC for online submissions and your payroll software has to be accredited by the Inland Revenue. Remember it is compulsory to submit all documents online. Paper returns are no longer accepted.

However, your first point of contact should be your company accountant, as the vast majority of accountancy firms also deal with payroll issues. Alternatively, contact a payroll services company to take care of your end of year payroll issues – it costs from as little as £15 a month for up to five employees.

Outsourcing the payroll is one of the best things you can do for your business.

Sole Trader v Limited Company

One of the most important decisions a business owner has to make is whether to operate as a sole trader/partnership or via a Limited Company.  Company tax rates have fallen in recent years and this has made the Company route more attractive even to those posting relatively low levels of profits.  However, any decision on incorporation should not be taken on tax grounds alone.  The nature of the business, its trading methods and even the personal circumstances of the owners need to be taken into consideration before a conclusion is reached and it is therefore essential that you take advice from your accountant before making your decision.

 

Ignoring the nuances which will colour individual decisions, there are a few areas which apply to all decision processes.  These include:

 

• Who owns the business?  A limited company is a separate legal entity and this means that the directors have to act in the best interests of the company rather than their own best interests whilst a sole trader has a lot more freedom to make changes within the business structure.  However, business debts run up by a limited company stay as the debts of that company whilst those of a sole trader fall on the business owner themselves.
  
  
• The ongoing tax and legal implications.  Not only are the tax structures different, limited companies have legal obligations to file company accounts and publish documents such as board minutes and resolutions.  This can result in additional costs as well as a loss of privacy.  However, given the current corporation tax rate and the flexibility of remunerating “owners” via salary or dividend these costs are usually outweighed by tax savings.
  
  
• What happens on sale or transfer of business?  Limited companies tend to be viewed as more professional and therefore can often command a higher price on sale.  In addition the ability to buy, sell or transfer shares can make the transfer of ownership of a company a relatively simple matter as well as potentially assisting with IHT planning.
  
  
• Special considerations for existing businesses.  Switching from sole trader to limited company or back again can be a minefield with financial, tax, contractual and legal issues all requiring careful planning.  For example, contracts with suppliers may need to be renegotiated whilst the timing of the transaction can have a profound effect on available tax reliefs.

 

Businesses which are considering switching between sole trader and limited company or are starting up for the first time are encouraged to take advantage of the Solid Limited start up service.  We’ll guide you through the decision making process and assist with the legal requirements such as company payroll, corporation tax and VAT registration; helping you to get your business on a sound footing.

Why we all need accounting software

There are many reasons why businesses decide not to install special accounting software.  These include perceived costs, worries about complexity, and the gut feeling that piling receipts into a shoebox and handing them to an accountant at the end of each year should be sufficient.

 

The truth is that whilst all these reasons may have been valid in the past, times have changed and there are now some extremely persuasive arguments as to why accounting software is a must for all businesses.  Let’s start with cost.  While accounting software used to be pricy, with costs escalating for each additional user, it is now possible to get hold of a decent accounting package which won’t cost a penny.  For example, we provide all our clients with an online accounting system called KashFlow.  Normally costing in excess of £200 per year, Solid Limited clients receive KashFlow for FREE. 

 

For those of our clients who may prefer to look at alternative systems, there are a few ideas on the Solid Limited website at free accounting software page.  This link includes details both of free on line accounting software and desktop software.  However, we do prefer clients to use KashFlow as it enhances the service which we are able to offer to our clients.

 

The second reason why businesses may shy away from accounting software relates to worries over complexity.  We must admit that over the years we have seen some extremely complex accounting systems, some of which seemed to require users to have a degree in lateral thinking.  Whilst unfortunately there are still some complex dinosaur systems around they are gradually becoming extinct as software houses realise the need to be competitive on design as well as price.  One of the reasons why we recommend Kashflow to our clients is that it is simple to use.  For those who have not used KashFlow before we are also happy to provide training and will set the system up for you on your desktop.

 

The final reason why businesses may not consider using accounting software is the perception that preparation of accounts is a once a year exercise best left to accountants.  There are several reasons why this is no longer the case, if it ever was.  For a start, leaving accounts to the year end means that for 364 days of the year the business owner has no idea of the true position of their business.  This can lead to a delay in collecting payments, missed opportunities in being able to negotiate for credit facilities and the potential for bounced cheques and high bank charges. 

 

Using accounting software enables businesses to:

• Keep on top of the bank balance
• Monitor receipts and payments
• Quickly chase outstanding debts
• Plan cash flow and monitor actual against forecast positions
• Interpret business and trading conditions
• Provide business information to back up requests for finance

 

In short, the business with accounting software can be a proactive business.  However, there is one further prime argument for maintaining regular accounts.  That reason is HMRC.  In the last year the Revenue have embarked on a mission to carry out interim reviews of businesses where they suspect them of failing to pay sufficient tax.  The business review teams have given out strong signals that whereas in the past they only expected accounts to be up to date at year end, now they are looking to business to maintain good accounting records throughout the year.  For HMRC, inadequate records equates to potential tax evasion so maintaining accounting software can help to avoid a costly and time consuming HMRC review.

Why go to a business show

Despite the general gloom and doom in the business world, one continuing success story is that of the business show.  Whilst there are reports of a few specialist shows showing a drop in numbers, in general as business people it seems as though we can’t get enough of these events.

 

Just looking at one event location in London, in the space of a few days it is possible to visit business shows about restaurants, e-commerce, call centres, care, workplace management, building services and energy solutions.  Whilst we wouldn’t suggest a scattergun approach, a careful choice of business show can really boost your business.

 

Business shows work because of the mix between exhibitor and visitor.  Each have their part to play and it helps to understand the golden rules for making the most of a show.  Starting with exhibitors, here are our top tips for making the most of any business show.

 

• The stand.  It doesn’t matter if you have a two foot patch of floor or half a football pitch, the important thing is to make sure your stand looks attractive and is manned at all times.  Have plenty of brochures, business cards and leaflets available to give away to visitors.
• The people.  There is nothing worse for a visitor than to find a stand is manned by people who apparently want only to talk to each other or to play on a laptop at the back of the stand.  Smile, step out of the stand area to greet, be friendly and chat.  Above all, make sure that your people know about your business.  A good impression here will make prospective clients want to get in touch again.
• The “freebies”.  Some companies go overboard, others give nothing away.  Whether you want to exchange a business card for “a chance to win”, offer sweets to passing trade or give away pens or balloons doesn’t really matter.  These may help to get you remembered but you will also be caught by a number of people who go to shows to collect as many free treats as possible.  At the end of the day all these are ice breakers to persuade people to stop and talk to you or a way of collecting business cards.
• The follow up.  If you have collected business cards at the show by whatever means, make sure your diary is blocked out for the next few days to follow up.  Even a short e-mail with some extra information about yourself or a link to your web site is better than nothing.  If possible, when collecting cards make a note about one aspect of your chat so that you can personalise your follow-up e-mail.  Don’t leave it too long though as after a week or so visitors will have started to forget about you.

 

From the visitor’s point of view the most important thing is that you are there to look, chat and learn.  Visiting a show is not a cheap way of marketing your business.  Remember that the exhibitors have paid for their stands and they want to talk to you about their business and how they can help you, not receive a sales pitch from you.  Having said that, conversation is a two way thing and you may well find that some exhibitors are interested in follow up discussions about your business.  In addition, many business shows run speed networking sessions where the idea is to meet and pitch to other businesses so bring a sizeable pack of business cards with you.  Remember to follow up on these introductions though or you will waste your initial impression.

 

Business shows allow you to meet others in your line of business, exchange ideas, and get information.  In particular, business shows such as the Business Start Up show at Earls Court on 17-18 November enable new businesses, existing businesses and those thinking of starting a business to find out about accountancy, banking, networking, software, web sites and so much more.   So whether you are a new business or an existing one why not pop along to the Business Start up show and say hello to us while you are there.

The importance of good bookkeeping in business

The announcement in January by HMRC that they intended to crack down on poor record keeping by SMEs was a wake up call to all businesses.  The original proposal, which went out to consultation, involved the proposed investigation of up to 50,000 SMEs each year. 

via news.solidlimited.co.uk

Bulletins on Business part 6

I wonder if KashFlow and Tugg are going to collaborate again. But then all this drama could have been planned in advance to generate more publicity. (Apple lost their iPhone 5, accidentally)

This is the 6th and final video in this series of broadcasts by Serial Uber Guru Tugg Gently.

KashFlow is the best online accounting software, we are giving it for free.

This week's round up of accountancy and business news

Will simpler reporting work against the recovery

Credit Management experts say that simplified reporting may mean that small firms won’t be able to get the good references they need to pass credit checks.

http://www.accountancyage.com/aa/news/2106067/economic-recovery-jeopardised-simpler-sme-reporting

 

New scheme to tackle mortgage fraud

A new scheme which allows lenders to check income details with HMRC is set to tackle cases where mortgage applicants incorrectly declare their income

http://www.moneynews.co.uk/9946/new-scheme-launched-to-tackle-mortgage-fraud/

 

Disguised Remuneration under the spotlight

Disguised remuneration schemes, where employers pay employees through tax-efficient methods, are under the HMRC spotlight

http://www.payandbenefitsmagazine.co.uk/pab/article/disguised-remuneration-12321431

 

Charitable giving via wills won’t work say CIOT

The Chartered institute of Taxation say that the Government proposals for leaving money to charities via wills have some fundamental defects.

http://www.tax.org.uk/media_centre/LatestNews-migrated/Charitable_tax_break_will_not_work

 

One in ten workers may never retire

A new report by Baring Asset Management says that one in ten workers fear they will never be able to afford to retire

http://www.totallymoney.com/news/index.php/2011/08/early-retirement-becoming-a-thing-of-the-past/

 

Advisory fuel rates published

HMRC have published its latest quarterly table of fuel rates for company cars to take effect from 1 September.

http://www.hmrc.gov.uk/cars/advisory_fuel_current.htm

 

Talk Talk follows BT in raising prices

Talk Talk has followed the recent BT price rise announcement with the news that it is increasing its line rental and call charges costs.

http://www.moneysavingexpert.com/news/phones/2011/09/talktalk-announces-price-hikes

 

A look at extended warranties

The Office of Fair trading is reviewing the extended warranty industry amid question marks raised about value for money

http://www.thisismoney.co.uk/money/bills/article-2033345/Is-worth-money-buy-warranty-OFT-investigates-consumers-good-value.html

Bulletins on Business part 5

The storm seems to have passed.  Are you ready for some numbers.

Free online accounting software

This week's round up of accountancy and business news

HMRC help for those affected by riots

Those affected by riots, either private or business, who want to discuss any tax related matters with HMRC can phone a single number – 0845 366 1207

http://nds.coi.gov.uk/clientmicrosite/Content/Detail.aspx?ClientId=257&NewsAreaId=2&ReleaseID=420774&SubjectId=36

 

Meanwhile here is a round up of other help for riot victims

MSE news has put together a quick overview of insurance and compensation routes for those who have lost out due to the riots.

http://www.moneysavingexpert.com/news/insurance/2011/08/london-and-uk-riots-the-financial-help-available

 

Children approaching 16 and staying on in school

HMRC has issued a reminder to parents of children approaching 16 that they have to notify HMRC is the child is staying at school or they will lose child benefit.

http://nds.coi.gov.uk/clientmicrosite/Content/Detail.aspx?ClientId=257&NewsAreaId=2&ReleaseID=420770&SubjectId=36

 

Is 50p tax rate on way out?

The Chancellor, George Osborne, has branded the 50p tax rate uncompetitive and believes it is not raising expected additional taxes.

http://www.thisismoney.co.uk/news/article-2025820/George-Osborne-end-50p-tax-uncompetitive.html

 

Are you prepared for the abolition of the default retirement age?

Research says that more than 50% of SMEs are not ready for the abolition of the default retirement age which comes into effect from 1 October.

http://www.contractoraccountants.com/2011/08/10/employers-may-still-be-able-to-make-compulsory-retirements/

 

Do you “employ” contractors?

A supreme court ruling on the status of contractors could affect up to a million workers, mainly in the construction industry.

http://www.accountancyage.com/aa/news/2101472/employment-ruling-affect-tax-status-million-workers

 

Goodwill valuations

The valuation office and HMRC have produced an article on the valuation of goodwill; particularly in pubs, hotels and care homes

http://www.tax.org.uk/media_centre/LatestNews-migrated/Goodwill_Valuation

Bulletins on Business part 1

KashFlow accounting software has teamed up with Phillip "Tugg" Gently to create a series of webcasts sharing their experience and wisdom. Duane Jackson seems very keen to spread the word so we took the liberty and embeded the videos on our blog.

Below is the first of these “Bulletins on Business”.

We like KashFlow very much and want all our clients to use it so we give it for free.