Will your business records survive an Inspection?

I picked up on a consultation doc issued by HMRC last week entitled 'Business Record Checks'. This seemingly innocuous sounding document has quite important potential ramifications for all small business owners - the full text can be found here,  though I'll attempt to quickly summarise.

Existing legislation exists concerning the records all businesses must keep, along with the additional records needed by VAT registered firms. HMRC have always had the ability to levy penalties for inadequate record keeping, though in reality these have not often been used.

HMRC estimate that tax loss due directly to poor record keeping is a factor in 40% of random enquiries - they therefore propose to check the records of up to 50,000 businesses annually, beginning in second half of 2011.

That timescale is actually rather soon, if your records are not currently up to scratch!



PS: SPECIAL FESTIVE OFFER
****We love online accounting so much, as a special Christmas pressie are including a full years Kashflow license at no extra cost throughout December for all new client sign ups****
There is a small amount of small print, pls email us at plymouth@taxassist.co.uk !

Biz Tip Stocking Filler #10 - Saving Accountancy fees!

Biz Tip #10 is all about saving the pennies and pounds with your Accountant!

Here are some 'quick wins' to keep those accountancy fees down, and value received, up:

1: Books & Records: By far the most significant way you can reduce your fees is by doing the bookkeeping well. At its most basic level, this could be a simple spreadsheet of ins and outs. To get maximum savings, you must reconcile the bank.

2: Identify which specific services you need the accountant to provide. Good accountants will demonstrate clearly the impact that each service line has upon their fee.

3: Areas such as payroll can often be performed more economically by a specialised bureau, rather than your accountant.  Can you outsource this particular task?

4: Keep in touch with your accountant! The accountant can't do a lot in the way of tax advice if he only finds out after the event that you've sold an investment property for instance. A lot more could be done in advance!

5: If you like and value your accountant, can you recommend business to them? The accountant will be mindful of this when performing fee reviews.

At TaxAssist Accountants in Plymouth we've recognised that getting value from us is fundamental to the service clients want. We price new work from a fixed price menu to demonstrate this, and then actively help clients progress to the right accounting solution for their business.

PS: SPECIAL FESTIVE OFFER

****We love online accounting so much, as a special Christmas pressie are including a full years Kashflow license at no extra cost throughout December for all new client sign ups****
There is a small amount of small print, pls email us at plymouth@taxassist.co.uk !

Do I need Accounting Software?

The answer is (of course) it depends. This article will aim to provide answers to typical queries we get asked, some of the misconceptions, and look at a couple of packages too.

If your business is VAT registered, and/or a limited company, there are legal requirements as to the records that must be kept. Spreadsheets can handle these requirements in a simple and straightforward manner, and it maybe that if you don't need any additional info about the financial affairs of the business, you need look no further.

BUT, and its a big but, if you want additional information, such as that listed below, really you need to be considering software:

• Profitability!
• Debtors reports (ie reports detailing customers owing you money)
• Creditors reports (the same, but detailing those to whom you owe money)
• Cash flow information
• Sales information (ie which products sold what, when)
• Stock control
• Costing information (ie how much was spent on say advertising last month)
• Automated invoicing and statement generation
• Project and time costing
• Customer database
• VAT reports
• Snapshot financial reporting data

For small businesses, the choices of packages are typically split between those covering bookkeeping (and therefore data entry only), and reporting, covering bookkeeping, everything above and a lot more besides.

The cheapest bookkeeping packages (think Cashflow manager and Do$h for example) will do VAT returns and produce basic profit and loss information. Don't ask them to do much more than that though. We think there are much better options out there, even for the non accountants.

If you've established you need software, and are looking at something that will be of value to you as well as your accountant, then really you are looking at a piece of full accounting software. What package to go for? Clients often come in having heard about Sage or Quickbooks, and it is true that these firms have been the market leaders in the UK for some time.

Here is our view on the current round up of full packages we regulalry encounter:

Sage Instant £115+vat - this just makes the list, it is simple and fairly cheap, but does have the likely functionality a simple, small business will need. Tech support is extra mind you after a year, as is training. We don't generally recommend it as non-accountants tell us they find it less intuitive to use. Its also software in the traditional sense, meaning it is one license installed on one pc.

Sage line 50 £550+vat - for small/medium sized businesses, with high volumes of transactions, and needing solid financial reporting, this is the definite article as they say. Reporting is excellent, but the programme is complex. Unfortunately it is expensive, and tech support will cost more still. Sage line 50 will push the abilities of the non-accountant, so be prepared for training on top (or to pay a bookkeeper to come in). Sage also have a nasty habit of charging for annual updates...........

Quickbooks - various editions from £90 to £450 +vat - some clients swear by Quickbooks software, it is certainly better designed for the non-accountant user, and also good with dealing with higher volume of transactions (as Sage). It achieves very similar functionality to sage, in an easier to use way. Again like sage, its installed on a pc or laptop, so unless you carry the pc round with you, thats the only place you can access your financials. Your accountants may well be less keen on Quickbooks but thats another story.......

VT Transaction+ £125+vat - I would describe this as a 'rough diamond' - VT has a basic company website, the package manages basic reporting only and is cheap as chips, but don't be deceived! Underneath the budget exterior lies a great piece of software, especially when your business is heavy on the transaction side. Its very easy and quick to enter data, easy to correct mistakes and easy to reconcile the bank. Its our choice over the sage and Quickbook alternatives EXCEPT if you want it to talk to your website, which it can't, yet.

Kashflow £15.99+vat per month direct (or see our offer below) - this is by far the best of the new breed of 'in the cloud' programmes. 'In the Cloud' refers to the fact that the software is internet based, so can be accessed from wherever you happen to be, and via pc, laptop or even mobile phone. The other big advantage to this is that your accountant can login to your records for the occasional check-up without doing the whole transfer of data routine malarky! Functionality is great for the smaller business, including great invoicing options and reporting. It fairs less well for the high volume of tansactions business (simply because its internet based). Otherwise we think its the first and only choice, and if you've never used accounting software before, we think you'll be amazed by its ease of use.

I did mention that we are running a Kashflow offer - currently we have a 60 day trial on our TaxAssist version, AND are selling it at the discounted rate of £149+vat for the year, AND will even chuck in 2 hours one on one training for purchasers who also appoint us as their accountants. We like the product so much we use it in house too for our own books, need we say more?

This article will hopefully emphasise the fact that there is no one size fits all when it comes to software. So if your accountant insists on your use of one program its probably because its in his interests rather than yours!

Ultimately we'll work with whichever software is right for each client.

Starting up in business

If you've started up in business for yourself in the last 18 months or so, you will be facing completing what is possibly your first self-assessment tax return.

Appointing an accountant to help get the return completed correctly will normally prove a shrewd investment, as the accountant will be able to advise you on what is and what is not claimable, more than likely make suggestions for improving the profitability of your business, and of course manage all the deadlines so it doesn't all become a last minute rush.

I've just got a painter/decorator in to do my hallway/landing - and yes here I reel out the well worn cliche in the small business world - but there is a huge amount of fact in that as much as I'd like to think I could do the job myself, I know that if I attempted it, it would take me an age (read months), during which I could earn more by working at what I'm good at (yes, read tax returns). Most importantly, the end result will be 10x better (at least it better be haha). With ever-changing tax legislation, the modest outlay on a good accountant who you get on with can only be money well spent.