Preparing for Self Assessment

cashflow tax year end Jan 19, 2022
The end of January is creeping up on us, are you ready to submit your self assessment payment on the 31st?
 
My advice, as always, is to get the numbers sorted out for your tax return as soon as you can. Download my year end checklist here to get the list of what you need to get together.
 
Hopefully, you have been saving around 30% of your net income. For a sole trader this is revenue less expenses ie profit from your business, and for limited companies, it is on salaries and dividends paid.
 
If you can submit your numbers early, you might have some spare money you can release, if you have been saving 30%, or at least you will know what the number is and you have 10 months to sort things out to find that money.
 
Knowing where you are at the moment is especially important to ensure that you can do something about it now. For example, taking a mortgage holiday, stopping any subscriptions you don't use etc. Don't just stop direct debits and standing...
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Podcast Episode 23 - Taxes and pricing

growth pricing tax Aug 18, 2021
 

The idea of taxes shouldn’t stop you from putting up your prices. And neither should it keep you from growing your business. I’m a firm believer that you shouldn’t let tax or accounting dictate how you run your business. You should consider it, but it shouldn’t be the main driver behind how you run your business. 

You shouldn’t be playing small by keeping yourself under the VAT limit. In the UK, the VAT limit is £85,000, and once you get to that level, you have to charge VAT on all your sales. It does mean you can claim back some VAT, but it often means in a service-based business that you will also be paying VAT. 

Be prepared for taxes and VAT

Many people don’t want to be VAT registered as it’s seen as a bit of a pain. That’s not a reason not to do it! You shouldn’t be limiting your business growth to that £85,000 threshold and having to put 20% on everything. You should be preparing for it once you get to...

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Why you should have Xero in your business

It’s so important to have an accounting system in your business. It doesn't matter how small you are or how big you are, everything is made easier by having an accounting system.

I am Xero certified because I love it, and I highly recommend Xero. I find QuickBooks really clunky, so if you're choosing between QuickBooks and Xero, I'd say Xero every time.

Why do I need an accounting system?

Having an accounting system will save you lots of time in the long run. It will also save you time in the short term by having all your invoices sent from the system, help you collect money via GoCardless and seamlessly match it all. Plus If you have an accounting system like Xero, you can connect up your bank, Stripe and PayPal. This makes it very easy to keep track of your numbers, because every business needs to know what their numbers are.

You can also take photos of your receipts when you are out and about (when that can happen again!) and then all receipts and invoices are in one place...

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Pricing for VAT registration

accounting finances tax Oct 28, 2020

It’s safe to say that most businesses want to be financially successful. I’m sure there are many who want to be earning more than £85k per year, right? Well, not necessarily. There are an awful lot of businesses that want to avoid getting near that figure - simply because it’s the threshold for VAT registration!

Don’t want to pay VAT? That’s understandable, but having that artificial ceiling in place is stopping you growing your business further.

So it’s time to stop letting that artificial ceiling stop you. It’s time to realise that paying more tax is a good thing - and here’s how you can pave the way for that transition into VAT registration.

Start increasing your prices before you hit the VAT registration threshold

Look ahead and start increasing your prices. This is especially relevant if you are a B2C (consumer) business or are a business that sells to people who are not VAT registered. Most B2B (selling to businesses)...

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5 reasons to be a limited company

Should I be a limited company?  I get asked this a lot, and the answer is it depends on your business and personal setup.
 
But in general, it is because of 5 key things:
 
1.      Liability insurance
2.      Employing people
3.      Business partner
4.      Tax & control of income
5.      You want to be seen as a bigger business than you are.
 
Liability
 
Liability is a critical one. If you have insurance of any kind and you are a sole trader, if the insurance is inadequate, you are liable for your personal assets (house, car etc). So make sure you have adequate insurance cover especially if you are a sole trader.  It’s the main reason I am a limited company, to protect me professionally.
 
Payroll
 
If you are employing people a limited company gives you a legal framework to work...
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Being a sole trader

There is often a lot of talk about whether you should be a sole trader or a limited company.  There are circumstances when being a limited company is a really good idea, such as having people on the payroll or being in business with someone else.  The main reason for most service businesses is that they want to save tax.  Once you take home more than £30,000 from your business (sales less costs), it is worth considering.  But it isn’t always the right thing to do and you should consult an accountant first.  More information is here
 
You must make sure you have sufficient insurance in place.  When you are a sole trader, liability if a client sues you is unlimited (hence Limited company) and you need to have solid insurance in place to ensure they can’t take your house.
 
Being a sole trader, if you have been in business for more than a couple of years, has also been much easier to claim from the government in recent...
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Cash Management

Have you heard the expression “Revenue is vanity, profit is sanity, but cash is king”.
 
It’s a phrase used a lot in the accounting world and one that holds true almost all of the time.  If you don’t manage your cash you will not have a business.  “6 figure” sums are always talking about revenue and are amazing but you have no idea if they have 6 figure costs at all or are turning a profit.  You also have to run the business you have, not the one you want, to ensure your costs don’t run away with you.
 
You must also be careful not to manage just your actual bank balance all of the time, as this includes amounts due for tax, payroll, supplier payments.  It also does not account for invoices that your customers have not paid you for yet.
 
Managing your business on a cash basis for day-to-day practical management of your business numbers is a perfectly good way to do things. However, you must always make...
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Know how much to put away for your tax bill

tax tax return Jan 16, 2020
So here we are it’s a new year and I’m now looking at my tax return and thinking I’ve got it all under control.
 
Obviously I have because I’m an accountant and it would be foolish if I have not already completed my tax return ready to pay in the next couple of weeks, however lots of people find this time of the year really stressful.
 
It’s obviously a time when you haven’t got very much money post-Christmas. Maybe you worked less in December, so earned less plus the money that comes in early January will just about tide you through until the end of January without a tax bill.
 
It’s a time where people worry a lot about money and it’s something that is really important to manage in your business. If you don’t manage your money carefully then you can be hit by an unexpected tax bill in January at any time when you least need it.
 
Don’t ever be afraid of your tax bill again and be sure that you know...
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