All I want for Christmas is… Cloud Accounting!

Written by Director Huw Moseley:

With the big celebrations just days away and as we head into the New Year… if we had just one wish for Christmas here at Link Accounting – it would be that all businesses switch on to the joys of cloud accounting!

As you know, we’re big advocates of smart business tech and we make it our mission to help you get set up and using the online tools effectively as part of our service.  If you haven’t already embraced cloud accounting, we’d love for you to take a fresh approach to accounting in 2019. It means that instead of us checking in with your business occasionally at year-end and VAT return times  – we can work collaboratively with you throughout the year to support your business growth. For you, it means:

  1. No more spreadsheets or installing programmes on one machine– you can log into your account from anywhere with an Internet connection. Add add multiple users to your account with role-based access so they only see what they need to (another great security measure).
  2. Data is sent into and saved in ‘the cloud’ where it is processed and returned to you in real-time– all your data is saved on the cloud server and constantly backed up – so its super secure.
  3. You can pay monthly and start using it immediately – so you can spread the cost of the software from as little as £5 per month, which helps you manage your cash flow. (Or if you’d prefer to pay up front you get a great big discount.)
  4. The software is consistently updated (for free!) so you don’t have to do anything – this means if things change, for example auto-enrolment, the software does too, so you stay up to date without needing an IT team.
  5. No more manual invoicing, reminders and, following up with debtors–automate the whole process (really easily!) and even combine with your HR and Payroll applications to generate payslips and other HMRC documents.

The best bit? Cloud accounting software is built with non-accountants in mind – so it’s really easy to use.

How about a demo? We can show you just how intuitive it is… and if you like what you see we can have you set up, saving time and money in a couple of hours.

 

Do you have a cash target?

Written by Director Huw Moseley:

Most businesses we work with have top line revenue profit. Often they’ll also have a net profit target. But for many businesses, particularly agencies, it’s important to have a cash target too…

If you have a largely fixed cost base in your people – ensuring you have enough work at all times to cover costs is really important. It helps the team from becoming absorbed in the delivery of projects to the detriment of bringing in new business/additional work.

Having a clear idea of the cash you have in your bank now, and over the next 3 years, is a solid idea for a number of reasons, not least because you’ll have:

  1. A robust financial system to build on
    From prospecting to proposal, securing deposits, invoicing complete projects, monthly fees, and credit control – by focussing on cash in the bank, you’ll get full visibility of your financial system. And because it’s visible, you can refine the process to minimise any client drop-offs along the way.
  2. A relentless focus on profitability
    No matter how good your pitch conversion rates, your invoicing procedure and credit control process are – generating profit is key to your long-term success. By focussing on cash in the bank, you’ll have a clear idea of what profit is tied up in incomplete projects and amounts owed for work in progress. This will help you concentrate on accelerating project delivery, which in turn, improves project profitability.
  3. Flexibility that gives you a strategic advantage
    Being able to move at the pace of the digital world can be a huge advantage. With cash reserves in the bank, it means you can invest in equipment, people, or a specific marketing campaign, quickly pivoting the business to offer new or better services to clients. When this flexibility results in a competitive advantage, it’s also likely to result in more profitability long-term.

At Link Accounting there’s nothing we love more than helping you set ambitious goals for cash and profit and implementing the financial systems you’ll need to deliver the business growth you’re seeking. So get in touch, we’d love to hear about your plans >

 

Struggling because clients are failing to pay on time?

Did you know that half of all invoices are paid late – which can quite literally be a nightmare for businesses, having a sizeable impact on cash flow.  Getting paid on time is vital, and yet it can be a crippling drain on resources. There are lots of tools to help automate the process, but ultimately, someone in your organisation should also be responsible for getting invoices paid on time because occasionally it requires manual intervention.

Sometimes, your clients might be genuinely struggling for money and simply won’t have the money to pay you. Firstly, arrange a meeting to discuss the situation, and if possible, stop the work you are doing for them until they pay the overdue amount. At least this limits the work that may never get paid for.

More often than not though, your invoice won’t have been paid on time because it hasn’t been given the right priority by your client.

Here are 5 ways to ensure you get paid on time, every time:

  1. Collate all necessary invoice information from the client:
    Many companies need PO references, due dates, references and service descriptions included in an invoice in order to process it. Ensure you capture this information correctly and save it safely – online bookkeeping tools are set up so you only have to key this data once. 
  2. Have a robust sales invoice process in place:
    Make sure you have a robust, ideally automated, process for raising sales invoices at the start/end of a project, or monthly; make sure they are raised correctly the first time with all the relevant information to prevent any delays in payment from your client
  3. Ensure you have a clear audit trail:
    Having a clear audit trail makes light work of phrases such as ‘I haven’t had sight of this invoice’ or ‘This invoice has been paid’. However, it’s always worth ensuring your payments have been reconciled correctly before contacting the client with your evidence of non-payment.
  4. Implement a chasing process:
    Show your clients that you have a thorough system when it comes to credit control by implementing an automated process that chases every overdue invoice. This will also help flush out any invoices that might be ‘in dispute’.
  5. Introduce a fixed interest fee for common late payers:
    This tactic is really a last resort, as enforcing interest for late payers could be at the expense of the client relationship – and clients are often hard won.  But it might be a useful procedure for particularly problematic clients.

We hope you’re never in a situation where you get no response from your client when you chase payment. However, there are still things you can do to try and recover what your due, including writing a Letter Before Action and submitting an Online Claim.

If you’d like any advice about getting paid on time, recovering what you’re due, or client liquidation – get in touch with us as soon as possible and we will do everything in our power to help.

Are you in the 11% of people who file paper tax returns?

Written by Director, Huw Moseley:

Truthfully, it’s a little baffling to us here at Link Accounting that people still choose to file paper Self-Assessment Tax Returns – but 1.14 million people did so in October last year. That’s 11% of all people who filed a return.

There are so many advantages of submitting SATRs online – including a much longer deadline – that we strongly advise this approach. Online filing means:

  1. Tax is calculated automatically when you fill in the return.
  2. The system pre-fills elements of the form with information it has on file for you (address/NI number etc) and removes irrelevant sections – so it’s far less complicated and time-consuming.
  3. If you get distracted – you can save the sections you have filled in and complete the form at a later date simply by signing in.
  4. You get an instant confirmation message and reference number for peace of mind that it has been submitted successfully by the deadline.
  5. If HMRC ever owes you money – you get a faster repayment!

It’s also worth noting that if you file online and submit your tax return by 30 December, providing the tax you owe is less than £2,000 you can opt for this to be collected through PAYE.

However, if you’re still thinking of submitting a paper SATR, the filing deadline is 31st October. All we would say is that if you’re in any doubt you might not make the deadline, do not send it off late. You’re likely to be charged a financial penalty. Instead, apply for your Unique Taxpayer Reference number because you still have until 31st January 2019 to file your return online.

If you need any help with calculating tax or filing returns – drop us a line and we’ll be very happy to assist.

Here at Link Accounting we specialise in ensuring our clients pay the least amount of tax legally possible. So if you’d like proactive, timely and targeted advice on how to improve your personal finances – give us a call to discuss our Personal Tax service in a bit more detail: 01295 720500

How to: Reclaim VAT you incurred before you become VAT Registered

Written by Director, Huw Moseley:

If you’ve reached the VAT threshold (congratulations!) and need to register your business, it’s worth considering reclaiming any VAT that you have incurred on:

  • Goods acquired in the last 4 years that are still owned at the date of registration
  • Services supplied for the purpose of the business in the 6 months prior to registration.

You can recover input tax on these items on your very first VAT return once you become registered.

Previously, reclaiming VAT was a bit of a headache as HMRC stated you should apportion the amount of input tax claimed to reflect the use of the asset prior to the date of registration.

Thankfully, HMRC recently published clarification on this point so that: businesses that own the asset at the time of registration can recover all the VAT incurred on the asset, where it is used for taxable business purposes.

This means there’s no need to apportion VAT to reflect use made of the asset before the date of business’ registration.

So if for example a new employee joins your team and brings their own device to work for work purposes – and you decide to reimburse them for their expense – you can then reclaim input tax on the device.

If in doubt – before you submit your first VAT return, it’s worth checking it out as input tax can quickly rack up (even if you think of a few essentials like a mobile phone/laptop, a printer, contracts, broadband etc).

Here at Link Accounting, we want you to pay the lowest amount of tax legally possible. So if you’d like help reclaiming input tax when it comes to submitting your VAT return – we’d be delighted to assist in calculating all that you can claim! Simply get in touch…

GET IN TOUCH >

How To: get a potentially lucrative additional income through your second property

Written by Director, Huw Moseley:

Lots of the clients I work with are in a fortunate position to own a second property – and it presents an interesting field of accounting. Did you know, for example, Furnished Holiday Lets (FHLs) – quite apart from being a great way to win friends and influence people – are a potentially lucrative additional income?

In order to qualify as an FHL, your property must be, furnished, profit-making, and available to let for 210 days. (Find out more here via Sky Cottages >)

Skye Cottages (link above) have written a really comprehensive guide on this subject, but it’s quite a meaty read… so here are 5 highlights!

  1. For tax purposes, if you share the ownership of the FHL you can flexibly portion the profit between you however you decide.
  2. Any income you generate is classed as ‘relevant earnings’ so you can make tax-advantaged pension contributions.
  3. There’s no Council Tax to pay (because the FHL will be subject to Business Rate property tax – which you may be able to claim back through Small Business Rate Relief).
  4. Capital Gains Tax (CGT) relief may apply when it comes to selling your property.
  5. You can deduct the cost of decorating and kitting out your FHL from your pre-tax profits – so luxury standards really can be affordable.

Of course, there are always downsides and here are a couple to consider:

  1. You’ll need to get VAT registered if turnover from your FHL portfolio exceeds the threshold. (If, like our clients, you run a separate business and are a VAT registered individual, your FHL property income may also be subject to VAT.)
  2. If your FHL makes a loss, its carried forward and offset against future profits (ie. you cannot offset it against other income.)

If you have a second property – or you’re thinking of buying one – let us know and we will happily explore with you the most tax efficient and profitable way for you to rent it out. Simply get in touch…

GET IN TOUCH >

And another thing about HMRC

Written by Director, Huw Moseley:

If you read my last blog, you’ll know that my advice when dealing with HMRC is to know your accounts inside out and backwards – as some times even Government administration bodies make mistakes.

Well, I’m blogging on this subject again because in the last week, we’ve had another win for a new client here at Link Accounting.

The client had an ongoing tax enquiry where HMRC tried all ways to say that he had not submitted a correct tax return.

HMRC did what it does and made assumptions based on averages to calculate the tax he owed – but in this case, the assumptions were wrong. Undeterred by the fact they were wrong, HMRC wanted to impose changes to his return that would have cost him nigh on £50k in extra tax.

Facing this enormous bill, he decided he wanted a professional on his side and got in touch with us here at Link Accounting. We took the case on to defend him and we’ve this week had notice that they are not going to change his return. Naturally this has been a massive relief to the client and a great result for both him and the team here at Link.

The client said afterwards that, dealing with this on his own, he “would not stand a chance”.

As I said in my last blog: you shouldn’t always believe what you read in a letter from HMRC. If you don’t think it sounds right, it’s likely it’s not. And if you don’t feel able to “fight it” on your own – it can pay to have a professional in your corner.

Here at Link Accounting we deliver the full range ofTax Services your business needs – using the latest tax software to prepare everything from basic employee Self-Assessment returns to more complex Company Tax returns – and handling all contact with HMRC on your behalf.

So you can trust us to give you proactive advice that will ensure your business is compliant with HMRC while you pay the lowest amount of tax legally possible to maximise your profits and grow your business!

GET IN TOUCH >

The trouble with HMRC (is that they often get it wrong)

Written by Director, Huw Moseley:

Now, I know the subject line for my blog this week is controversial. Like or loathe tax, we have to pay it because it keeps the country running. Which means somebody has to administrate it.

But oftentimes, the administration leaves a lot to be desired.

Just this week, my wife received a self-assessment tax calculation letter with amended figures stating that she owes more tax. As you might expect, I know for a fact that this is incorrect, dealt directly with HMRC on her behalf, and got it sorted.

But it got me thinking, how many people simply pay when they receive a letter like that?

Recently, a new client told me that he had done just that: paying over £1800 in penalties and interest for not submitting a tax return when told he should have done.

He paid the fines at great cost to his business, thinking that “HMRC must be correct – I owe them money”.

Thankfully when he came on board with Link Accounting, he mentioned it and I swiftly appealed the HMRC decision (as it’s contrary to case law). The penalty was overturned and all of the client’s money returned.

This is why it’s imperative that if you’re managing your accounts, you have a good grip on how much tax you owe and when it’s due. And if you’re struggling to make your case with the HMRC demanding payment that you don’t believe you owe, here at Link Accounting, the team will review your accounts and (assuming it’s not an error in your books), we can take this up with HMRC for you.

So far my personal track record with resolving disputes with HMRC in our clients’ favour is one I’m very proud of!

GET IN TOUCH >

HMRC Deadline Reminder: 6thJuly 2018

Written by Director, Huw Moseley

It’s that time of year when employers need to report taxable benefits to HMRC. So don’t delay in preparing your P11D or P11D(b) forms as a failure to meet the deadline could result in a minimum £100 penalty for every month or part month the form is late – plus interest!

You have until 6 July 2018 to complete a P11D form for every employee, reporting his or her benefits and expenses for the 2017/18 tax year (unless you registered online with HMRC before 6 April 2017). The benefits you need to report include:

  • Company cars
  • Health insurance
  • Non-business travel or entertainment expenses
  • Assets provided by an employer that have significant personal use.

If you’ve paid any taxable expenses or benefits to your staff, you’ll need to submit a P11D(b) form, even if some or all of them have already been taxed through payroll.

Using the information you submit, HMRC will then calculate the class 1A national insurance contributions that need to be paid. The deadline for paying any class 1A national insurance is then just a month away on 22 July 2018 (or 19 July if paying by cheque).

If you’re worried you won’t hit the deadline – don’t delay in getting in touch and we’ll help you through the process…

So what exactly is Cloud Accounting?

Written by Director, Huw Moseley:

Basically, instead of having accounting software installed on your desktop – cloud accounting software is hosted on remote servers. So no more spreadsheets or installing programmes on one machine – you can log into your account from anywhere with an Internet connection.

Data is sent into and saved in ‘the cloud’ where it is processed and returned to you, the user, in real-time. All your data is saved on the cloud server and constantly backed up – so its super secure. And you can add multiple users to your account with role-based access so they only see what they need to (another great security measure).

So even if you don’t see the value of real-time, accurate accounts information 24/7 on your smartphone – which is one of the major benefits of cloud accounting – here are 3 reasons that make online accounting tools a ‘no brainer’ for small businesses:

  1. You can pay monthly and start using it immediately – so you can spread the cost of the software from as little as £5 per month, which helps you manage your cash flow. (Or if you’d prefer to pay up front you get a great big discount.)
  2. The software is consistently updated (for free!) so you don’t have to do anything – this means if things change, for example auto-enrolment, the software does too, so you stay up to date without needing an IT team.
  3. No more manual invoicing, reminders and, following up with debtors–automate the whole process (really easily!) and even combine with your HR and Payroll applications to generate payslips and other HMRC documents.

As you know, here at Link Accounting we’re big advocates of cloud accounting, and we make it our mission to help you get set up and using the online tools effectively as part of our service.

But why?  

Cloud accounting means that instead of us checking in with your business occasionally at year-end and VAT return times  – we can work collaboratively with you throughout the year to support your business growth.

Still not convinced?

The best bit is that cloud accounting software is built with non-accountants in mind – so it’s really easy to use.

How about a demo? We can show you just how intuitive it is… and if you like what you see we can have you set up, saving time and money in a couple of hours.