T: 01206 233170 E: email@example.com
People assume that just because I am a chartered accountant I must love doing my own books… Believe me I don’t.
I made the decision many years ago that I had a fantastic bookkeeper working for me so why should I spend my time on something that actually adds no value to my business. Those hours that I released could then be spent on something far more important. Growing my business….
Sound familiar? You are an expert in your own technical way but you are not a qualified bookkeeper so why try to be? So what happens? Your spouse does it? A relative does it? Or worse still no one does it until there is a deadline such as a vat quarter or more horrifically it’s the deadline to submit your accounts to HMRC.
So why not just delegate it and concentrate on what you do best. “Building your business”.
Making Tax Digital is the most significant change in our tax system for decades but even I was surprised that I had managed to write TEN blogs about it since February 2016. And there are going to be more in the future. I am (excitedly) waiting for the results of the consultation which took place over the autumn and HMRC have promised to tell us what they intend to do sometime in January. Am I expecting HMRC to change their minds? No absolutely not. Will they delay it? Possibly but in some ways I hope not. The digital world is here with us now and we would be complaining if HMRC still demanded paper returns so let’s go fully digital and do it properly. We all work better to a deadline so even if it is delayed there will still be accountants leaving it until the last possible moment to get to grips with it and blame their clients if it goes wrong. So let’s stick to the current deadline, get the excuses out of the way early and move on.
In case you missed my earlier blogs on all things “Making Tax Digital” they are listed out below.
11 February 2016 – Making Tax Digital
12 April 2016 – More on Making Tax Digital
It's a topsy-turvy world. Twelve months ago, Britain’s membership of the EU seemed secure and George Osbourne had just delivered the Autumn Statement for 2015. Who could have predicted what would happen in the months that followed, but here we are in November 2016, uncertain of what Brexit has in store, and with a new Prime Minister, and a new Chancellor to deliver the Autumn Statement.
Certainly, a lot has changed in a year, but there are more changes to come.
Last week, the Chancellor announced changes to the VAT Flat Rate Scheme (FRS) to be introduced from 1 April 2017.
FRS is scheme that simplifies VAT for small businesses, reducing paperwork and often providing those who use it with a tax benefit. Small businesses have been able to benefit from FRS since 2002.
The Chancellor's announcement of the changes under the title of ‘Tackling aggressive abuse of the VAT Flat Rate Scheme' has caused a stir, most notably because small businesses have long been encouraged by HMRC to benefit from the scheme. Don’t believe me?
The following is an extract from the HMRC Internal Manual.
Policy and Background: Why was the scheme introduced?
The scheme was introduced as a response to growing concerns about the complexity and compliance costs of VAT for small businesses. It reduces the cost of complying with VAT obligations by simplifying the way that VAT due to HMRC is calculated. Use of the scheme should be encouraged, as it is an important part of our response to the high level objective of reducing compliance costs. You should take the opportunity to discuss this and other schemes whenever contact is made with an eligible business.
Notice the words “Use of the scheme should be encouraged”…and the fact that HMRC officers recommended it.
Having worked with thousands of clients over the years we have seen a wide variety of quality in the records presented to me. Generally the bigger the client, the bigger the accounts team and therefore the better the accounting records. Small businesses are therefore paying their highly qualified accountants to do further bookkeeping just to bring those records up to a reliable standard rather than taking advantage of those skills and knowledge to improve their businesses.
However cloud accounting is changing all of this and it is now possible for the smallest business to deliver excellent records to their accountant enabling them to take out the bookkeeping element which has little value anyway and replace that time with high level advice.
So can using a cloud accounting system such as Xero or QuickBooks Online (QBO) really reduce your bookkeeping to just 5 minutes a day? And if the answer is yes do you need a bookkeeper at all?
As is often the case the answer is… it depends… so here are our top tips to maximize the benefits from Cloud accounting.
Some software may be intuitive and users can gain competence very quickly. Most, however, take training and lots of practice. Cloud accounting systems are powerful business management applications with lots of features and you need time to decide what you do and don’t need to use. Xero and QBO are actually very similar and both offer a free demo period so it’s worth looking at these before choosing one and putting your real data in. Both also offer extensive online training videos although these can be overwhelming and you could, unless you are following a logical learning checklist, become confused. We offer a simple and free checklist to our clients if they are happy to learn by themselves but many take formal training with us because the small upfront investment for this is more than saved over time with the reduction in their ongoing bookkeeping costs.
Review the Chart of Accounts
The Chart of Accounts is the foundation of your cloud bookkeeping system. It helps you to organize and categorise your transactions so reports from the system are meaningful. A standard one is provided by Xero and QBO but your business may have some unique properties or systems and it will improve the usability of your accounts if you have considered the layout and descriptions used in your chart of accounts in advance. We often say to clients that cloud accounting is the foundation of a better business but it can only deliver on that promise if the reports coming out of it are accurate and in a format that aids decision making. We have seen records where every expense has been categorized as “Miscellaneous” so not a lot of help to us to prepare meaningful accounts.
The spreadsheet has been one of the most enduring tools for businesses for decades. Along with desktop computers, spreadsheets were first adopted on-mass for business use in the late 80s and 90s. It’s impressive that this piece of software has remained popular for so long, but after three decades, is it now time to say so long to spreadsheets?
It’s easy to see why the humble spreadsheet became popular for business. As one of the default programmes loaded on to every PC and laptop, it was cheap and familiar for new entrepreneurs to harness for financial projections and as a cashflow tool to log money coming in and out.
But as we enter a new age of cloud-based apps and connected devices, it is clear that those who continue to rely on spreadsheets as a business staple will find themselves at a competitive disadvantage.
On The Move
Spreadsheets were never designed to be used on a tablet or phone, which is where cloud accounting software steps in.