Bookkeeping - Tips

Are you ready for your tax return?

Mon, 25 Sep 2023 10:04:24 GMT

For small business owners, tax season can be a stressful and daunting time of year. It makes sense that you’d rather not think about it, but as a bookkeeper, every year I see business owners feeling stressed as the season approaches because they know deep down that rushing things and leaving it to the last minute can lead to mistakes and penalties.

That’s why it makes sense to get ready for tax season right now. In this blog post, I will explore why now is the time to get your self-assessment tax return done, instead of waiting until the deadline of January 31st.

I’ll offer tips on how to outsource your bookkeeping, why the deadline is not a target, and how it’s crucial to know your numbers to help motivate you to complete your tax return.

You don't want to be doing your tax return over the holidays.

It's no secret that the holidays are a busy time of year - especially for small business owners. With the added pressure of balancing work and family commitments, it's easy to put off sending your tax return until January. However, with the deadline of January 31st fast-approaching, don't let yourself end up cramming your tax return in over the holiday period. Instead, tackle it now and enjoy a stress-free break.

The deadline is a deadline, not a target.

Many small business owners falsely believe that the filing deadline of January 31st is a "target" rather than a firm deadline. This could not be further from the truth. The HM Revenue and Customs (HMRC) takes non-compliance very seriously, and failing to submit your tax return by the deadline could result in a fine. Get it done and off of the list as soon as you can.

Outsource your bookkeeping so you don't need to do it.

One of the best ways to get your tax return completed now is to outsource your bookkeeping. If you don't have the time or expertise to handle this task in-house, think about getting the help of a professional bookkeeper or accountant. Outsourcing your bookkeeping can not only save you time and energy, but it can also help you stay organised and ensure your tax filings are completed accurately and on time.

Here’s the unexpected benefit

Many small businesses see the tax return as the ultimate goal, but at CLS Bookkeeping Services I know that the most important reason to get your tax return completed now rather than later is to know your numbers. It gives you time to save for your tax bill if you haven’t already (talk to me about this, I can help), and it is key to knowing your numbers. Your tax position reflects your business performance for a certain frame of time, and we expect you want to know how you’re performing in as near to real time as possible. Understanding your financial situation is vital in running a successful small business. By knowing your financial figures in-depth, you can make informed decisions for your business, plan for the future, and stay on top of your finances.

Conclusion

Getting your tax return done as early as possible is crucial. Of course, this avoids unnecessary added stress, mistakes and penalties, but it means you have feedback on how your business is doing.

At CLS Bookkeeping Services I encourage my clients to file their tax returns as early as possible and I would love to chat to you about how I can help you with yours.

You can reach out by a calling for a chat on 07394 069 106 or by using the contact form .

So why wait? Let’s get your tax return sorted now so you can move on to more exciting things.

Why hiring a bookkeeper can keep your business running smoothly during the summer

Wed, 26 Jul 2023 14:23:59 GMT

School holidays can be tough on small business owners. Balancing work and holidays can be tricky, especially when you and your team want to take some time off with family. You want to be able to keep the business running smoothly while getting some time out.

That's where hiring a bookkeeper comes in. As a small business owner, you might think that you can’t afford to outsource bookkeeping tasks, but a bookkeeper can save you time, money, and stress. Here’s how.

A good bookkeeper helps you stay on track with your finances

Regular bookkeeping is important, even if you think of yourself as just a small business. Your bookkeeping is the foundation for monitoring your sales, expenses and profits, but also your cash flow and your progress against your goals.

Hiring a bookkeeper during the holidays means you can keep track of your finances while you're gone. A professional bookkeeper can record and reconcile transactions, process invoices and payments.

They can also identify potential bottlenecks in cash flow and spending patterns to help you adjust your budget accordingly.

Additionally, a bookkeeper can also help you prepare financial statements and tax returns, saving you from returning to work knowing you have to quickly turn around a VAT return.

A good bookkeeper provides valuable business advice

Your bookkeeper is also a business owner, and a great confidant for discussing your business goals and challenges. A good bookkeeper can help you identify areas where you can save money and make suggestions for increasing sales.

They can also help you identify potential problems in your cash flow. It’s hard to delegate when you want to know everything about your business, but imagine the peace of mind of having a finance expert’s eyes on your business while you’re taking a holiday.

A good bookkeeper helps you prioritise your workload

During the holidays, there's always a temptation to either do nothing or keep working and not spend time with your family. You didn’t start your business so you could become a bookkeeper!

Engaging a bookkeeper to handle your financial tasks can help you prioritise your workload so you can just do what you need to do, and enjoy time with your family.

A good bookkeeper saves you time and money

It’s hard to think that hiring an additional person into your team is going to save you money, but bear with me. Engaging with a bookkeeper to handle tasks that aren’t your specialist area will save you time and money, and here’s how. Not doing these tasks yourself will free you up for the work you’re really meant to do in your business - where there’s a much better return on your time investment.

Compare hiring a bookkeeper for £500 per month with spending more time with your customers providing your services and generating £2,500 per month. Are you better off to forgo the £2,000 and spend your time bookkeeping, or to earn an extra £2,000 in your business this month?

How about if you took half of that time you would have been doing the bookkeeping off as holiday instead? You’d still be £2000 better off this month - just by hiring a bookkeeper. This is maths that makes sense.

Add to this how a bookkeeper can usually save you costly mistakes in your bookkeeping and you’ll never question the value of a bookkeeper again.

A good bookkeeper gives you peace of mind

Knowing that a professional bookkeeper is managing your finances not just while you’re away but every day of your business gives you limitless peace of mind. You can always be confident that your business finances are up to date and in good hands, so you can get on with running your business armed with the information you need to make good, timely decisions.

In summary

Hiring a bookkeeper isn’t just a good move for the summer holidays, it’s a great move for the life of your business. It allows you to focus on what you really need to do as a business owner and take a break while everything financial happens smoothly behind the scenes.

You don't have to worry about falling behind in your financial tasks, and you can trust that a professional is managing your finances. By leveraging the expertise of a bookkeeper, you can focus on spending quality time with your family and return to your business recharged and ready to tackle new challenges.

If you’d like to talk to me about how I work with small businesses like yours, call me on 07394069106 or book a discovery call

5 Bookkeeping Tips for New Small Business Owners

183:755250521 (Claire Summers) — Sat, 31 Dec 2022 20:21:33 GMT

* This blog contains affiliate links. If you choose to make a purchase after clicking a link, I may receive a commission at no additional cost to you. Thank you for your support!

When starting your new business, the bookkeeping may not be your priority as you are more than likely concentrating on growing your business.

Keeping good financial records is essential for the success of your business. Here are 5 tips to help you get started with your bookkeeping.

1. Keep your personal and business finances separate

One of the most important bookkeeping tips is to keep your business and personal finances separate. Open a separate bank account for all your business transactions, this will help you to save time when reconciling your accounts at the end of each month. If you mix them both your personal and your business, it can become a complicated mess.

It will also prevent problems with your bookkeeper asking questions about your personal transactions.

Banks such as Starling and Mettle provide online accounts for sole traders, partnership and small business with no monthly account fees and no charges on electronic payments, domestic transfers or ATM withdrawals.

They also integrate with accounting software such as Xero, Sage, FreeAgent. Pulling all your bank transactions through to your accounting software automatically.

Starling bank offer a free day out at a National Trust site of your choice if you open an account with them.

2. Use accounting software from day one

Using accounting software from day one will help you manage your bookkeeping, you can raise and send your sales invoices as soon as you have completed a job, whenever and wherever you are. If you have an online store your sales figures can be pulled through automatically to the accounting software.

Accounting software can produce financial reports for analysing how your business is preforming. Show you who owes you money and who you owe money too.

You can try most accounting software’s for free for 30 days, take advantage of these free trials to find out which one best suits your business.

The software we use at CLS Bookkeeping and recommend are

Xero

Sage *

FreeAgent

3. Stay organised

Set aside some time each week or month to update your accounting software, this could be 1 hour a week.

Completing your bookkeeping little and often will reduce the amount of stress in doing your bookkeeping and will also help you to track the thresholds of any tax obligations you may have to meet, for example VAT.

Get into a routine of keeping all your receipts and invoices for your expenses from day one, remember that you can claim some start-up costs that you incurred before you started trading.

You could take pictures of your receipts and invoices and save them onto a cloud-based storage, for example. One Drive, Google Drive etc. This is a backup in case you misplace any of the originals.

By law you must keep your financial records for a certain amount of time. This can be digitally or paper copies.

If you are self-employed, 5 years from the 31 ^st January deadline submission of the tax year

Example, if you sent your 2020 to 2021 tax return online by 31 January 2022, you must keep your records until at least the end of January 2027.

If you are a limited company, 6 years from the end of the financial year. Example, you have filed the account for the year ended 31 ^st December 2021, you must keep your records until at least 31 ^st December 2027

4. Keep on top of your cash flow - Put money aside for your tax

With the reports that you can produce from your accounting software, you can tell from them who owes you money. Making sure that you have credit payment terms in place for customers and ensuring that they pay on time is vital for your cash flow. This may mean that you will have to keep good credit control procedure in place and chasing customers when they do not pay on time.

It's also just as important that you also pay your suppliers on time too, to avoid late payment fees, which may affect your credit rating. Paying on time keeps a good business relationship with your suppliers.

If no money is coming into the business, then you cannot pay your suppliers!!

Remember, that you will also need to put money aside for your tax bill, analysing how your business is preforming on a regular basis will show you how much money you will need to put aside for tax ready for the end of the financial year. You could even open a business savings account to save for your tax.

5. Know when it's the right time to take on a bookkeeper

As your business grows you may find that you do not have the time to complete your bookkeeping on a regular basis. Trying to squeeze in time for your bookkeeping can become very stressful and will more than likely result in incomplete records and not being tax compliant.

Understanding the importance of the role of a bookkeeper before it is too late will be an asset to your business. A bookkeeper is an investment to your business not an expense.

Bookkeepers can offer more than just the day-to-day bookkeeping. We can help you find out which accounting software is best for your business and set this up for you. We can help you meet your tax deadlines and more.

View our services to find out how we can help you or book a discovery call for a chat about how we can help.

How to Register as Self-Employed

183:755250521 (Claire Summers) — Wed, 05 Oct 2022 19:35:50 GMT

It's important to know if you need to register as self-employed and when is the right time to register.

What is self-employment?

You are self-employed if you meet the following criteria

Run your own business and are responsible for its success
Sell goods or services to make a profit
Have more than one customer
You decide when and how you work
You provide all the tools and equipment to complete your work
You are responsible for finishing unsatisfactory work in your own time
You charge an agreed fixed price for your work
You can hire staff to help you at your expense

You can use HMRC tool online to check if you are self-employed.

Why do you need to register as self-employed?

When you are self-employed you do not pay any tax and national insurance when you are paid from your customers. Registering as self-employed lets HMRC know, that you are earning money and will need to pay tax and national insurance once the tax year has ended, by completing a self-assessment tax return.

When do you need to register as self-employed?

Once your business income (money received before expenses are deducted) reaches more than £1,000 you are legally required to inform HMRC that you have started working for yourself, whether or not you are making a profit.

HMRC has a deadline for you to register for self-employment, which is the 5 October following the end of the tax year you started trading in.

The tax year runs from 6 April to 5 April.

So, for example, if you started trading on 1 May 2021, then you will need to register with HMRC by 5 October 2022.

It is best that you register as soon as you start trading, by doing so you will have plenty of time to complete the registration and avoid any penalties for late registration.

How do you register as self-employed with HMRC

You will need to create a business tax account

Go to HMRC website to register as self employed

Choose create sign in details – then enter all your details and follow the instructions

Enrol for Self-Assessment – you will need the following information:

Personal details, date of birth, national insurance number, home address
Contact details – email and telephone
The date you started your business
Business trading name, if you have one
Information about the work you do

HMRC will then send you your Unique Tax Reference (UTR) number by post, this normally take 10 days.

You must keep this number safe as this number is unique to you and you will need this to prove that you are a sole trader.

Activation code – you will also receive an activation code to verify your government gateway account. This can take up to 28 days to arrive in the post. Once you have received this you will need to log into your government gateway account and enter the code to complete the verification process. Login to HMRC

What next?

Once you are registered you will need to follow the self-assessment rules:

Keep accurate records, particularly of your turnover (sales) and expenses.

Declare your income once the tax year has ended by completing your self-assessment tax return by 31 January every year.

Makes payments to HMRC if you owe taxes.

You can assign a tax agent, such as a Bookkeeper or Accountant to help you with submitting your tax returns.

Book a discovery call to discuss how we can help you register and submit a tax return

The benefits of submitting your self-assessment tax return early

Tue, 19 Apr 2022 08:58:51 GMT

The tax year runs from 6th April – 5th April, with the deadline for submitting online and paying any tax you may owe being the following 31st January. Although, the deadline for submitting your self-assessment tax return is 31st January, you can submit your tax return as soon as the new tax year starts on the 6th April, with the first payment due on 31st January.

1. Budget - Cashflow

Starting to work on your tax return as soon as the tax year has ended will help you budget for the future.

If you are due to pay more than £1,000 of tax you will have to make payments on account in advance for the upcoming tax year. If this is your first year to submit a tax return this can be quite a surprise to some. Therefore, starting your tax return early, you will know how much will be due on the 31st January, giving you plenty of time to save and budget for this.

If, however you are due a refund, HMRC do not wait until the 31st January deadline to refund you, they will normally refund a few weeks after you have filed the return.

2. Avoid Penalties

Leaving your tax return to the last minute will only make you rush it and more likely to make mistakes and may even miss the deadline, resulting in late filing penalties.

Starting early enables you to take your time in getting all your records together, if you have been using a good bookkeeping system throughout the year, all your records will already be together. If not, then you still have plenty of time to gather all your records.

3. Time to Register

The deadline to register as self employed is 5th October after your first tax year, starting early ensures that you register in time and that you will have all your login details in plenty of time to submit your return.

To find out how to register read our blog How to Register as Self-employed

4. Save Money

If you are using a bookkeeper or accountant to submit your tax return, then their charges may increase the closer it gets to the deadline date. Contacting and working with your bookkeeper early will ensure that they have all the relevant information in time, making their fee cheaper for you.

5. Peace of mind

Completing your tax return early is one job to tick off your to do list, which feels great. Less stress at Christmas as you won't be worrying about getting your tax return submitted. To reduce the stress even more you can appoint your bookkeeper to submit your tax return on your behalf.

NEED HELP?

CLS Bookkeeping Services is here to help you file your self-assessment tax return, contact us to find out more information.