Accounting lessons to help you defeat the Dark Side 1

star wars

There are many Dark Forces that can destroy business but you can over come them.

As Yoda said

“Ready are you? What know you of ready? For eight hundred years have I trained Jedi. My own counsel will I keep on who is to be trained. A Jedi must have the deepest commitment, the most serious mind. This one, a long time have I watched. All his life has he looked away… to the future, to the horizon. Never his mind on where he was. …Hmm? On what he was doing.”

If you want to your business to succeed you need to avoid these mistakes and Obi-Wan Kenobi won’t be your only hope

  1. Lack of Planning – Businesses normally start with a great idea but you need to have business model that works and to at least have a basic business plan and cash flow.
  2. Over Trading – this happens when a business expands too quickly for its working capital, when you start a new business its tempting to accept every order without considering whether you can have the resources and the cash to deliver.
  3. Wasted Marketing and Advertising – new businesses are an easy target for marketing companies but its important to stick to the essentials to start with, having a website, e mail and business cards are essential, magazine advertising and other things can be done as the business grows, in the early stages you are experimenting and finding your market so if you spend too much too soon you might promote the wrong things at the wrong price.
  4. Wrong Business Structure – Before you start your business get some advice from your accountant, its important to choose the right structure not just for tax reasons but also for investment and ownership.
  5. Wrong Staff – Choosing the right team is critical for business success, choose staff that have the right skills, the right attitude and are dedicated to the success of the business.
  6. Over Ambitious – All too often businesses plans are over ambitious with sales growing rapidly, often they prove to be unrealistic, when preparing a sales forecast start with your order book and be cautious in your assumptions.
  7. Overheads – Many businesses over spend on overheads for example renting premises too early, work from home, if you can, to minimise costs.
  8. Stock Problems – Buying the wrong stock, under or over stocking are also issues for start ups, try to adopt a ‘just in time’ stock policy.
  9. Getting Paid – A sale is only a sale if you get paid, any one can give things away, make sure you manage your clients and get paid on time.
  10. Competition – Keep an eye on your competitors, they will be watching you and responding to maintain their market share.

Here are some more great quotes from the new Star Wars Movie

http://www.bustle.com/articles/130685-29-force-awakens-quotes-all-star-wars-fans-will-be-repeating-forever

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Will TAAR cause you problems on company distributions? (New Share Rules) Reply

Successful Businessman With A Contract In Hand

HMRC are currently consulting on new rules to start in April 2016.

The consultation is focusing on Capital Gains Tax (CGT) ways to extract money from companies to create Target Anti Avoidance Rules (TAAR) covering:

  1. A disposal of shares to a third party
  2. A distribution made in a winding up
  3. A repayment of Share Capital including Share Premium
  4. A valid purchase of own shares in an unquoted company

Here are the examples of ‘problems’ HMRC want to resolve, Example 1 is ‘moneyboxing’ and/or ‘phoenixism’ and sometimes involves ‘special purpose vehicles’

Example 1

Example 2 involves creating a holding company…

Example 2

The consultation ends on the 3rd February 2016, the results are likely to be controversial!

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2016/17 rules on the tax free allowance for Sandwiches 1

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2015 No. 1948 INCOME TAX The Income Tax (Approved Expenses) Regulations 2015 come into force on 21st December 2015.

Screenshot 2015-12-08 13.00.53

What are business journeys (HMRC definition)

You can only get tax relief on the cost of business journeys. These are when, as part of your job:

  • you have to travel from one workplace to another – this includes travelling between your main ‘permanent workplace’ and a temporary workplace
  • you’ve got to travel to or from a certain workplace because your job requires you to

But business journeys don’t include:

  • ordinary commuting – when you travel between your home (or anywhere that is not a workplace) and a place which counts as a permanent workplace
  • private journeys – which have nothing to do with your job

 

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Self Assessment 4 times a year if your income is above £10k Reply

Retro Drama Woman

Most taxpayer find doing one return per year stressful enough but by 2020 anyone earning over £10k will be doing quarterly returns.

‘These changes are going to be very onerous,’ said Chas Roy-Chowdhury, of the Association of Chartered Certified Accountants.

‘It is not just about filling in a form, it is going to be a real burden.

‘Workers will have to make sure their books and records are up to date at least four times a year in case the taxman decides something is amiss and investigates them.’

Initially workers will not have to pay tax four times a year. But accountants suspect quarterly returns are a step toward this.

The plans were slipped out in the small print of George Osborne’s autumn statement. Around four million people will be affected: the self employed, small business owners and landlords who make more than £10,000 a year profit.

George Osborne said: ‘HMRC is making savings of 18 per cent in its own budget through efficiencies – in the digital age, we don’t need taxpayers to pay for paper processing, or 170 separate tax offices around the country.

‘We’re going to build one of the most digitally advanced tax administrations in the world. So that every individual and every small business will have their own digital tax account by the end of the decade, in order to manage their tax online.’

Digital Tax Account

In order for this to work, small businesses will need to keep their accounts up to date.

The top 5 common accounting problems accountants deal with are:
1. Not doing any accounts – the shoe box approach to business
This is the most common mistake, book keeping is best done as you go along, putting all the paperwork in a shoe box or carrier bag is a really bad idea as you have no idea how your business is performing.
2. Not keeping receipts. Often small business miss out on claiming all their expenses because they fail to keep receipts and lose track of their spending
3. Not reconciling. Reconciling your bank statements to your cash book is vital to make sure that all of your income and expenses have been recorded in your accounts.
4. Using the wrong accounting system. For some businesses a manual cash book and records are fine but for many accounting software such as Debitoor will be needed to keep track of debtors, creditors and VAT. Make sure you understand your accounting system and operate it correctly.
5. Mixing business and personal expenses. Some sole traders even mix up business and personal bank accounts and in extreme cases don’t even have a business bank account. This can cause errors and often means that a sole trader will either claim to many expenses or to few.

Will small businesses be able to overcome these problems or will they end up in a tax mess with Digital Tax Accounts?

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Have you heard of the new Personal Savings Allowance (PSA)? Reply

British piggy bank

From April 2016 the new Personal Savings Allowance (PSA) will start.

The PSA will apply to all non-ISA cash savings and current accounts, and will allow some savers to receive a generous portion of their interest totally free of tax.

Its expected that 95% of savings will no longer be taxed.

Basic rate taxpayers will receive £1,000 in savings income tax free, higher rate taxpayers get a band of £500 and additional rate tax payers get nothing.

The current TDSI (tax deduction scheme for interest) will stop.

 

PSA

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Small businesses to benefit from extended Funding for Lending scheme Reply

3d concrete Bank Building on a white background

The Bank of England and HM Treasury have announced a two-year extension to the Funding for Lending Scheme.

The Bank and HM Treasury launched the Funding for Lending Scheme (FLS) on 13 July 2012. The FLS is designed to incentivise banks and building societies to boost their lending to the UK real economy.  It does this by providing funding to banks and building societies for an extended period, with both the price and quantity of funding provided linked to their lending performance.

The FLS allows participants to borrow UK Treasury Bills in exchange for eligible collateral, which consists of all collateral eligible in the Bank’s Discount Window Facility.

The Bank and HM Treasury announced an extension to the FLS on 24 April 2013, which was amended on 28 November 2013, on 2 December 2014 and on 30 November 2015.  This allows participants to borrow from the FLS until January 2018, with incentives to boost lending skewed towards small and medium sized enterprises (SMEs). 

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/194214/fls_infog.pdf

Crowdfunders have also been able to access Funding for Lending via the Business Finance Partnership Program

 

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Tax Free Childcare from 2017 Reply

 

Tax-Free Childcare will be available to around 2 million households to help with the cost of childcare, enabling more parents to go out to work, if they want to, to provide greater security for their families.

In summary:

  • The new scheme will start in early 2017
  • You will open an online GOV.UK. Tax-Free Childcare account
  • For every 80p paid in there will be a top up of 20p. The government will top up the account with 20% of childcare costs up to a total of £10,000 – the equivalent of up to £2,000 support per child per year (or £4,000 for disabled children). You or anyone can pay in whenever and whatever amounts you choose.
  • Its available for children under the age of 12 or 17 if disabled
  • Parents must be working and earning between £100/week and £100,000/year, there will be a 3 month checking process.
  • Any working family can use Tax-Free Childcare, provided they meet the eligibility requirements. Its not dependent on your employer offering a scheme. Its also available to self employed parents and those of paid sick leave, SMP, SPP and Adoption leave.
  • You will also have the option to continue with an employer supported scheme
  • If you need to you can withdraw the 80p part paid in

You find more details at Gov.UK

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10 things a Business Accountant will tell you when you start your own business 2

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According to Government figures, there has been a net increase of 146,000 businesses in the past year, taking into account all start-ups, closures, takeovers and mergers. It means more businesses have started than closed.
The Business Population Estimates also show the number of businesses that employ people has grown for the second year running, with 35,000 more at the start of 2015 than in 2014.
Small businesses continue to make up 99.3% of all businesses and generate over £1 trillion turnover for the UK’s economy.

Business Accountants (Association of UK Accountants) are Chartered Management Accountants (CIMA) and when you start your new business they are will tell you:

  • Choose the right business structure for your business – most businesses start out as sole traders but once they start making profits convert to limited companies, this is because sole traders pay more tax than company structures

  • Choose the best VAT Scheme you might be better off with Flat Rate or Cash Accounting
  • Choose the most suitable accounting software

Accounting Clients

  • Don’t mix up Business and Personal Expenses – always have separate bank accounts
  • Reconcile your Bank Transactions regularly – its easy to forget what you have spent checking the bank account keeps you in control
  • Understand and manage your cash cycle – how long does it take to get paid and what credit terms do you suppliers give you?
  • Manage customer payments and make it easy to pay your invoices
  • Understand and Comply with rules like National Minimum Wage and Holiday Pay
  • Understand and set money aside for Tax, don’t be late paying your tax
  • Have a Business Plan and Forecast it will improve your chance of success

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A New Blogging Record for stevejbicknell.com Reply

Blog Technical Squares

 

 

This year, 2015, we have had over 100,000 hits (48% up on 2014), which I think is amazing!

So I wanted to share the full details with you, see analysis below.

In total we have had 236,607 hits, we have 4,532 followers, there are 556 posts, most people find us using Google (over 80%). Thank you to all those who read my blog. Have a great Christmas.

 

2015 100000 hits

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