​So you’ve started out your own business, everything is very exciting and times are busy! Lots to get in place, ideas flowing, obligations mounding, life is great but so hectic. You don’t necessarily want to pay an accountant, just need to get that bookkeeping done which is a simple enough job so can be handled in house.
If in doubt always ask for a second opinion.  If advice given sounds surprising or amazingly beneficial or detrimental to the business there may be a problem.  Somethings in life you just can’t afford to play with. If you diddle the tax man or file incorrect accounts this is ultimately your responsibility and can lead to massive fines and imprisonment. A risk definitely not worth taking. Use your intuition and find the right person who clearly understands your business and is excited and enthusiastic to work with you over the long term.

If you would like to run your business accounting needs by us then please get in touch using the contact form or by calling our friendly team on 01275 873948

The focus in everyday accounting is keeping the books tidy, paying suppliers, ensuring customers pay you and that you have enough working capital to keep your business moving.  Year-end requirements mean that annual accounts must be produced and filed. But what happens after you’ve done this, or indeed throughout the year with your beautifully prepared accounts?

These documents are a mine of useful data for the easily pleased management accountant who loves to crunch numbers to extract relevant information to help you to drive your business forwards into growing and developing more than you could have even imagined.
Quarterly reviews of the profit and loss situation enable any abnormalities to be signalled up and any trends appearing to be quickly identified and exploited or eliminated as appropriate. Action can be taken sooner rather than later to avoid getting into huge profits or losses unexpectedly at year-end. Forecasting, budgeting, cash flow planning and margins are just a few tools used by your friendly management accountant to assess the health and growth of your company.
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Another technique which can aid your business is the creation of scorecards personally designed to identify key performance indicators and areas of particular concern. Analysis is always at the heart of a management accountant, analysis that leads to understanding and strategic planning for the future. Cost/benefit, net present value, profit margins, costings, pricing, deciding which options are best …

That's it, the 6th of April is here at last and the new tax year begins! There are new tax rules in place now, please refer back to previous blogs or ask us if you have any questions. If you would like to sit down with one of our friendly team to forecast your upcoming business year to see if we can guide you in anyway towards having a more profitable or tax efficient year, then please call us for an appointment on 01275 873948 and we shall be delighted to help.

Please now collate your paperwork up to 5th April to ensure that we can prepare your year end accounts and tax returns accurately and efficiently for you. Timing is especially important for those looking at applying for tax credits and also for those looking at reducing or eliminating the next payment on account due 31st July 2016.

And not just any month: it’s April, that wonderful time of year when Spring is blossoming and the tax year is closing to pave the way for the new one to begin on 6th April. Our friendly and efficient team are now ready to complete your year end accounts and tax returns for the year ending 5th April.

Please pop in to see us with your year-end information, and any questions or concerns you may have regarding the new financial year. There are imminent tax changes to be aware of, notably concerning dividends and personal allowance. Please refer to other articles to find out more and of course ask us for more clarification about how this affects your personal situation.

In order to complete your accounts accurately, we will need the following documentation from you:

Personal tax returns
Details of income (P45 or P60 for employment, Self-employment, property rental, dividends, sale of stocks and shares or land leading to capital gains tax, bank interest, pensions, Partnership income, Trusts, foreign income and any other income such as PPI claims)
Details of outgoings (Private pension contributions, costs of property rental including mortgage interest statements, purchase of stocks and shares, CIS deductions)
Any changes in personal situation or details.

Partnership or Sole trader year end accounts
Bank statements, credit card statements and details of cash activity for the business.
All sales invoices and purchases receipts, along with details of outstanding balances at year end.
Mileage and personal expenses claims to go through the accounts, such as usage of home which requires details of annual house running expenses (mortgage interest or rental, council tax, rates and water).

If in doubt, please call us on 01275 873948 before popping in or posting the information to us to avoid having to do it twice.

Bad news for smaller businesses whose directors pay themselves a small salary to preserve entitlement to the State Pension and take out a large part of their income via dividends L
From April 2016, the current 10% tax credit on dividends will be abolished.
A £5,000 tax free dividend allowance will be introduced.
Dividends taken above this £5000 limit will be taxed at 7.5% (basic rate), 32.5% (higher rate) and 38.1% (additional rate).
Dividend income will always be treated as the top end of income received during the tax year.
Individuals receiving dividends of over £5,001 will need to complete self-assessment tax returns.
Dividends from ISAs and pensions will be unaffected by this new rule.
This change will particularly affect small family companies who employ both spouses. A couple could be over £5000 worse off.
 
Examples of how tax on dividends will be calculated:

1. Mrs Smartie, Company Director, pays herself £17,800 salary over the tax year and awards herself a dividend of £22,000 after having a busy and successful trading period.Her tax is calculated as follows:

Salary £17,800 - £10,800 = £7,000 taxed at basic rate = £1,400
Dividend £22,000 - £5,000 =£17,000 taxed at 7.5% basic dividend rate = £1,275
She is now paying £1,275 extra in tax as this dividend would have been covered by tax credits historically.
 

1. Mr Cookie, Company Director, pays himself a salary of £8,000 (to ensure that he gets his NICs benefits) and after Corporation tax, votes himself a dividend of £50,000 out of retained profits. Company profit before salary and tax = £70,500, less salary of £8,000 gives profits of £62,500 thus corporation tax of £12,500.

Dividend is taxed as £50,000 – £3,000 remaining PA = £47,000 to pay tax on
£5,000 (dividend allowance) so 0%
£27,000 at 7.5% basic rate = £2,025
£15,000 at 32.5% higher rate = £4,875
Total tax due (corporation + dividend) = £19,400. At 2015/16 rules this would have only been £16,600
 
Please come in to see us or call us on 01275 873948 if you would like more information.

During Budget 2015 it was announced that personal allowance and basic rate limit for 2016/17 will be raised slightly. This is to show that the Government is actively supporting those on lower and middle incomes.
 
The personal allowance of tax free earnings will be increased to £11,000 for 2016-17. The basic rate limit will be increased to £32,000 for 2016-17, still taxed at 20% as per today’s rates. The higher rate earnings remains as £150,000 in 2016-17, with a top bracket of 45% for income over £150,000.
There will be one income tax personal allowance regardless of an individual’s date of birth.
 
Back in 2010/2011, the personal allowance was only £6,475 so we have come a huge step in the right direction since then!
 
Don’t forget about the MARRIED COUPLES ALLOWANCE which allows you to transfer up to £1,060 of your personal allowance to your spouse. This could save them £212 off their tax bill. This is quick and easy to apply for, just ask us if you would like help in setting this up.
 
Great news for those with a spare room and looking for a bit of extra cash: Rent a room relief is going up from the current £4250 threshold to £7500 in this tax year.
 
Please come in to see us or call us on 01275 873948 if you would like more information.