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It’s been a tough time for small businesses over the past couple of years. In fact, it’s been a tough time for most people. However, no business, big or small, was able to escape the impact of the Covid-19 pandemic. Now, regulators have warned that the energy price cap will rise further in October to around £2,8000, due to continued volatility in the gas market. With that in mind, it’s difficult to not reflect on what small businesses have had to deal with since 2020. With two years of uncertainty, restrictions and lockdowns to comprehend, it has likely taken its toll. Covid-19 cost SMEs an estimated £126.6 billion. Double what owners predicted it would cost them at the beginning of the pandemic. With six million SMEs in the UK – accounting for over 99% of all businesses, 33% of employment and 21% of all turnover – this £126.6 billion hole in the books was a huge blow to the economy. Behind every small business is an owner with families, livelihoods and dreams. The impact of the pandemic was devastating for a lot of businesses, both financially and emotionally. More than four in every five small business owners say the pandemic has negatively impacted their mental health. Finances have been at the root of many worries as 61% of small business owners have had serious financial concerns at some stage of the pandemic. 81% of self-employed people felt that the government did not support small businesses enough, as over 2 million SMEs were unable to access about financial support. Yet in all of this, we have seen countless examples of the resilience, resourcefulness, and creativity that we have come to associate with the UK’s small business owners. And at Account-Ease, we’re lucky enough to work with so many of them on a day-to-day basis, supporting the financial side of their businesses. Respectfully, many small businesses have grown over the last 2 years. Stemming from passions that they may not have had the time to explore if it wasn’t for lockdowns and furlough. With energy prices and the cost-of-living soaring, it’s set to be a difficult time once again. But what makes an SME able to thrive and survive during tough economic times? What are your goals for the next 12 months? All businesses will set goals as part of their business strategy, to ensure growth year on year.  KPIs provide targets for teams to aim for, milestones to gauge progress, and insights that help people across the organisation make better decisions. Some of these may include: Make the business more profitable –        Bringing in more money than the previous year is always a key aim in business, but with the rise in energy and therefore more outgoings, you may be looking for new areas to cut costs. Build an online presence –        If the pandemic taught business anything, it’s that having an online presence is vital if for some unbeknown reason, such as a pandemic, was to force the world to stay indoors. For a lot of people, social media was the only way to interact with customers. Making sure your website is up to date and has ecommerce ability and having social media profiles can turn business on its head. Generate returning customers –        Customer acquisition and retention marketing is key to successful business development. Acquiring a new customer can cost five times more than retaining an existing customer and increasing customer retention by 5% can increase profits from 25-95%. The success rate of selling to a customer you already have is 60-70%, while the success rate of selling to a new customer is 5-20%. Release new products –        Keeping your business new and exciting is paramount to success. Keeping up with the times and ensuring your offering is timely, innovative, and ahead of the times is key. Give back to the local community –        With so many people struggling in your area, it may be a goal to give back to those that have supported you in the past. This could be by donating to the local foodbank, organising fundraisers, or simply giving a top rate of service at a price that is fair. One aim for many businesses this year is to give back as much as they can. Tips for Success this Year Behind every successful business is someone who is creative, organised, financially savvy and understands the risks and rewards when it comes to being self-employed. Here are a few tips for success in what could be another difficult business year: Organisation is key Organisation is essential for a successful small business. Being flexible and able to quickly adapt to changes puts you ahead of the crowd. It’s also incredibly important to be able to communicate these changes to loyal customers quickly and efficiently. The quickest way to do this is via social media. But it’s also important to have your website, Google business page and listings up to date with your opening hours and contact information. Gaining customer’s trust and keeping them informed of any changes were pivotal in trading during the pandemic, and is something that you need to continue now. More than four in 10 small businesses have managed to grow over a turbulent two years by pivoting their business and embracing new ways of generating revenue. However, 46% believe they are still a few years away from accomplishing their business goals. It’s important to be patient and break your goals down into smaller achievable actions. Reduce Energy Consumption With energy prices rising again. It’s a good idea to review your energy consumption and reduce it in any way possible. To do so, you could replace standard light fixtures with LEDs to reduce energy consumption. Switch to a renewable energy provider and request a smart meter from your business’ energy supplier to ensure your bills are accurate. Businesses who have taken measures to become smart with their energy usage are able to lower their overheads amid rising costs. In a recent study

Becoming a contractor can seem daunting. Freelancing and contracting can be a fantastic idea, helping you deliver your skills in a way that is beneficial for your own work/life balance. Being freelance can allow you to spend more time with your family and even earn more money than if you were employed by someone else. However, if becoming a contractor is a new experience, you need to ensure you have the correct support around you. The world of finances can be the main headache when it comes to becoming self-employed. To ensure all your tax paperwork is correct and you keep on top of your outgoings and incomings, you need to make sure you have a good accountant that specialises in working with contractors. The right contractor accountant will make sure your paperwork is up to date, your tax assessments are completed on time and will help you make sure you’re not paying more than you have to – and that you’re paying enough! They’ll also advise on the complicated rules around things like IR35. If you have the knowledge to do it yourself, that’s great. But wouldn’t you prefer to focus on what you’re good at, rather than wasting time and getting bogged down in numbers or worrying about HMRC investigations? Of course, hiring a contractor accountant is a big decision to make. Your accountant will be someone you work alongside for years to come, and someone who you learn to trust with your income. Making the right choice when deciding on an accountant is incredibly important. Finding someone you can trust to deliver the best contractor accounting services is paramount. But when should you hire a contractor accountant and what should you consider when making the decision? Let’s take a look. What should I look for in an accountant? 1) Are they qualified? If your accountant is working for a well-known, established firm, they will be qualified to advise you. At bare minimum, if accountants are still training, they will have an AAT foundation certificate that qualifies them in bookkeeping, costing and financial administration. More experienced accountants will typically: –        Have an accountancy degree, a more advanced AAT qualification, or an ATT, ACCA, or CIMA qualification –        Be affiliated with a professional body Bodies include: –        ICAEW (Institute of Chartered Accountants in England and Wales) –        ICAS (Institute of Chartered Accountants in Scotland) –        ACCA (the Association of Certified Chartered Accountants) –        CIMA (the Chartered Institute of Management Accountants) At Account-Ease, all our accountants are professionally trained experts who continuously develop skills to deliver only the highest standards of service. The beauty of using Account-Ease is that you will have your own dedicated accountant that can learn everything there is to know about you and your limited company, and you can build a lasting relationship. 2) Are they experts in working with contractors? Being a contractor means you have to comply with complex legislation including IR35. The off-payroll working rules can apply if a contractor provides their services through their own limited company or another type of intermediary to the client. An intermediary will usually be the worker’s own personal service company, but could also be: –        a partnership –        a personal service company –        an individual The IR35 rules make sure that workers, who would have been an employee if they were providing their services directly to the client, pay the same income tax and National Insurance contributions as employees. The rules around IR35 and other expenses can be confusing and can have dire financial consequences if you do not follow them. Having an accountant who is an expert in the field can help you follow the legislation and keep your tax bill as low as possible. Many contractors pay themselves a small salary and take home the rest of their income as dividends. However, if your salary puts you under the primary threshold, you may lose out on the benefits of NI contributions. You also must declare dividends under HMRC’s rules. At Account-Ease we will set up your finances in the best way for you, whilst still ensuring everything follows HMRC rules. We pride ourselves on being up-to-date with the latest tax laws that apply to contractors and freelancers, so that you can be confident that you won’t run into any issues down the line. 3) Are they tech-savvy? Submitting your tax records and financial information is so much easier now accountants use the best software. In a digital world, if your accountant is still asking for paper copies of receipts in the post, mailing paperwork to sign and keeping physical copies of your records, they’re probably not as up to scratch as they should be. Some accountants are old school, which makes everything slower, harder and more time consuming. Others will ask you to upload everything to an online portal. HMRC asks for financial records to be complete, accurate and readable, and the best way to do this is digitally. Since 2015 the government has been working on the initiative ‘Making Tax Digital’. All VAT-registered businesses are required to follow the Making Tax Digital rules by keeping digital records and using software to submit their VAT returns. All businesses including contractors will need to file their taxes online using accounting software that has been approved by HMRC. 4) Do they have a good reputation? It’s important to find an accountant that has a good reputation and has excellent reviews from their current clients. You can only ever sense how trustworthy a service is by hearing first hand accounts from people who have used them. An accountancy firm might have a great website, huge presence on social media and affiliations from professional bodies, but you will only know how good they are from fellow contractors’ experiences. 5) Are they going to be responsive? When you’re working for yourself and constantly on the go, you need someone who is efficient and will quickly respond to your queries. You don’t have time to be chasing your accountant

The National Insurance fund was introduced in England back during World War I as a way for employers and employees alike to contribute towards their own healthcare needs. However, it quickly expanded into providing support for people who lost jobs or were unable to access medical treatment because of it, which is why today’s taxation system includes both employee payrolls AND self-employed profits tax payments too! National Insurance contributions (NIC) are essentially payments made by both employees and self-employed people to help cover their future healthcare costs and other benefits like maternity or unemployment pay. The amount you pay depends on how much you earn, and there are different rates for employees and the self-employed. How does National Insurance Effect an Employee? The government has announced that all employees will be required to pay Class 1 National Insurance contributions starting next year once they earn more than £9K per year. This increases the current threshold of just over $4300, which begins at roughly 18-20 thousand dollars for an individual annually or 16 euros if you live outside London. The rate above this primary amount goes up by 0% but moves onto 12%. Additionally, whatever remains after paying these two rates combined amounts can accumulate without further taxation until reaching Los 50 KILOS (which could happen quite quickly). The extra 1.25 percentage points in National Insurance contributions for certain employees earning under £50,270 a year will be phased out over four years starting April 2022 as the rate of employment increases to 6%, increasing costs significantly and putting some companies at risk from Brexit without access to European Union member countries. That currently provide low-cost labor markets due to reason but offer no advantages like free movement laws when it comes down towards hiring new staff members or even just transferring current workers between facilities located throughout different regions. When you’re self-employed, National Insurance can be tricky. The good news is that there are two different types of payouts depending on how much profit your company makes—Class 2 and 4, respectively. The first type requires payment at £3 per week when it reaches the threshold for small profits with rates increasing by 15 cents every year until it topped off at 4% total employment versus typical 7%. This rate goes up another 25c if someone has been working more than 18 months without any additional hours worked each month but only due exclusively. The impact of national insurance on employees The tax increase will have a significant impact on both employers and employees. The employee’s take-home pay may decrease, but this is not certain yet because it depends on whether they receive any bonuses or other forms of incentive payment from their employer, which are taxed at 10%. So far, there has been no change announced for these types of payments however we expect that possibility soon enough, given recent developments within parliament In addition to an increased cost due solely due to its connection with HMRC (the government). Another 2 percentage points worth -12% overall additional expense manifest themselves through changes made internally by companies such. How will it affect me if I am employed and self-employed? In the case of both self-employment and employment, you must pay: Class 1 NIC on your income from employment; Class 2 and Class 4 NIC on your self-employed income. When you receive your paycheck, two different types of taxes will be collected from the payroll department: Class 1 NICs and 4th NIS. The first payment for these charges comes on January 31st following tax year-end; however, they’re assessed every day as part of our salary during working hours – so keep watching! When you complete your Self Assessment tax return. HMRC will automatically calculate the amounts of Class 2 NIC and Class 4 NIC, taking into account the overall maximum amounts due. You can read more about NIC for the self-employed in our self-employment section. what is the purpose of the National Insurance system? The following are the purposes of National insurance system: Employees and employers alike pay a tax on their wages; the self-employed pay it out of their profits. When employees were laid off or required medical care, they established the fund in 1911. As a result, the NHS, welfare payments, and the state pension are no longer paid for by taxes. The National Insurance fund may also be used as a funding source for other government initiatives. What are people saying about the tax hike? It’s feared that the rise would hit the lowest-paid workers hardest. As a result, employees who earn between £9,564 (£9,880 from April) and £50,268 pay a 12% National Insurance contribution. A rate of 2 percent applies to profits over this threshold. As a result, if your salary exceeds £50,000, you will pay less in National Insurance. The Health and Social Care Levy will function similarly to National Insurance. When the UK’s tax year begins and ends? Missing a deadline might result in a penalty, so staying on top of essential dates and deadlines is critical. Additionally, it would help if you watched for any changes in the law that might affect your firm. A weekend or holiday payment deadline may necessitate paying your account on the final working day before it expires, so keep this in mind when making your payment. The tax year ends at what time of the year? Taxes in the United Kingdom are due by April 5 every year. The end of the tax year is one of the most significant events for tax purposes in the calendar. Rates and allowances tend to fluctuate annually; thus, this is the case. A good example is the ISA, where you may save is reset at the beginning of each fiscal year. Once your stipend is spent, it is gone forever. It implies that you should make as much contribution before the next tax year begins as possible. According to the Office of Tax Simplification (OTS). The end of the tax year should

Making Tax Digital also known as MTD is a part of the government’s ambition. Its purpose is to be one of the most digitally advanced tax authorities in the whole wide world. When Making Tax Digital (MTD) was first announced one unique caption caught my eye. This particular headline which was ‘Making tax easier: the end of the tax retrieval’ was found in a document published in 2015. However, in 2022, I soon realized this unique caption was rather a misleading one. Now, what does MTD imply for Self-assessment taxpayers? Well, it’s pretty simple actually. From April 2024, All businesses, as well as landlords whose gross income from either self-employment or rent is greater or is equal to 10,000 pounds, will be required to keep a digital record. They will be needed to make submissions of their data to HMRC electronically. Things You Must Know About MTD ITSA Business records and data should be kept electronically. Although spreadsheets can be used, it’s more appropriate to use online accounting software and apps such as Cloud accounting software for businesses to fulfill the very first condition. Starting from April 2024, all sole traders and landlords must comply with MTD ITSA. The partnership does not need to conform until April 2025. LLP’s partnership with corporate partners will need to comply from a date that is yet to be confirmed. Hence, the date is left to decide in the future  Some Taxpayers will not be required to follow MTD. That is if their combined business and rental income is less than £10,000 in tax from the year 2022 to 2023. New and existing enterprises with a turnover that surpasses £10,000 for the first time will be needed to follow MTD from the 6th of April. For example, a new business that initiates trading in April 2024 and exceeds the turnover test on 5 April 2025 only after 12 months. Such a business will be required to follow MTD from the sixth of April 2026. An exemption will be applied for those that are digitally excluded. For example, those who do not use computers or electronics for religious reasons or those that are unable to use such electronics due to age, disability and location. Administrators, executors and trustees will also be exempted from compliance with MTD. It is to be noted that very few will be exempt from this regulation. More About Making Tax Digital Separate submission of data will be made for each business and rental type. For example, if a sole trader collects rental income from residential property and amasses income from a furnished holiday let. He /she will be required to make a total of 3 submissions of data under MTD ITSA. And if that sole trader is also enlisted for VAT, then he /she will be required to submit data under MTD VAT too. Hence the sole trader will have to submit data under both MTD ITSA and MTD VAT. Quarterly submission of data will be required. This data must be electronically submitted to HMRC. These submissions may include designatory information like national insurance numbers and financial information including sales income and expenses. For landlords, the details of their properties will be needed. The standard quarterly intervals are on normal quarter dates like the 30th of June, 30th September, 31st March and 31st December. The due date for these quarterly submissions is the fifth of August, the fifth of November, the fifth of February and the fifth of May. A fifth submission will also be required that would include the financial data as well as the taxable profit of its businesses. This would be taken after making appropriate tax and accounting adjustments. This type of submission will also include information on other things like rental or non-trading income. This may also include pension or employment income, investment income or taxable savings. Lastly, a sixth submission will also be required to ensure that all the data submitted is accurate, definitive and final. The due date for these submissions would be 31 January following the tax year-end. Due date of these tax payments will not change and will remain the same for the time being. What you should do To Prepare for MTD ITSA If you’re using accounting software to record transactions in your business then you should check. Whether it’s MTD compatible or not. If you’re not using any software then try consulting. Or take advice from your accountant to figure out which software is most suitable for you. Once you find the one that you are most comfortable with it would become easier for you to follow MTD requirements. One such software is Cloud accounting software which comes with many advantages and benefits. It is not only MTD compatible but it can also give your accountant to empower you and give you useful advice on real-time tax estimates and planning tips. If you are a landlord or small business with an income less than £150,000, then consider using a ‘cash basis’ for accounting. It is much simpler to account for expenses and income. It would also make it easier for you to compile data for submitting under MTD ITSA. If you are not required to comply with MTD, then there’s no need to worry. You just have to continue filing your self-assessment tax return as you did before. Hence, on a serious note, for some taxpayers, it is not ‘the End of the tax return. Top Tip Get help and advice from your trustee accountant to choose the best possible Cloud accounting software as well as app and get started as soon as possible. Account-ease has an entire squad which is devoted to cloud accounting and is ready to help you. Therefore, you can get advice, support as well as training from account-ease.co.uk. Which will make it easier for you to comply with the requirements of MTD.

When you are running a business there is so much to think about. Keeping important accounting and tax dates in mind can become difficult to keep track of. There are a lot of dates but as a contractor or freelancer you need to be aware of these tax dates and deadlines, so that you don’t run into problems with HMRC such as late filing and penalties. This can be very challenging when you are busy in your day-to-day business operations. At Account-Ease, we provide accounting for contractors and freelancers so we are aware of all the key tax and accounting dates for both. Stay on top of these dates, we have put together an accounting and tax calendar to help you out. Key dates for contractors and freelancers If you’re self-employed, you have to keep all annual tax deadlines in mind, so you don’t miss any important dates and risk having to pay fines or penalties. You’ll also have different obligations to HMRC depending on whether or not you employ other people or if you’re a sole trader or own your very own limited company, for instance. By being aware of your accounting responsibilities, you can have peace of mind that you’re submitting documents to HMRC on time, every time. If you’re unsure whether you’re meeting all of these obligations or filling out paperwork correctly, it may be best to seek the expert advice of specialist accountants for the self-employed, who will be able to answer all your questions and assist with everything you require. In the meantime, you can check out our list of important dates for contractors and freelancers: 22nd January – PAYE and NIC’s The deadline to pay PAYE and National Insurance contributions for the quarter ending 5th December. If you pay by post, the deadline will be 19th January 31st January – Self-Assessment This is one of the most important dates in the tax calendar for self-employed individuals. If you have any income outside of PAYE tax, you will usually have to submit a self-assessment tax return, which shows HMRC how much you earned and need to pay in tax. Our guide to filling out and understanding your self-assessment tax return explains how to do this in detail. 31st January – First Payment on Account 31st January is also the deadline for submitting your first payment on account, which refers to the amount of income tax and National Insurance contributions you have to pay. Your second payment arrives six months later. 6th April – New Tax Year 6th April is when the new tax year starts, which means that new legislation, including new tax rates, will come into effect on this date. 22nd April – PAYE and NICs The deadline to pay PAYE and National Insurance contributions for the quarter ending 5th April. If you pay by post, the deadline will be 19th April. 1st February – Penalties Start If you fail to submit your self-assessment tax return before 1st February (extended to 1st March this year), you incur a £100 penalty. There are also further penalties that are applied the later the tax return is filed such as £10 per day from month 3 for up to 90 days. 31st May – Issue P60s If you have employees, you have until 31st May to issue their annual P60s. Speak to your small business accountants for more information on this. 6th July – Filling P11Ds If applicable, you have until 6th July to submit P11D(b) forms to HMRC. You also have until this day to issue P11Ds to your employees. 22nd July – PAYE and NIC’s The deadline to pay PAYE and National Insurance contributions for the quarter ending 5th July. If you pay by post, the deadline will be 19th July. 31st July – Second Payment on Account 31st July is the deadline for your second payment on account. Both payments account for 50% of your tax bill so, if you have to pay £2,000 in tax the previous year, you pay £1,000 on your first payment and the other £1,000 in July. 5th October – Registering for Self-Assessment This is a critical deadline for those who have never submitted a self-assessment tax return before. When you become self-employed, you should make it a priority to register with HMRC. This registration needs to occur by 5th October following the end of the first tax year, for which you have to submit a self-assessment tax return. 22nd October – PAYE and NIC’s The deadline to pay PAYE and National Insurance contributions for the quarter ending 5th October. If you pay by post, the deadline will be 19th October. Filing Annual Accounts At the end of the financial year of your limited company, you have to prepare full annual accounts (called statutory accounts). These annual accounts are prepared from your business’s financial records. They include a ‘balance sheet’ that shows the value of everything your company owns, owes and is owed. You will have to send a copy to your shareholders, to Companies House, to everyone who attends general meetings and to HMRC. When it comes to deadlines, you will file: First accounts with Companies House 21 months after your registration date Annual accounts with Companies House 9 months after your company’s financial year ends A Company Tax Return 12 months after your accounting period for corporation tax ends. Corporation Tax Your company must pay corporation tax on any taxable profits, and the deadline for this will depend on your company year-end. You have to register for corporation tax when you first start doing business. You also have to keep accounting records and prepare a company tax return (which has to be sent 12 months after the end of your accounting period) to figure out how much you will pay in corporate tax. You usually have to pay this tax – or report if you have nothing to pay – 9 months and 1 day after the end of your accounting period (which refers to the period covered by your tax return and can’t be longer than 12 months). VAT Return You will be required to file