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Bookkeeping is one of the administrative priorities for any self-employed individual. Maintaining accurate records of your income and business expenses is essential as it helps you understand your finances and track progress against any targets or cash needs you may have. Bookkeeping also helps you to provide your accountant with the information they require to finalise and submit your annual self-assessment tax return. When it comes to your annual income and expenditure as a sole trader, it is important to retain records of all your invoices and receipts. This makes it faster for your accountant to reconcile your financial records. Process your self-assessment to calculate any tax liabilities or refunds. It also helps you deal with any questions HMRC should raise about your tax affairs. What records do I need to keep as a self-employed person? Unlike the rigid bookkeeping and reporting requirements for limited companies, those for the self-employed are more relaxed. However, this does not make it any less important for individuals to track their finances. Do you keep asking yourself the question “What records do I actually need to keep?”. We have set out a brief summary below as a guide: All forms of income Keep track of your invoices or other supporting documentation for all forms of income generated through your business or self-employed work, as well as any additional personal income. All forms of business expenses Keep all expenses and receipts that relate to your business or self-employed activity, as these may be deductible from income when calculating your profits in your annual self-assessment tax return. You don’t need to submit these receipts in your tax return but it’s useful to have digital expense records to support all transactions should your accountants, HMRC or others need more information about your finances. VAT records (for those VAT-registered) All VAT registered businesses must also keep a record of their VAT invoices charged to customers and all expenses where VAT has been charged to them. This will support the completion of VAT returns and submissions. Bank records All bank transactions relating to your business or self-employed activities should be recorded. Your accountant can help with this by supplying you online bookkeeping software that links into most bank accounts, simplifying record keeping. Any records of grants from the Self-Employment Income Support Scheme (SEISS) It is important to note that all grants received from HMRC during the lifespan of the SEISS must also be recorded and reported as taxable income as part of your self-assessment. Do sole traders need to produce accounts? It is not a legal requirement for self-employed sole traders to publish formal accounts. However, there are often benefits to producing formal accounts – it can help owners to better understand how their business is performing and support banking relationships and requests for loans/finance. What is the best accounting software for sole traders? If you are seeking sole trader accounting software that can improve your bookkeeping accuracy and efficiency and help to make sure you are ready for Making Tax Digital, we would highly recommend the following tax accounting software solutions as a starting point: Xero The Xero software offers an award-winning solution that links well with the personal, expert service delivered by our own accountants. Xero can automate lots of your conventional accounting legwork. Including the distribution of invoice reminders and importing bank transactions to update your records. It is also easy to integrate with other Xero products such as Xero Payroll for seamless bookkeeping. QuickBooks Access your QuickBooks software 24/7 on any device, with real-time information and reconciliation from all your active business bank accounts. You can send bespoke invoices and quotes via mobile to build your brand image and reputation. Can I do my own bookkeeping? If you want to keep your overheads low and avoid paying accounting fees. It is possible to look after your own bookkeeping. However, there are risks as you will need to be 100% accurate with recording your income and expenses. The consequences of making mistakes with your own bookkeeping can be disastrous, particularly if this triggers an unexpected HMRC investigation. Professional bookkeeping can help save time by taking the pain of maintaining your own records away. Allowing you to focus on building your business and achieving the right work/life balance. It will also help you understand your business finances, monitor your cash balances. Plan for future tax liabilities and pinpoint trends to help support important business decisions. How Account-Ease Accountants can help with your bookkeeping We can look after your bookkeeping on your behalf. Saving you time and money to focus on doing what you do best – running and growing your business. Our rates are competitive and we can provide you with software solutions to help make your life easier. As a tried and trusted accountant for sole trader and business clients nationwide, we can reduce the risk of human error, ensuring accurate self-assessment tax returns are submitted and improving your business’ overall tax efficiency. We have a range of online bookkeeping services that can help to handle day-to-day record keeping and provide a smoother process for sending receipts. Invoices and expenses digitally. These intuitive platforms also enable you to make commercial decisions with greater foresight. To arrange a free initial consultation about our bookkeeping services, which can take the administrative hassle away from you , call our team today on 0208 133 4599 or drop us a line using our online enquiry form.

With the aid of an accountant you can save your business valuable money and time in the long run. Such savings come from the reduced level of risk of human error and the avoidance of late filing penalties from HM Revenue and Customs due to missed tax deadlines. You do not need the hassle of managing your own bookkeeping. Particularly when you need to dedicate most of your energies to training and empowering staff, developing and improving your products or services and improving your firm’s bottom line. When juggling all the above, it is not surprising that errors can creep into your accounts. Below are some of the most common errors that professional accountants find during preliminary reviews of small business’ bookkeeping habits. Overdue self-assessment tax returns When it comes to self-assessment tax returns, there are multiple deadlines and responsibilities for sole traders and small business owners to be aware of. You must file your tax return on time to avoid a late filing penalty. Furthermore, you must pay the tax you owe on time to avoid incurring additional fines and interest on your bill. In most cases, the latest date to file a tax return for the previous tax year is 31st January. For example, the deadline for 2021/22 tax returns will be 31st January 2023. Furthermore, any tax due will also be payable by this date too. The penalties for late filing are as follows: 1 day late – Automatic fixed penalty of £100. This applies even if you have no tax to pay or you have paid the tax you owe on time. 3 months late – £10 per day up to a 90 maximum of £900. 6 months late – £300 or 5% of the tax due, whichever is higher. 12 months late – £300 or 5% of the tax due, whichever is higher. In serious cases, you may even be asked to pay up to 100% of the tax due instead. The penalties for late payment of tax bills are as follows: 30 days late – 5% of tax due Six months late – 5% of outstanding tax due at that date 12 months late – 5% of outstanding tax due at that date To avoid these penalties, you should enlist the help of a dedicated local accountant that can work periodically on your behalf to maintain your tax return commitments – and provide a schedule for tax payments. Inaccurate records for expenses and invoices There is no need to pay for extra hours for your accountant to untangle your confusing record of expenses and invoices. Find a local accountant who can offer you a dedicated solution to accurately record expenses. Platforms like Dext ensure you never lose another expenses receipt, as you can quickly photograph or scan your receipt at source and send it instantly to your accountant. Overpaying of tax The inaccurate categorisation or classification of regular transactions such as monthly subscriptions or payments happens more often than you think. Small business owners who handle their own books may classify these regular transactions in a certain column one month and include it in another column the following month, making it difficult to keep track of outgoings. Equally, it is also possible small businesses miss out on claiming the maximum allowable amount for tax because of this. They may even be forced to pay for their accountants to spend more time recalibrating periodic transactions under one heading. Using unsuitable bookkeeping solutions Many small business owners will choose a bookkeeping software without identifying whether it is the right fit for the way they do business. If a business does not issue invoices, an accounting solution with an invoicing function is not necessary, for example. During initial consultations with a professional accountant, they will often specify an accounting solution that would work best for your business. You should not have to fit around your bookkeeping software – your software should fit around you! Now is the ideal time for your small business to digitise its accounting regime. If you are a landlord  or an unincorporated business such as a sole trader with turnover above £10,000 per year, you will be required to onboard for Making Tax Digital (MTD) for Income Tax from April 2024. Making Tax Digital is designed to revolutionise the UK tax reporting system, making it more efficient and effective.. At Account-Ease, we can can work with you to comply in advance of April 2024, including the selection of appropriate accounting software that is compliant and futureproof for your business. Manual entry record keeping which eats in to your family time For some small business owners, manual accounting and administration has been the status quo for many years, if not decades. But many are unaware of the time that can be saved by harnessing the speed. Automation of state-of-the-art accounting and expense software and apps. Some entrepreneurs spend time pulling their bank statements and uploading them, but these next-generation solutions can pull your bank data directly into accounts to save you valuable time and energy. Quite often business owners will use their family time, i.e. evenings and weekends, to work on the record keeping for their business which probably isn’t the reason someone chooses to work for themselves. Alternatively, this work can eat into the valuable time that could be spent improving. Developing the business and driving up income. Timely, accurate accounting and bookkeeping really does add significant value to businesses of all shapes and sizes. It is a false economy not to lean on a professional so that you can focus on growing your business. There is no longer any need to fall victim to any of the above small business accounting errors. Account-Ease can help you with the right advice to support your business. For friendly advice and support, why not arrange a free initial consultation about your firm’s accounting needs with us today? You can pick up the phone and call us on 0208 133 4599 or fill out our online enquiry form to get the ball rolling.

As a contractor Accountants, you’ll face many challenges, and your ability to overcome them will determine how successful you can be as a self-employed worker. Preparation is key and making sure that you’re in a position to overcome any problems that come your way is paramount. Challenges can range from issues with clients, to managing your finances. If you are new to contracting, you may not have faced as many issues as those who have been self-employed for years, or you may have already been through the highs and lows of contracting in a short space of time. Recent stats have shown that more than 7 in 10 (74%) contractors are not happy working via umbrella companies. The research that was carried out by IPSE, a self-employment trade body, showed that despite an increase in the number of contractors working through an umbrella company, many believe there are no advantages to working this way. A lot of this stems from the IR35 reform that came into force in the private sector in April 2021. With the new legislation in place, a significant rise in freelancers and contractors began operating via umbrellas. More than three in five (61%) of those working this way do not believe it offers any benefits. With the majority (69%) claiming that they had no alternative. contractors stated A further two-thirds (63%) of contractors stated that while they had some level of choice, they were given a limited range of umbrella companies to choose from. However, 5% had no say and were allocated an umbrella company to work through. The main cause for being unhappy was that because of the need to join an umbrella company, they day rates for contractors has fallen. 80% of respondents cited that they now have to cover the liability for employer’s national insurance, and where applicable, the apprenticeship levy, through a reduction in their day rate. In addition, over half (57%) believed their role should fall outside the scope of IR35, but the supply chain would not allow them to take the risk of working through their own limited company. As a result, around 70 per cent reported having lost their independence. The report has been shared with the government following their recent call for evidence, in the hope that recommendations will stop freelancers from being forced into working for an umbrella company that limits independence and gives no real benefits. There is an option of switching between umbrella employment and PSC working. A dual approach means that contractors can work on contracts requiring employment through their umbrella company, while also taking on assignments that fall outside IR35 through their limited company. Since the rules were introduced, people are starting to feel more confident, however if you’re looking to work in this type of way, it is incredibly important to have a good accountant in place to ensure that your tax payments are being paid correctly. There is no doubt that the IR35 reform has had a significant impact on the way contractors work and the initial reaction from many businesses caused a huge shift to umbrella employment. But what else can cause a contractor to be unhappy in their work, and how can it be counteracted? We look at some other scenarios: Having too little or too much work Contracting comes in all different forms, and in a post-pandemic world, some have been more sought after than others. For example, Brits spent £110 billion on home improvements during the pandemic. As we spent more and more time at home, workspaces needed adapting and the same four walls became tiresome. Five million people redecorated rooms in their homes, 1.5 million built an outhouse and over a million built home-gyms and extensions. People were saving money on travel, and paid for home improvements instead of holidays. Others simply finally had the time to do it. According to research by Checkatrade, the most common purposes for home renovations over the lockdown period were for shed offices, home cinemas and snugs. As the property market continues to boom, more and more people are wanting home and garden renovations doing. In short, it’s been a great time for tradesmen, landscapers and builders. However, a term you may be familiar with is ‘being on the bench’ – what contractors call not being on a contract. It’s incredibly common to go through times where you’re quieter on the work front, especially if you rely on short-term contracts. If you are facing a quiet period, fill your days with networking events or email marketing, to help build your customer base. Write things down in a diary to keep motivated and show the day hasn’t been wasted. Just as too little work is a problem, it’s also common for contractors to take on too much. Initially, the prospect of more money is a great incentive, but overworking can see you providing a worse service than normal, and could potentially ruin the reputation you have built. Contract rates The rates you charge can vary from client to client depending on the situation, however building a skillset and reputation can ensure you are able to charge a rate in which you deserve. It can also depend on the different industries, and at quieter times you may end up accepting contracts that are worth a little less than you would like. Making sure you have a great reputation and reviews means you can stand out against a competitive crowd. Ensure you expand on your skills at any given opportunity and compare similar contracts available within that same industry with the aim to negotiate with the client. Not getting paid on time Working with a range of clients is great to have a varied work schedule, however you might find that some clients aren’t as timely in their payments. That can cause you problems with your cash flow, which can mean struggling to find funds to pay yourself. It’s difficult to deal with, however you can take payments or deposits up front

Apart from the excitement of creating a new product or service, startup entrepreneurs also have the opportunity to design and build a new business culture from the ground up. A viable approach to diversity, equity and Inclusivity (DEI) for a startup firm is more than simply scaling down the procedures used by larger organisations. It demands a new strategy that is more agile and adaptive. Putting equity for startup rules in place at the start of a company’s life will go a long way toward overcoming the biases that underrepresented groups confront throughout the hiring process and the barriers placed in their path once they are hired. This blog will examine the measures that a startup can take to consider DEI while creating a business actively. What is DEI? Diversity It refers to how people differ, including visible and less evident differences. It includes race and ethnicity, gender, cultural background, class, religion, sexual orientation, disability, language, and life experiences. These differences influence our perspectives and shape who we are as individuals. It takes planning to hire a diverse workforce but having one will help you discover blind spots and design a product that appeals to a broader audience. Inclusion It involves creating an organisational culture where people are free to be themselves and bring their unique perspectives to the table. They are respected and welcomed, particularly if they disagree with the majority. Inclusion is critical, especially in a diverse workforce, because it ensures that everyone is heard and can participate regardless of their background. Equity It refers to working toward equal treatment, access, and opportunity for all people by attempting to identify and remove structural or individual obstacles that prohibit groups and individuals from fully participating and engaging in society. Recognising and resolving institutional and environmental systems of injustice and unequal distribution of resources and opportunity is part of improving equity. It means establishing fair and equitable processes in the workplace, removing barriers that make it difficult for individuals to work with you, and ensuring that you develop a product that does not perpetuate bias and inequality. With the above definitions in mind, here’s how to make DEI a priority for your startup with straightforward steps. 1. Decide what you want to care about DEI For a founder, deciding how to operate your firm and how DEI fits into that vision is personal. As a founder, many things are competing for your attention right now. What role does DEI play among them as a priority? It must be a deliberate decision, as it will not occur naturally. There are many structural obstacles to a diverse and equitable organisation emerging organically. It takes a conscious commitment to make DEI a priority and commit time and resources. So, to make this conscious decision, consider the following questions: What kind of organisation do you want to start? Which type of business are you proud to put your name on? What sort of relationship do you want to have with your workers? What kind of global influence do you want your product to have? You don’t need to compose a complete vision statement; all you need to do is consider these questions regarding DEI and be on the same page as your company’s other leaders. 2.  Build your culture purposefully by role modelling inclusion There’s a common belief that employing a diverse workforce is the most crucial aspect of DEI for companies (often, startups focus their efforts on hiring women). Yes, having a diverse team is critical, but gender diversity is just one part. The more significant and immediate opportunity for startups is focusing on an inclusive culture from the start. The creators and leadership team play a critical role in deliberately creating this culture. First and foremost, it’s essential to consider how inclusion, bias, and equity fit into a workplace culture. Take some time to learn more about how bias affects our decision-making. Also, try understanding how our identities have made life easier or more challenging for us. It doesn’t matter who your founding team is when it comes to role-modelling behaviour; you have the power to establish the company’s culture and acceptable behaviour. You must take deliberate steps to demonstrate inclusive conduct. Small businesses are a close-knit community. Whether they are doing it purposefully or not, the founders are already role models. Employees naturally look up to the founders. It’s an excellent opportunity to acknowledge that responsibility and put the qualities of DEI in your firm. 3.  Ensure equal opportunity in the employment process and take steps to eliminate bias In this regard, equality of opportunity ensures that diverse applicants are fairly represented at all stages of the talent pipeline, including the final step. For example, Setting targets for each stage of the pipeline aiming for 50% women candidates and 30% minorities ethnic candidates at the first round of interviews, and ensuring at least two or more varied candidates at the last stage, is one way to ensure equality of opportunity. You have to create interview panels as diverse as possible regarding ethnicity and gender and hold calibration meetings before the interviews to ensure that the interview team is aligned on hiring criteria to avoid individual bias influencing decision-making. 4.  Put fair and transparent policies and processes in place Start recording your HR and employee processes, including recruiting, promotion, benefits, holidays, and harassment, even if it sounds early. Otherwise, as your firm grows, many unplanned decisions are made with no regard for transparency. It is how bias sneaks in. These procedures don’t have to be overly complicated; you can summarise some of them on a single page. Here are a few things to consider when it comes to processes and policies: Ensure that all job descriptions are clear to the individual and their coworkers. It’s fine if they change over time, but keep track of them. For employment purposes, keep track of how an application is evaluated, selected interview candidates, and what the interview process comprises. Make sure there’s a transparent process for deciding