amir

Bookkeeping is an essential part of managing a business’s financial health, but it might seem confusing at first. Our guide explains the accounts jargon that might trip you up, and includes advice on how to get your bookkeeping right. What is bookkeeping? The process of bookkeeping involves recording all daily transactions that take place within a business in order to accurately show the income and expenditure. Bookkeeping records must show how much money your business has received and spent as well as the amount it expects to receive in the future. When you receive an invoice that you haven’t yet paid. It’s important to record the invoice in your books because you know that at some point you will have to pay. You can then plan your money needs and the dates for them (also known as Cash flow Management). What is double-entry bookkeeping? Double-entry accounting shows that every business transaction is an exchange. Double-entry bookkeeping allows you to record both sides of the exchange by recording the transaction twice. A supplier invoice, for example, means that money has been spent, but it is offset by the return of goods or services. How can double-entry bookkeeping help me to run my business efficiently? Double-entry accounting is useful for recording your business transactions because it helps you to see where the money comes from and goes. A sale, for example, means you don’t have the product or time period in your business. You can’t re-use these goods or services, even if you’ve not yet provided them. The invoice shows that something left the company, but it is offset by the resource returning to the business. This is usually the money your customer pays for the sale. If you pay for staff or buy materials, the same applies. The money that leaves the business must be compared to the resources they provide. How can I display transactions in double entry bookkeeping? Invoices sent to customers are double entries. Receiving payment for an invoice is also a double entry. The debit amount is credited to your sales when you issue an invoice. This is a double entry. When the bill has been paid, you will need to make another double entry. Your ledger is debited because your bank balance increased. Credit is applied to the debtor control to reduce the amount due by the customer. This example shows a business invoicing a client for £10 and showing it in their accounting with two double entries. It’s easy to get mixed up when referring to credits and debits with the bank. When you put money in your bank account then the bank owes you this money, so they call it a credit. From your own accounting point of view though, an increase in your bank balance is a debit. How do I know if my transactions match in double-entry bookkeeping? Each of your financial transactions are recorded as a debit and a credit. On one side of the transaction is the debit, and on the other is the credit, so they cancel each other out and balance to zero. Running a trial balance report makes sure that these entries match. Do I have to keep bookkeeping records for my business? If you run a business then HMRC do expect you to maintain good bookkeeping records which show what’s happening in your business. This is true whether you’re a sole trader, a limited company, in a partnership, a freelancer, VAT registered, or any combination of these! Your bookkeeping records form the basis of every tax return that you need to send, so it’s crucial that they’re accurate. Good bookkeeping helps you avoid uncomfortable conversations with HMRC auditors, (and any potential fines) but it’s useful for other reasons, too. Keeping your financial records up-to-date helps you keep track of any money you owe and spot areas where you could save. You’ll find it much easier to manage your cash flow, too. Recording all the money that you spend on your business means you’ll be able to claim tax relief by clawing back any allowable expenses. Huge numbers of business owners go without claiming tax relief on their business expenses every year – don’t be one of them! What records should I keep for my bookkeeping? You will find that your records show all transactions in your business. It includes all invoices you send or receive, banking transactions, expenses, and so on. Your bookkeeping information will vary depending on how big your business is and how many transactions you have. Your records must include information such as the date, amount, purpose, customers, suppliers, and the name of the customer. You may also have to deal with international transactions. This will require you to think about the tax implications, and multiple currencies. You can imagine that bookkeeping is a tedious job with all the data flying around. However, using bookkeeping software like Xero, QuickBooks, and Sage! can speed up this process. Your bookkeeping records should include all supporting documents, as well as the transaction itself. You’ll also need to include the invoices themselves, so you will not only have a list but also the invoices. Bookkeeping for sole-traders and limited companies You should also consider how the structure of your business affects the documents that you maintain. There’s no difference in law between you and your business as a sole-trader, so the profits of your business are yours. This has tax implications. There is a guide that explains the bookkeeping process for sole trader bookkeeping and partnerships . You are a separate entity from your business, and so must report both your income as well as the finances of your business. What is the difference between bookkeeping and accounting? Although the terms accounting and bookkeeping are often used interchangeably , they serve different purposes. Bookkeeping is the recording of financial transactions and cash flow management for a business. Accounting is the use of bookkeeping data to analyze and report how a business is performing. This helps make the right decisions at the right time. These are both essential to the success of any business. They make it easy

What is self-employed accounting software? If you’re self-employed, you’ll need to make sure you’re keeping records of all of your income and expenditure in order to submit accurate tax returns. Self-employed accounting software helps you do this by providing an online platform to record and store all your digital paperwork. You’ll be able to explain transactions and use them to generate tax returns such as your annual self-assessment. The best software even lets you submit your returns directly to HMRC. Why should you use it? Self-employed accounting software saves time and makes it easier to track things. You’ll also make the accountant’s job easier and faster if they are used to submitting your tax returns. This results in lower accounting fees. Many people can even do without an accountant. Using accounting software to avoid fines Accounting is one of the worst parts of running a business. Unfortunately, it’s a part of business that can’t be avoided. Your accounts must be accurate, up-to-date and submitted by the due date. You could be facing dire consequences if you do not. You can even be £100 for submitting your tax return late. You’ll be charged more if you file late. You’ll be charged interest for late payments. You don’t want yourself to be in this mess. This is where self-employed accounting software can help. FreeAgent  It is easy to use, and it’s one of the best softwares out there for those who are self-employed without any previous experience. This is why it’s ranked so highly in our list of the best self-employed software. This program has some amazing features to help you: Estimates and invoices You can store receipts and photos in Expenses. You can invoice more accurately with time tracking. Self-assessment tax return VAT or other corporation taxes You’ll find more than enough features to run most small businesses. FreeAgent isn’t the most affordable option in the market. Prices start at £19 per month. Quickbooks  Quickbooks has been designed for small businesses. This platform is perfect for sole traders and self-employed people. You can create and track invoices and organise your cash flow. It will also automatically import your transactions if you have a bank account connected. This reduces the amount of work you need to do. Quickbooks can even generate your tax return automatically. If you are self-employed, this is a lot to think about. FreshBooks FreshBooks is a platform that was specifically designed with small business owners in mind. It’s also one of the best accounting software for self-employed people. Client-based businesses will appreciate the features of this software, such as easy billing and time tracking. There’s more to it, though. The accounting side offers some great integrations to help you keep your bookkeeping and tax records up-to-date. Zoho Books Zoho Books is also highly recommended in our list of best accounting software for self-employed individuals. Zohos Accounting Platform is actually quite good. It’s probably better known as a CRM tool and other business tools. The software has many of the features found in other business tools. It is also free if you have an annual income below £35k. There is a slight learning curve, due to the sheer number of features available. Xero Xero, when it comes to accounting programs, is a powerful force. As we mentioned in our full Xero review, Xero one of the few companies that offer a version of their app on the apple watch. No matter where you are or what device, if you’ve got an internet connection you can access it. Now, that’s accounting on the go. This software was designed to cater to large and medium businesses, not to the self-employed. Some of the features are a bit complicated, and you won’t need them. Sage To tell the truth, The Sage is probably a bit too advanced for small businesses. We’ve added it because we understand that everyone has different needs. Sage’s more advanced features may be very helpful if you are planning a large growth. You might want to spend some time learning the powerful features of Sage 50Cloud now, as it is easier to stick to one platform than to switch. Read our full Sage review for more information. What are the accounts that self-employed business owners need to maintain? Start with the records that independent businesses such as yours should (and must be!) keeping. Not every report will be examined. You will need them to calculate accurately your profit or loss on all of the paperwork and tax returns you’ll complete. You’ll need to deal with paperwork if you want your business to succeed. Once you have calculated the amount, keep your documents. Keep them safe for a minimum of 5 years following the submission of your tax return. You may be asked at any time to give them to HMRC. Included in this is: All receipts and stock Bank statements, chequebook stubs The sales invoice, the bank slip and the till roll

Small businesses play a major role in driving economic advancement and innovation within the business environment of the UK. They are the backbone of our economy and contribute significantly in terms of job creation, and innovation, adding to the country’s national income, and its export and import balance. Furthermore, small businesses not only augment economic viability but also contribute significantly to maintaining the market dynamics. While they do not have individual power to augment the market dynamics, they can swiftly adapt to market changes. Having said that, there are some perquisites to this adaptability. A good accounting system is one of them and probably the most important one. Partnering with Accountants for Small Businesses allows the business to manage the records but also streamline the finances. When it comes to efficient management of the business, one cannot overstate the significance of accountant services for small businesses. Robust financial management practices like proper bookkeeping, accounting, strategic planning, and likewise serve as the guiding compass for these small businesses to manage complex financial requirements. In this comprehensive guide, we will discuss in detail the role of an accountant for small businesses. If you are planning to get an accountant for a small business in the UK, this guide will help you make a well-informed decision. The Responsibilities of an Accountant in a Small Business Setting Generally, small businesses are called for to function with limited spending plan margins, due to which correct and calculated financial management is a non-negotiable for their growth and survival. Prior to you zero in on your local business accountant in London, allow us take a better check out recognizing just how getting an accounting professional for a local business helps. Accurate Record Maintenance: Accounting professionals for small business help preserve thorough records that provide you access to a riches of financial information which can be made use of for fad analysis and critical planning. In addition to serving regulatory needs, these thorough economic documents are important for reviewing business’s financial standing, determining locations for cost decrease, and projecting future growth. The dynamic globe of entrepreneurship necessitates well-informed decision-making, and accountants for small companies act as custodians of economic records and are important in managing unpredictability and assisting business in the direction of long-term profitability. Budgeting and Forecasting: When it pertains to making economic projections and spending plans, accounting professionals for small businesses in the UK can be of terrific assistance. They supply much-needed help to small businesses in forecasting future patterns and therefore getting ready for them. By taking a look at historical monetary data, accountants aid services in developing reasonable financial goals. As necessary, business allots resources, handles cash flow, and adapts to market problems. Consequently, it can likewise efficiently assign and distribute a budget to back its features and operations. Tax and Other Regulatory Compliance: Taxes are a complex and layered world, which can be difficult to navigate. This is especially true for small business owners. Accountants are essential to small business owners in making sure that all tax laws are followed, available credits are realized, and eligible deductions are considered when calculating taxable income. Small business accounting firms in London are responsible for keeping up to date with the latest tax laws. They can therefore anticipate, explain, and cushion the impact on the business of any changes to tax laws. Tax planning can lead to substantial savings for the company, which helps preserve and improve its financial health. Financial Analysis: Accountants for small businesses in the UK do much more than crunching numbers and maintaining records. They analyse financial statements and based on their evaluation provide valuable insights into the business’s performance, risks and opportunities. They take into account various factors like economic drivers, past financial data, current industry trends, performance of the competitors, etc. By doing a thorough analysis of all these factors, accountants for small businesses help these businesses curate the right strategy for their growth and sustainability. Audit and Reporting Support: Accountants for small businesses also feature know-how in regulatory standards. They provide significant assistance in making sure that neighborhood and international reporting regulations are complied with. Precise and timely coverage signals a dedication to visibility and honest monetary practices. This not only fulfills lawful demands but additionally fosters stakeholder trust fund. Accounting professional solutions for small businesses help them work out intricate reporting and auditing functions while keeping monetary compliance. Financial Advisory Support: In the complex business environment of the UK especially London, accountants are indispensable advisors. They offer tailored services to help small businesses navigate the complexities of business with confidence. Small businesses can benefit from their strategic and specialised services, which help them to effectively manage difficult situations. They offer more than just traditional services such as bookkeeping services and accountancy. They also provide insights into regional trends, regulations and industry dynamics. Small businesses can benefit from quality advisory services and position themselves strategically for long-term growth with the help of these services. When Should a Small Business Get an Accountant? So what is the correct time or under what conditions should you obtain an accountant for a small business? The optimal utilisation of an accountant’s solutions for small business can be done when you understand when to companion with an accountant, to begin with. While there can be numerous such instances or circumstances, where partnering with a professional like an accounting professional will be best for your small company, here are some usual circumstances, where it becomes necessary to take the aid of an accounting professional for a small company. At the Onset of the Business: Accountants for small businesses help business owners navigate the challenges of business formation with ease. You will receive accurate information on everything from choosing the right business structure to dealing with initial tax requirements. This ensures that your new business has a solid financial foundation. A business created in conjunction with an accountant will also ensure accurate documentation and compliance. Small Businesses Experiencing Rapid Growth: The financial complexity of small businesses

With what could be the final budget before the general election, Chancellor of the Exchequer Jeremy Hunt today delivered his Spring Budget to. The House of Commons to announce the Government’s tax and spending plans. After lots of speculation over the last few days around tax cuts ahead of the forthcoming election. Reports suggested that several measures were being considered to raise money to fund this, including raising duty on flying first class. It was expected that further permanent cuts to National Insurance would be announced and potentially an income tax cut as well with Jeremy Hunt aiming to give “a message of hope in challenging times” and achieve heathy long-term economic growth, good public services as well as reducing taxes. Another big talking point ahead of the Spring Budget was the possibility of taxing vaping. As well as examining scrapping non-domiciled tax status, which the Treasury had declined to comment on. Additional decreases in National Insurance Contributions In response to the Autumn statement, additional measures to reduce taxes were announced. From the 6th of April, the Class 1 Employee National Insurance Contributions (£1) will be reduced by 2p from 10% to only 8%. The Class 4 National Security Contributions will be reduced from 8% to just 6% for those who are self-employed. This equates to a £450 annual saving for an average employee, and a £350 savings for a typical self-employed individual. Mandatory VAT Registration Threshold Increased The VAT registration threshold will be increased from £85,000 to £90,000 from 1st April 2024. This is the first time this threshold has increased in 7 years which will mean thousands of businesses will no longer be required to register for VAT. Permanent Expensing for Leased Assets The draft legislation to boost business investment will be introduced as soon it is affordable. Changes to Child Benefit The government is looking to reform the high-income child benefits charge in the future. It will change the system to one that applies to all households. Rather than the current system where the charge is applied if the household’s highest earner earns more than £50,000. The threshold for the high-income child benefit will begin at £60,000 in the interim and gradually increase to £80,000. The high income child benefit fee currently starts at £50,000, and is fully repaid when it reaches £60,000. Non-Domicile Tax Reform A rumoured change prior to the budget, the regime whereby individuals were able to avoid paying tax on their foreign income is to be scrapped. And replaced by a new residency based system from April 2025. Under the proposed new system, there would be no taxation on foreign income for individuals arriving in the. UK for the first four years after which regular UK residence taxation would apply. There will be a transition period for those currently utilising the “non-dom” system. Fuel And Alcohol Duty Frozen In good news for motorists, the Fuel duty freeze previously introduced in 2022 was temporary and fuel duty would have increased by 13% this month. But the Chancellor is maintaining the 5p cut for a third year and keeping it frozen for another 12 months. Alcohol duty was frozen in the Autumn statement and this freeze is now extended until February 2025 which will continue to cut costs for pubs, bars, restaurants, nightclubs and more. Changes for Landlords and Property Investors In news that could impact landlords and property investors. The multiple dwellings relief will be abolished for those that purchase multiple properties at once. The higher Capital Gains Tax rate on residential property will be reduced from 28% to 24%. With the aim of increasing the number of transactions to ultimately generate more revenue for the Government. The Furnished Holiday Lettings Relief scheme will also be abolished from April 2025. Other Key Points Include: £100m of levelling up funding to be allocated to support cultural and capital projects and community regeneration across the country NHS productivity plan to be funded in full at a cost of £6bn with a focus on reducing waiting times and improving service £200m will be provided to extend the recovery loan scheme to help small business and SMEs A new tax will be imposed on vapes, tobacco duty will increase and the tax on non-economy flights will increase Planned growth in day-to-day spending will be maintained at 1% in real terms Additional tax credits of 5% and a 40% tax relief for eligible film studios to boost the creative industry in the UK £105m to be invested over the next 4 years to build 50 new special free schools Guaranteed rates to be paid to childcare providers over the next 2 years as part of the Government’s boosted childcare offer to help more people into employment with 30 hours of free childcare being provided for working parents How Account Ease Accounting Can Help You As the UK’s most trusted accountants, our experts can help you make sense of the Spring Budget and how it could affect your business. Account Ease accountants are on-hand to answer any queries you have regarding the Budget, your accounting needs, tax-optimisation, and much more. If you need an accountant that you can trust with your finances, call us today on 0208 133 4599 or request a call back here.