Tip # 1.    Hire an experienced accounting technician.

Why?

It will save you money that will be much better spent on winning customers and growing your business.

How ?

1.No penalties, surcharges, interest charges.

An experienced accounting technician keeps up to date with all the regulations and will ensure you comply with these regulations, and meet payment and filing deadlines.  HMRC and Companies House have both initiated far more aggressive penalties for late filing of statutory accounts and tax returns and payment of tax liabilities.

2.Faster, more accurate accounting information.

An experienced accounting technician, who understands the debits and credits, has worked with accounting software packages, and has an eye for the detail will mean you have current financial information, presented in a format that you understand and can use to make sound management decisions.

3.Better cash flow management.

Your customers will receive timely invoices, and be encouraged to pay within your credit terms.  Suppliers get paid the right amount saving time spent over queries.  Your cash flow is managed and you know when your peaks and troughs will occur and can make spending and saving decisions with confidence.

Reduced fees spent on audit and/or statutory reporting.

Accurate and clear accounting records will save you and your professional advisors time every year.

Tip # 2.   Keep paperwork organised.

How?

First of all, keep a record of all financial transactions! Receipts, supplier invoices, bank statements, sales invoices.

Then file it; alphabetically, in chronological order, by method of payment.

Why?

1. If you are a Vat registered company or individual, having supporting documentation and official Vat receipts will ensure you claim back everything you are entitled to.
2. Supporting documentation will help your case if you ever have a tax inspection (Vat, PAYE, corporate tax) and are asked to substantiate claims.
3. Filing according to these criteria makes documents easier to find when required and greatly facilitates the accounting process.

Tip # 3.  Do not mix business with pleasure.

How?

Keep personal expenditure separate from business expenditure.  Do not have personal transactions going through your business bank accounts or credit cards.

Why?

You will be incurring unnecessary accounting charges because these transactions will have to be processed and allocated to your personal account.

It will raise questions and potential taxes if assessed by HMRC.

Where do I go from here?

Call us at The Company Books for a complimentary meeting to talk over  your accounting needs and how we might help you save time and money and stress. It is always best to have professionals look after the things you are not best at.  And after all, it’s your life and your business that you will be saving.

Putting in place strategies and methodologies to reduce the time that elapses between outgoings and the subsequent income can really make a difference. Seeking experienced accounting advice as to what can be done can often reveal otherwise unknown possibilities, though there are a few basic ideals to consider that we have listed here:

Customer Credit
As important as maintaining positive customer relations may be, it is also vital that these relationships are well managed. One of the most challenging areas for any business is deciding upon a credit policy. These should be clear to understand and set out the terms in an unambiguous fashion.

Customer Invoicing
An important part of managing such a policy is to control the invoice process well. These should be issued promptly, and followed up with a courtesy call to ensure the invoice has been received and there are no potential disputes over charges.
Outstanding payments should also be chased promptly. To help manage this, the use of an aged debtor list is advisable, in order that invoices can be tracked, monitored and measured against.

Early Payment Discounting
The use and advertisement of penalty charges in the terms can be an effective tool in receiving timely payment. However, these should be exercised with caution. Often, a better leading solution is to offer rewards and discounts for early or prompt payment, though both can be used successfully together in a sensible environment.

Payments in advance
For larger contracts, it is best to arrange a system of deposits and regular payments. For both parties this is a sensible approach; guaranteeing the provider can service the customer – and vice versa.

Supplier Credit
It is equally important to manage relationships with suppliers and, once again, the hardest area is defining a credit policy that works in the best way.

Having developed a good relationship with a supplier, it is always a good idea to ask for extended credit terms. Negotiating such a deal will likely require larger or more regular orders to be placed, so it is important to ensure demand from the end customer exists and is guaranteed wherever possible.

Forecasting Peaks and Troughs
A conservative projection of monthly cash income and expenditure will enable you to predict the peaks and troughs and make any necessary arrangements for further funding before the need arises. Excess cash can be better managed and capital expenditure planned for.

Accurate and up-to-date accounts, along with conservative income and realistic expenditure forecasting, will go along way to managing your cash flow. At The Company Books we have a variety of management tools and plenty of expertise to assist you with cash flow management.

Taxation
One of the most important areas for any SME is existing tax obligations. Whether liable for income tax and VAT, corporation tax and stamp duty or others, accurate bookkeeping and cash planning is essential.

If the business is registered for VAT, there are certain ways in which this can be optimised too. For example, timing the purchase of major items with the VAT period makes sense, as the VAT on these purchases can be offset against the VAT charged on any sales.

With significant experience in business management, at The Company Books we are able to assist businesses with their accounting processes. By synergising our knowledge and methods with that of our clients, we provide tailored bookkeeping and accounting solutions to help companies move forward with their goals and ambitions.

The main objection is the worry that simpler financial reports will make creditors reluctant to lend and traders reluctant to engage, fearing the mini-companies will be unable to honour their debts.

On the other side, supporters argue that cutting a swathe through red tape will liberate time and resources, allowing businesses to thrive and revving the economy from the bottom up.

Read more about Simpler SME reporting

The paper proposes easing corporate reporting procedures so that micro-entities are only required to file a simplified Trading Statement (in place of the current Profit and Loss account), a simplified Statement of Position and a simplified Annual Return.

The paper also proposes developing an integrated software package to help small businesses prepare financial information. This could allow managers to gain a better understanding of the trends in their businesses’ performance and help them plan for the future.

Business Secretary Vince Cable said:

“The Government is focused on boosting growth and the Hargreaves review highlighted the potential to grow the UK economy. By creating a more open intellectual property system it will allow innovative businesses to develop new products and services which will be able to compete fairly in the UK’s thriving markets for consumer equipment.

“We are accepting the recommendations and will now set about reforming the UK’s intellectual property systems. Opening up intellectual property laws can deliver real value to the UK economy as well as the creators and consumers.”

A copy of the changes can be accessed via the website. http://www.ipo.gov.uk

The VAT cost sharing exemption is a European law provision that allows businesses and organisations making VAT exempt and/or non business supplies to form groups to achieve cost savings and economies of scale. Once formed the groups are relieved of a VAT charge on their supplies if all the conditions of the exemption are met.  This is currently not possible in the UK.

Following earlier statements in the 2011 Budget, HMRC has now opened a consultation on 28 June 2011 to examine how this European VAT cost sharing exemption could be used by UK businesses and organisations and to explore a possible framework for its operation.

If implemented the exemption could remove the VAT charge preventing institutions such as charities and universities from gaining efficiencies by sharing costs with each other.

The Consultation document can be found at: VAT cost-sharing document

http://realbusiness.co.uk/news/exempting-micro-businesses-from-filing-accounts-will-cause-damage

Treat your bookkeeper with respect! – Bookkeeping is not an administrative task involving processing paperwork, but a skilled profession that demands more respect and recognition than many business owners give it credit for.  A good bookkeeper will help you manage your business more efficiently, offer you support and advice, and will become a vital part of your core team.

Too many business owners consider this side of their business as unimportant, that they can do themselves when there is nothing better to do (which is never) or is a clerical job that can be done by junior staff who manage the filing.  Years later they understand their mistake when they pay large sums of money to a professionally trained accountant or bookkeeper to sort out the mess, and more large sums to the government in penalties and interest on statutory liabilities that have been neglected or ignored.