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Remote Working Continues For Accountants Seven Months Into The Pandemic

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The shared experience of working in the office vanished when the COVID-19 pandemic hit the UK. The feeling of company and teamwork in a space disappeared along with this and challenges soon arose for businesses trying to keep things running smoothly and remotely.

Some businesses coped better than others. Ones which were more used to removing sensitive financial data from the office were better equipped at working remotely. These organisations have been laying the groundwork for years of being able to balance the books from the comfort of their homes, so the pandemic was a good opportunity to put this into practice.

These businesses had worked to gain a continuous accounting process. This automates routine accounting tasks that require complicated calculations such as depreciation and amortisation. Therefore, these processes become continuous because of how automated they are. This automates the generation of financial statements, transfers with eliminations and reconciliation tools including AP sub-ledgers and the general ledger. Technology is an efficient way to process transactions for accountants and counteracts the complexities that come with working remotely.

The goal is for these automated processes to happen continuously. The pandemic has focussed on a need for automatic technologies and has also highlighted the importance of the cloud in doing so. The cloud allows sensitive financial information to be stored securely. This could involve data privacy as well as internal permissions when accountants are outside of the office.

Cloud-based technologies are updated regularly in line with the newest standards and regulations which often change. The cloud is kept modern and running smoothly. This maintains compliance for organisations.

With automated systems, there is increased accuracy. There is no need to rekey information from system to system manually. This reduces the chance of human data entry errors, so saves time that can be dedicated to other internal operations within the businesses. It also increases the quality of work-life for employees when functions are automated and left to the end of the month. The most tedious work has become more automated.

In conclusion, although remote working continues for accountants seven months into the pandemic, there have been advantages that have come with it. These advantages mentioned above have sped up the work of accountants by saving them time and removing more tedious aspects to complete. Accuracy has increased and the overall move to automation couldn’t have come at a better time for accountants.

If you need any help with your accounting needs, get in contact today.

Accountant’s Guide to Managing Your Business Finances

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Financial management can take many years to master. Managing your money is difficult but so vital to grow and develop your business. Nowadays, we are blessed with the ability to hire accountants to help manage our business finances for lower costs than you may think. However, you cannot be purely reliant on accountants alone as you are accountable for managing your finances. Here is your guide to equipping yourself with the essentials to manage your finances…

Understand the basics of finances

All business owners must have the basic skills of managing finances in order to have a successful business. There is terminology which is vital to know like the breakeven point, net profit, cash flow, expenses and gross revenue. These will be terms used on a daily basis so make sure you understand them all.

Furthermore, you must also understand business accounting documents such as revenue forecast, cash flow statement, income statement and balance sheet. If you aren’t familiar with these terms and documents, google them and research what they all mean and do. It will be invaluable knowledge for your business. 

Keep track of your cash flow

Cash flow is the money that goes in and out of your business and is easy to lose track of so ensure you are organised and know where it is at all times. The inflow of your business is from selling your goods whereas your outflow is the money your business spends on stock, payroll as well as marketing too. Try to always keep your outflow lower than your inflow, even though this could prove difficult. Just bear it in mind at all times and never lose track of your business goals.

Ensure your business and personal finances are kept separate

If you are a small business owner, it may seem easy and simple to have all your finances in one account. This is not recommended as it makes your business disorganised and can lead to tax issues as your business grows larger in the future. The first thing you should do when setting up your business is having two separate bank accounts for your personal life and company.

Spread out your tax payments

Paying your tax in a lump sum isn’t always the wisest of moves as large amounts of money leaving your cash flow can seriously affect it. Instead of this, try and opt for tax as a monthly expense. This will help you with budgeting.

Have a business cash reserve

Have a business bank account that can be used as a cash reserve. Top it up as often as you can and make it easy to withdraw money when needed for your business. This will take the pressure off when you have any additional bills to pay for your business.

If you need assistance with your business accounting, contact me today!

An Introduction to VAT

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VAT can be a confusing concept to grasp if you have never needed to pay VAT before. Nonetheless, being VAT registered can bring with it lots of advantages concerning your finances. Here is a brief introduction on VAT with some answers to questions you may have on the subject.

VAT is a tax which is added to the majority of services and goods. It is something you must pay if you are a business or merely an individual. You pay it on a range of things from bills to clothes. For companies who make over £85,000 a year, they will need to add VAT to their goods and services’ costs. Businesses must register for VAT if they turn over more than this.

Once registered, a business will need to charge VAT on the goods and services which they sell and offer. Companies will also need to fill in a return every three months. This will include information like how much VAT their business has charged as well as how much their business has paid.

Businesses will have to pay outstanding amounts of VAT if they have charged more than they have paid. In contrast, companies are able to claim back VAT money from HMRC if they have paid too much VAT than they have charged.

VAT rates in the UK are 20%. That is the standard rate. Mobility aids and children’s car seats are 5%, and most food, male razors, children’s clothing and books are 0%. Health, financial insurance and most sports services are exempt from VAT too. Find out more about on different types of VAT.

Sole traders and freelancers must also pay VAT if their turnover annually will exceed the £85,000 threshold. The VAT will be registered in their name unlike businesses, and they must ensure always to keep records of the VAT they are charging customers.

There are a few VAT schemes to consider when applying for VAT, so it is important to do your research to discover which one is right for you. There is standard accounting, which is the common one, the Flat Rate for businesses which turnover less than £150,000 per year, as well as Annual Accounting for a turnover of less than £1.35 million and cash accounting which is the same threshold but for small businesses.

Advantages of VAT are that you can reclaim VAT that is paid on top of things bought for your business, such as phones, laptops and office equipment. You can register for VAT even if you do not earn the £85,000 per year yet. This will mean you won’t have to bother looking out for the threshold when you hit that sum and owe HMRC a large lump sum.

To register for VAT, you will need to go to the gov.uk site. You will need things like a tax reference, bank details of your business and company number/address. After this, you will gain your VAT certificate with details of your VAT.

Five Reasons Why You Need an Accountant

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Managing your finances is not for everyone. It can become very complicated and dreary and detract from the time and passion you put into your own business with the wasted hours filing tax returns. Whether you are just starting out or running a top company with the aim to expand, an accountant can be a big help. Here are five reasons as to why you need an accountant!

Saves Time

Having your own business begins with the idea that you are passionate about. This excitement doesn’t tend to include the hours spent going through your finances and paying taxes. Accountants are paid for doing the financial work you don’t want to do. They will allow you to save time to focus on your business. You get to spend time making money and not having to crunch numbers.

You are still legally responsible for an accountant’s accuracy, but you can hand over full account management to them. Your accountant can do virtually everything on your behalf, saving you so much time. They can do things like complete tax returns, manage PAYE and more. They can even be the ones who communicate with HMRC! 

Organisation

Deadlines for tax can change regularly. This can be a stressful ordeal, and getting a foot out of line could lead you to underestimate your future tax bills. An accountant is organised and knowledgeable on all things financial. They can guarantee that deadlines will be met, and you will be paying the correct amount of tax at the right times. Having an accountant will be a useful safety net to ensure nothing goes wrong and will keep all your numbers organised and tidy.

Save Money

Hiring an accountant is not as expensive as you might think. Good accountants can address areas where you could save money. This could be through claiming entitled expenses. This would cut your tax bill considerably and might mean that in the long run, your accountant will be paying their own fee through the money they saved for you!

Support and Advice

Not only are accountants there to help with your finances but having their support can really improve your whole businesses’ setup. If it’s a new business and you’re inexperienced, they can be there to look over your plans and goals. As you grow and expand, they can show you your options and direct you in ways dependant on your business’s structure. 

Makes life simple

Working with figures and finances is not everyone’s cup of tea. Hiring an accountant is a good idea if you dread the thought of seeing spreadsheets, invoices, and tax returns. You can sit back, relax and concentrate on your business and make money while your accountant does the work you don’t wish to spend your weekends doing. Life will be pure bliss, and you have the added knowledge that you won’t be penalised for late payments!