ZB Accountancy Services

ZB Accountancy Services Bookkeeping/accountancy services. https://www.facebook.com/groups/selfemployedbookkeeping

20/07/2023

Managing cash in a small business is a key skill for any owner and can determine whether the business is successful or not. Cash flow refers to the money that comes into and out of the business. Cash coming in is the monies received from the customer or clients, maybe also loans or capital introduced by the owner. Cash out is against expenses e.g. stock, salaries, office stationery etc. Cash coming into the business needs to be enough so that is covers the payments on expenses out. It might appear quite basic and the principles of good cash flow management straightforward but it can be a area where businesses struggle.

One way to be able to excel at cash flow is to have a good credit control system in place. Have very clear credit limits and payment terms for your clients, send out invoices quickly and start chasing debts as soon as they are due, these controls should all help in being able to stay positive in the cash flow situation.

Introducing Merlin, my other gorgeous rescue cat!
18/07/2023

Introducing Merlin, my other gorgeous rescue cat!

17/07/2023

Another really important task for business owners is reconciling your transactions. This task is normally done at the end of the month, usually when you have your bank statement. This involves checking that your financial records match up with the transactions you have shown on your statement.

This is a good opportunity to find any unexplained purchases or charges, also make sure that no double payments have been made and confirm that monies from customers or clients have been paid against invoices issued.

This again is something that is easily done by a manual process but software does do this automatically if it has been set up with a bank feed option, this can provide a way of saving some time if that is a concern.

13/07/2023

Having had a brief look at the different types of keeping your records from manual (book based) to digital (cloud accounting software) it is worth noting that as from 2026 legislation is set to come into effect which will require digital reporting quarterly of your accounts. This is being brought into effect in a tiered system depending on how much your turnover is. The legislation has already been moved back once from an initial date of 2024 so it is question of whether there will be further delays or not, we will have to wait and see.
To start preparing for this change if you don't already use some form of computer to record your transactions then it is a good idea to prepare by looking into what system you would like to use. If you use spreadsheets then you will require some form of bridging software to upload them to your digital tax records to HMRC. If you opt to use the cloud accounting software then the processes required will be built in already by the manufacturers.

If you have any questions please do ask, or join my Facebook group Bookkeeping and accounts for the self employed small business UK.

As well as my horses I adore my two rescue cats! This is Misty who had been de-cobwebbing when this was taken 😆
11/07/2023

As well as my horses I adore my two rescue cats! This is Misty who had been de-cobwebbing when this was taken 😆

10/07/2023

Essentially bookkeeping is all about recording how much money has entered the business and how much money has left it. At the end of the year this information is given to HMRC who then calculate what tax is owed.

So what is the way to record all these transactions? Presently this can be done in a few different ways depending on the way you find easiest and works for you. You could have a monthly book where both incoming and outgoing expenses are recorded. The totals could then be taken forward to the next book and so on until you have the totals at the end of the year. Traditionally these type of books would have been called ledgers and in a more complete way of recording there would have been a ledger per customer, type of expense and bank. With the advance of the computer this basic style of account keeping moved into spreadsheets, which is still a good way of recording transactions but with further advances there is now available a large selection of cloud based software which can make life even easier and faster.

29/06/2023

We touched briefly on income tax in my last post so a point to always consider is how to reduce your tax bill at the end of the year.

Anything that is a business cost can help reduce your tax bill so this can include:
- Computers, software, printers, toners, internet access
- Stationery, advertising, leaflets, cards
- Phone bills (or a percentage if used for personal use and not a dedicated business phone)
- Mileage or vehicle costs (depending on how you use your vehicle etc)
- Rent (or a room allowance if working from home)

If you are VAT registered then you must remember to keep all receipts (not just the card copy) which should have a VAT number on them to be able to claim. If you have travel expenses then try to buy them online so you have an email record etc. Always request a receipt when you buy anything for business - some shops/outlets don't automatically provide one.

This is just a very brief look at what you can include as expenses. I will be exploring this in greater detail in a future post.

By accurately keeping track of your expenses you can save on your final tax bill so it's a good habit to establish on routine for recording them.

Any question please do ask or join my group Bookkeeping & accounts for the self employed small business UK.

As you know I adore my horses! Here is a photo of Mocha with a very newborn Freddy! He was about 5hrs old here 🥰
27/06/2023

As you know I adore my horses! Here is a photo of Mocha with a very newborn Freddy! He was about 5hrs old here 🥰

26/06/2023

Income Tax - so what do you actually have to pay out and what can you keep?

Self employed tax rates are the same as those for employed people. There is a standard tax free personal allowance which apply to most people with different rates, bands and thresholds.

Presently the personal allowance is set at £12,570, which means you can earn up to this amount with a 0% tax rate. Once you earn over this and up to £50,270 the tax rate is 20%. Over this and up to £150,000 it's the higher rate of 40% and then goes up to the additional rate of 45%.

The rate you pay is dependant on your trading profits within each bracket and not a single rate on the overall amount.

For example if your trading profits were £51,000 you would pay:
No income tax on £12,570
20% on the next £37,700
40% on the remaining £730

Then you have to consider Class 2 National Insurance which for the tax year 2022/2023 was £3.15 per week. This is paid on consideration of your profits so for 2022/23 you paid it if you were above the small profits threshold.

It's worth noting that for 2022/23 onwards the rules have changed and you pay Class NIC if your profits are above the Lower Profits Limit (£12,570). If they are below the Small Profits Threshold then you can choose to pay voluntary Class 2 NIC. If your profits fall between these two levels then there is no Class 2 NIC to pay and it will be treated as if you are making Class 2 NIC payments.

The final thing to consider is the Class 4 NIC which again is paid in profit bands.
Up to £12,570 nil
Over £12,570 up to £50,270 9%
Over £50,270 2%

I always advise my clients to take out 30% from their monthly earnings and put into a savings account or such like. This way they shouldn't find themselves worrying about a large tax bill come January 31!

22/06/2023

As a sole trader you will have registered with HMRC and you need to understand the rules around naming and running your business.

You have to keep records of sales and expenses, submit an annual self assessment tax return and pay income tax on your profits. You will also need to pay Class 2 and Class 4 National Insurance and take responsibility for the running of the business and any debts that occur. Detailed bookkeeping is crucial as you have to report accurately how your business has performed over the year and declare any profits. All records will need to be kept for six years and HMRC can carry out random checks to ensure compliance with the current tax regulations.

As I mentioned in a previous post it is always good to try and set up processes to make sure that you are compliant and record all income and expenditure transactions for your business just in case they ever do need to inspect your records. You will then feel very confident that everything is in order and be able to show it.

20/06/2023

Charlie was the most amazing horse for me. He was a six year old grey gelding that had been sent for schooling on the yard where I was working ( I think I said I was totally infatuated with them and left school as promptly as possible to go and work with them!). I obviously fell in love with him as soon as I sat on him though he had a very wicked sense of humour and mainly did what he wanted to do which is why he was there in the first place. After a few months I left the yard as I finally realised that a career in horses was not going to make me any money and had a change of direction. I was heartbroken to leave Charlie behind and really missed him over that summer. In the November I passed my driving test and finally had freedom!! One of the first things I did was go and visit the yard to say Hi to everyone and was told that Charlie had been advertised the weekend before in the paper (that's how it was done in the 80's!!!) and someone was coming to view him. Luckily that sale fell through and I was over the moon (to say the least) when I came back from babysitting one evening to be told that he was mine! My Mum and Dan had brought him, without me knowing, and he was the best present ever!!

19/06/2023

One area that makes life easier when being a sole trader or self employed is having a separate business account so personal and your business finances are kept apart. This will make it so much easier when managing your bookkeeping and you will be very thankful later when there are more transactions to keep on top of as your business grows. It will also help with cashflow as you will be able to see very clearly when invoices are paid and ensure you have enough money to cover business costs. If you have a larger contract or job it might be worth considering staggered payments or deposits to help with cashflow as opposed to waiting for completion before you send your invoice.

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