Online Accounting
Online Accounting
Everyone in business knows they should prepare accounts. But how do you do this?
Good accounts start with good bookkeeping records.
A small business or landlord may decide to do this annually by hand but HMRC are increasingly asking for electronic submissions, and this is now compulsory for VAT.
In a few years’ time every business with a turnover of more than £10,000 will need to make electronic submissions to HMRC, quarterly.
Additionally, online systems are becoming more and more automated – so why not save time, and increase accuracy by implementing online accounting ?
Good use of an online package can aid efficiency in fulfilling regulations and provide valuable information to monitor your business in the face of change.
Accountants have the experience, and knowledge of what is required so let them guide you on this journey.
The essentials
Accurate gross income records are essential for every business. Your systems should incorporate raising invoices to customers, keeping track to collect dues and then producing reports for your accounts and the authorities.
Expenses are your choice. You need to identify, separate and collect details of expenses you consider to be business. The system needs to do this efficiently and report appropriately.
Independent entities such as companies are also obligated to keep a track of assets and liabilities.
Year end accounts are compiled from the above bookkeeping records, according to relevant rules on content and presentation.
HMRC then have an opinion as to what is tax allowable, and how tax reliefs are given.
Firestone Accountants have a wealth of experience in online accounting so can help you choose a system that suits your needs. We can assist with set up and teaching how to input information efficiently, also how to use the systems features to best advantage for you and your business.
Bookkeeping
Maintaining up to date and accurate financial records is an essential component of any business. Depending on the size and nature of your business, it could be a simple matter of keeping a list of income and expenditure but for many businesses it is much more complicated.
Staying informed of the latest HMRC requirements can be challenging and while Making Tax Digital (MTD) is intended to make tax easier for HMRC to manage in the future, it can feel harder for you to get systems working, as it becomes compulsory to keep bookkeeping digitally and submit returns electronically from those records.
We can help you to migrate your bookkeeping to an online platform and show you how to digitise routine business tasks to save time. Alternatively, you can hand over your cash book with a bag of receipts and we will take care of the bookkeeping for you.
Regardless of how much money your business generates, we strongly advise all of our clients to maintain a separate business bank account. Not only does this avoid any confusion with personal expenses; it keeps a clear division of interests if HMRC audit your business.
Basic rules to consider: –
- HMRC require all business income to be recorded accurately – no guesswork
- Rental property expenses need to be split into HMRC headings
- Construction Industry Scheme (CIS) contractors must separate material and labour costs and record tax deductions on both income and payments
- VAT registered businesses need to record invoices and split out the VAT
- Sole traders with income over £85,000 PA need to break down costs into HMRC headings
- Payroll costs need to be monitored and reported to match
- Partnerships should identify who takes money and when, to maintain partner equality
- Limited Companies have an obligation to track all assets and liabilities, especially cash
Good use of an online package can aid efficiency in fulfilling regulations and provide valuable information to monitor your business in the face of change.
Call to arrange a free initial consultation to discuss the most cost-effective way to manage your bookkeeping.
Let us help you choose, design and set up a system that works for you and your business.
ONLINE ACCOUNTING SOFTWARE
At Firestone, we recommend QuickBooks Online or Xero due to their ease of use and HMRC compliance. However, we do have expertise in other systems including Kashflow, FreeAgent & Liberty.
We can set up the software and train you to use it and check your returns before filing.
VAT registered businesses must keep copies of individual invoices and bills. The easiest way to manage this is to scan receipts and upload them into your online accounting software. If you have a lot of transactions to process, then a third party can use these scanned copies to enter invoices and bills into your bookkeeping software.
Online accounting software features a status dashboard, which can be viewed on your PC, tablet, or phone and allows you to:-
- take photos of receipts and upload them as you go
- find transactions quickly and answer queries
- create and track invoices to get paid faster
- track your budget/income against your targets
- spot trends and adjust your business plan accordingly
- monitor cash flow and anticipate large expenses
- measure the effectiveness of actions (e.g. advertising, promotions, weather)
- calculate and track VAT
VAT
A business must register for VAT if they provide taxable goods and/or services and have a turnover that exceeds £85,000. Under certain circumstances, it can be advantageous for a business that falls below the VAT threshold to still opt to be VAT registered.
As part of Making Tax Digital, all newly VAT registered businesses, are required to keep digital records, submit VAT returns online direct from software and make electronic payments.
Value Added Tax (VAT) is an indirect ‘spending’ tax paid by customers when they purchase goods/services from VAT registered suppliers/sellers. There are 3 tariffs but the standard rate of 20% applies to most things.
The VAT collected is then forwarded to HMRC, minus any VAT the business has incurred on goods or services purchased, for sale by or use in, the business.
As well as advising on how to handle VAT, we can help you to set up efficient online bookkeeping systems, create VAT invoices and prepare and submit your quarterly VAT returns digitally.
Management Accounts
Management accounts are created for internal use to guide management decisions and are not a legal requirement. They can be used to compare actual results with forecasts, benchmark against trends and use predictive modelling to see the effects of any future changes. These can be produced quickly and easily using online accounting.
At Firestone, we design custom management accounts to give you an in-depth understanding of your business so that you can make knowledgeable decisions, based on facts.
Year End Accounts
All businesses, regardless of size, have a legal duty to ensure their annual profit and loss accounts are complete, accurate and submitted to HMRC on time.
Using online accounting for your bookkeeping, provides a good basis for your year end accounts.
Knowing that your accounts have been prepared accurately and filed on time will give you peace of mind and free up precious time to focus on the critical tasks that drive your business.
Firestone Accountants have experience of online accounting so can help you choose a system that suits your needs. We can assist with set up and teaching how to input information efficiently, also how to use the systems features to best advantage for you and your business.
