Category Archives: Accountancy

Cashflow Forecasting

Anyone who has ever studied anything to do with business will probably have heard the saying ‘Turnover is vanity, profit is sanity but cashflow is king’.  This saying is very true and poor cashflow management is the number one reason why over 50% of British startup businesses fail within the first 5 years.

It doesn’t matter how great your turnover is, how amazing your are at what you do, how brilliant your ideas are, if you haven’t got the money in your business to pay your suppliers, rent, staff etc you are going to fail.

So what is cashflow – it’s ensuring the amount of money coming in to your business is greater than the amount of money going out.  In business, as in personal life too, this needs to be monitored constantly so you can plan ahead for any shortfalls.

Having to rely on overdrafts and credit cards can lead to large charges making cashflow worse and an ever increasing downward cycle is created.

You need to pay particular attention to cashflow before any large purchases are made or new ventures entered in to.

Having a contingency fund (savings) of one months expenses will help ease cashflow when unexpected costs arise or money due in is late.

Don’t take it for granted that you will be paid on time.  Be very proactive when it comes to chasing money you are owed.  If possible have a contract or ‘terms of business’ with every customer detailing when payment is due.

Allow for fluctuations in income, do you close for Christmas, is your business seasonal.

Ensure you have good relationships with suppliers and financiers as they could help when your cashflow runs into problems.

The Cashflow Forecast

This is nothing more than a simple list but the more complex your business, the more complex your cashflow forecast will need to be.

Across the top will be 2 columns for each month (or week if needed).  One column for forecast and one for actual so you can compare results.

At the side you will have a row for each item of income and then each item of expenditure.

You can find many examples of cashflow forecasts on Google to give you an idea.  We can help set up a spreadsheet to do this for you but when it comes to applying the figures, you as the business owner are best placed to forecast your figures.

 

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Deadline is Looming

So the deadline for Self Assessment tax returns is Midnight on 31st January and while the majority of our clients have already been to see us and got their returns done, there are always some that leave it to the last minute.

This is just a reminder to those that we need the paperwork asap.  As the month goes on we are less likely to be able to guarantee the returns can be done on time and if they are submitted after the deadline there is an instant £100 fine regardless of whether any tax is due or not.

Each year HMRC publish their top 10 weirdest late tax return excuses people used to try and get out of paying the fine.  Last year’s list included ‘I had a run-in with a cow’ and ‘my pet goldfish died’.  Needless to say these excuses failed as did the ones on this year’s list which are:

  1. “My pet dog ate my tax return …. and all the reminders.”
  2. “I was up a mountain in Wales and couldn’t find a postbox or get an internet signal.”
  3. The poor taxpayer at number three ‘fell in with the wrong crowd.”
  4. “I’ve been travelling the world trying to escape from a foreign intelligence agency.”
  5. “Barrack Obama is in charge of my finances.” – I wonder how much he charges.
  6. “I’ve been busy looking after a flock of escaped parrots and some fox cubs.”
  7. “A colleague borrowed my tax return to photocopy it and didn’t give it back.”
  8. “I live in a camper van in a supermarket car park.”
  9. “My girlfriend is pregnant.”
  10. “I was in Australia.”

HMRC have said there are genuine excuses for being late with your tax return but I don’t know what they are, I mean, being dead is not classed as an excuse so what could be??

Picture credit to Gratisography

 

Christmas Wreath

Nothing to do with accounts!!

For 4 years now I have been making my own wreath for our front door.  Why? Because I couldn’t find one I really liked in the shops, the ‘non-real’ ones look, well… non real and the real ones are all so uniform and perfect that they don’t look real either plus some of them were £50 and I still didn’t like them.  So inspired by Kirsty Allsop off the telly, I decided to have a go at making my own and now its become a bit of a tradition in our house.

So if you want to have a go yourself it’s really quite easy, much cheaper and the results are great but be warned you will get very sticky, sappy hands, sore fingers, damaged nails, pricked several times by the holly and you will get the odd bug walking across your table!

Here’s what you’ll need:  A ring of some sort, you can get them from Hobbycraft or online, you can get wire ones, rattan, moss covered foam.  I think mine is made from grapevines and is still going strong after 4 years.  A pack of florist wires, again I re-use them year after year.  You will also need some way of attaching it to your door.  I use a big red ribbon which gets tied to the door knocker. A pair of garden clippers or good scissors and some newspaper to protect your table.


You can also get additional objects such as cinnamon sticks, dried orange slices, Christmas ornaments, monogram letters etc.

Next is the fun bit, you need to go out foraging in the woods, preferably on a crisp dry day. On the heath they cut down loads of trees every winter and leave them for you to take – free Christmas trees, there is loads right now but some are a bit scrawny.  Here’s what we collected on a half hour dog walk.

You need to try and find as many varieties of Pine and Fir trees as you can.  The one on the left is from our Christmas tree.  Try to find bits with the cones still attached as it makes life easier.  In my opinion, holly with berries on is a must but some years this has been hard to find but seems to be in abundance this year.

These are always just lying on the floor but give them a good shake to get any crawlies out.

You can also use cones and small sticks to add interest.

Now to assemble, take a few of your assorted bits and twist a florist wire around the stems about an inch from the bottom to make small bundles.  Once you’ve made a few bundles, start attaching them to the ring using the wire that you have attached to the bundles.  Start near the top of the ring and work down, overlapping each bundle to hide the stems and wires.  You don’t want to make the bundles too uniform but the ring does need to be reasonably symmetrical.  Do a few each side until they meet at the bottom.


Once you have initially covered the ring, hold it up against a door.  You will immediately see if there are any gaps and if any parts need more wires to secure them.  Lay the wreath back on the table and add more foliage and wires where necessary.  Its also at this point that you can add extra decoration with cinnamon sticks, drift wood, cones etc as the wire you use to secure them can also help secure the bundles at little better.

This is my finished wreath.

Happy Christmas

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Pictures: Diane Hudson

A Bit On The Side

A Bit on the Side

No, not what you’re thinking, I’m talking about the Side Gig, Side Hustle, Moonlighting, Homers, whatever you want to call it, it can be a very good idea.

Initially I built up my accounts practice on the side of my day job before leaving that job to grow my business full time.

More and more people are moonlighting on the side of their day job – so why is this such a good idea?

Test the waters

If you eventually want your side job to become your full time job, growing it on the side gives you time to test the waters, experiment and learn.  It lets you try out different strategies to see what works and allows you to fail, all whilst keeping the financial security of your day job.

Not having to rely on your side gig for income allows you to focus on the long term success rather than short term income.

Extra Income

You’ll no doubt make some money from your side gig to compliment your full time income.  Whether you use this extra income to grow the business, save or dig yourself out of debt is up to you but the extra cash will always be nice.

Cash lets you fund your own start up or take a pay cut when you eventually want/need to ditch the full time job and make your side job the full timer.

Money can make you feel that you have options, that you have some backup, that you can afford to fail.  In other words it makes you feel safe, and if you feel safe you are more likely to take the small risks necessary to start up.

What to do

You need to establish what your side gig is going to be – what are you good at, what do you know how to do, what would you like to do, what would others pay you to do.

Getting started

Once you’ve decided what you are going to do you need to work out how you are going to get clients/customers.  How are you going to get the word out about what you are doing and what platforms are you going to use to do this.

Keeping it going

Office management – even if your side job is something low tech such as dog walking, don’t think you don’t need to get involved in office management.

A side gig doesn’t have to be about money.  It can be for fun, to gain experience or self education.   However, if money is the main objective you need to take it seriously.  Dealing with administrative tasks, paperwork, income, expenses, taxes and marketing all need to be done.  If you are making money you have a legal obligation to declare this for tax which requires some record keeping.

Stay Organised

If you’re working 9–5 and then moonlighting on the side, you are going to be busy.  You must stay on top of the admin and if you are making money you need to stay on top of the finances.  Keep track of all income, expenses, bank and paypal accounts.  You may need to develop systems for tracking this, customer/client relationship management and other items relevant to your line of work.  These systems can be anything from notebook scribbles or spreadsheets to specialised software.  The more you have going on, the more you need to attend to these back office tasks.

Word of warning

If your side gig is something that could tread on the toes of your full time employers business, you should get their permission first as there may be clauses in your employment contract to stop employees setting up in competition against them or stealing their clients.

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Photo Credit: Splitshire.com

New Annual Tax Statements

So October is just a handful of days away, and this October not only allows us to throw our car tax discs away but for some of you lucky folk October also brings you the New Annual Tax Statement.

One of the Coalitions promises back in 2010 was that every tax payer would be sent a statement of their tax position, including National Insurance and where the money is spent. Four years on and they are nearly here – but not for everyone.

Initially the statements will only cover your tax position for 2012/13 and will only go out to those paying tax under self assessment and are registered for HMRCs online services; or if you pay PAYE and receive a P2 Notice of Coding or a P800 tax calculation.

If you do receive one of these you don’t need to do anything with it, as it’s just for information purposes but it would be good to check through it.

One very handy use for this statement will be to check your NI contributions. There are new State Pension rules coming into effect in April 2016 and to receive the full State Pension you need to have paid the correct amount of NI contributions for 35 years. You will be able to check that you have paid enough with these statements.

We await their arrival!!

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HMRCs Home Office Policies

How much can you claim, for using a room in your home for business purposes?

HMRCs guidance uses typically vague words such as ‘fair & reasonable’ and ‘modest or excessive’. The trouble is someone earning mega money will think one figure is fair and reasonable but to most of us the same figure would seem excessive.

HMRC believes just £4 per week is all that should be claimed for the use of a home office. This measly amount is deemed as a ‘significant’ expenses and any claim over this amount must be justified by providing records or demonstrating your calculations.

How to can claim over the £4 per week

One way to prove your claim is reasonable is to calculate your monthly outgoings for gas, electric, rent, water etc then divide this by the number of rooms in the property (excluding kitchens & bathrooms).  For example if you have 5 rooms (Lounge, Dining Room, 3 Bedrooms) and one is used as an office take 1/5th of these bills.

If this amount seems too substantial for your business use you could divide it down further by the number of hours you spend in it working each day eg, 8/24 hrs or by the number of days per week that you work or by square meterage if known.

Beware

Be careful if claiming for more than one room as you will need more justification but it is possible ie a photographer could have an office and a darkroom (days before digital).

You should never claim the room is ‘solely’ for business purposes as this could lead to a business rates claim by the local council for part of your home or even Capital Gains Tax when you sell your property. Most people’s home office also doubles as a spare bedroom or is home to the unused exercise bike or the kids use it for doing their homework.

If you run your business through a Limited Company you can draw up a lease agreement so your company is reimbursing you for the costs of the room thus reducing your Corporation Tax but again, to be exempt from Capital Gains Tax when you sell the property make sure the agreement doesn’t state that it is solely and exclusively for business purposes.

Canford Heath

Want to see whats beyond the little path at the front of our place?

 

Canford Heath is an 850 acre heathland of special scientific interest.

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It’s very pretty in the evening sun

 

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Late summer is the prettiest time of year 

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There are nine cows – 2 big black Shetlands & 7 British Whites

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Full moon rising at the top of the path to Wallisdown