The Accountancy Office

How much National Insurance will my company pay in 2025-2026?

As the dust settles on Labour’s first Budget in 14 years, we look at the impact for businesses, in particular single directors’ of limited companies.
The biggest budget announcement related to employers National Insurance – hitting employers hard with a double whammy:
1.2% increase in employer’s National Insurance contributions (NICs) and

Lowering the secondary threshold (ST) which means employers will start to pay NICs on employees earnings from £5,000 instead of the current £9,100 threshold.
However, the Employment Allowance (EA) will be increasing from £5,000 to £10,500 which will help offset some of the additional costs – for some employers but not all.
Sole Directors of Limited Companies
A company with only one employee paid above the Class 1 National Insurance Secondary Threshold, where that employee is also a director of the company are specifically excluded from claiming the employment allowance.
Whilst this has always been the case (and seems somewhat outdated considering the reduction in the dividend allowance in recent years,) it does mean that sole directors will face additional NIC costs.

Example of a Director’s salary in 2024-2025
In 2024, for a single director working through their own limited company, the most common annual salary was typically £9,100 or £12,570.
A salary of £9,100 did not attract any Employers’ National Insurance because it was below the secondary threshold. The salary also suffered no employee tax or National Insurance contributions and secured a pension credit for the director, as if it had been paid and securing a qualifying year towards the state pension.

National Insurance Chart

What will be the optimum director’s salary in 2025/26?
We anticipate that for the 2025/26 tax year, sole Director Companies (with no employees) will choose between:
A salary of £12,570, achieving the most efficient tax savings available and securing a qualifying pension year, or
Lower salary, not achieving full tax savings and forfeiting a qualifying year, or
No salary, reducing administrative costs and forfeiting a qualifying year.
A salary of £6,000 would incur an Employers NI liability of £150 but it is too low to qualify for the state pension credit because earnings need to be equivalent to the National Insurance Lower Earnings Limit (LEL) (£533 per month 24/25 and £542 25/26).
However, a £6,000 salary + £150 Employers NI would save corporation tax of 19% = £1,169.
If you were to take £6,000 as dividends rather than a salary, the personal tax would be £481 based on the basic dividend rate of 8.75%.
Alternatively, employing an additional staff member could make the business eligible for the Employment Allowance, offsetting Employer NI costs.
There is no definitive answer as to what the best optimum salary for a limited company director is. It will depend on your personal situation, business position, personal priorities and overall tax position.
For company directors with employees (who can claim the Employers Allowance) the optimum salary will usually be £12,570.

What about larger companies?
Let’s look at a larger business who employs 150 workers paying them an average salary of £38,000 per year.
This example highlights the real impact of the Employers’ National Insurance changes with a clear illustration of how the government expects to raise extra revenue.
150 employees x £38,000 = £5,700,000
2024 Employers NIC x 13.8% = £598,230
The company is not eligible to claim the Employment Allowance as it’s Employers NICs exceeds £100,000.

In 2025, with the same number of employees and the same pay rate, the business will be eligible for the Employer’s Allowance due to the removal of the £100,000 cap.
150 employees x £38,000 = £5,700,000
2025 Employers NIC x 15% = £742,250
Less Employers Annual Allowance = £10,500
Total Employers NIC = £732,000
This employer will pay an additional £133,770 in NICs each year (22%) which is a very significant additional tax burden.

How Can I Prepare for the Employers National Insurance Increase?
Adapting to these new additional costs will require thoughtful adjustments to business strategies.
Here are some proactive steps you can take:
Review Payroll Budgets: Businesses should reassess their payroll budgets to account for the higher NI rate and the lowered threshold. By factoring in these changes early, businesses can better prepare for their financial impact. The National Minimum Wage increase should also be considered, where applicable.

Optimise Workforce Planning: Employers may consider restructuring roles or adjusting part-time and flexible work arrangements to manage costs effectively. Prioritising efficiency within the workforce and identifying ways to improve productivity could help offset some of the increased NI expenses.

Consider Salary Sacrifice Schemes: Some companies may explore tax-efficient remuneration options like salary sacrifice schemes, where employees opt to exchange part of their salary for non-cash benefits, reducing the NI liabilities for both employers and employees.

National Minimum Wage
The 6.7% increase in the National Minimum Wage from April 2025 will have a significant impact on employers.
The National Living Wage will increase to £12.21 from 1st April 2025, for employees aged 21 and above.
The National Minimum Wage rate for employees aged 18-20 will increase to £10.00.
The National Minimum Wage rate for employees aged 16-17 will increase to £7.55.
The National Minimum Wage rate for apprentices will increase to £7.55.

Conclusion
There were other announcements that will impact business owners that we have not covered in this blog. For your free Budget Report and complimentary personalised NIC projection, please call 01386 366741 or email us here

What are the financial reporting changes from January 2026?

How much tax do I pay with dividends

What are dividends?

Dividends are a distribution of limited company profits paid to shareholders after any expenses, taxes and liabilities are paid to reward them for their investment in the business.

How are dividends taxed?

Dividends are paid gross, with no tax deducted, and everyone is allowed to earn an amount tax free each year. In the 2024/25 tax year, you can receive £500 of dividend income, tax free.

Having been reduced from £5,000 to £2,000 in 2017, and reducing again to just £1,000 for the 2023/24 tax year, the dividend allowance of £500 in the 2024/25 tax year is a shadow of what it used to be.

The dividend tax rates are:

• 8.75% for basic rate taxpayers

• 33.75% for higher rate taxpayers

• 39.35% for additional rate taxpayers

Dividend tax rates are lower than income tax rates. This means that with a tax efficient structuring of your remuneration through a combination of both salary and dividends, you can pay a reduced amount of tax – whilst remaining compliant and keeping more cash in your pocket.

Dividends also count towards your annual income and any amount of dividend income falling within your income tax personal allowance is also tax-free. The personal allowance is currently £12,570 and first applies to non-dividend income – i.e. from earnings or pensions.

The good news is that dividends are not subject to national insurance, which is why a combination of both salary and dividends can be the most tax efficient form of remuneration as director and shareholder of a limited company.

How do I pay myself dividends?

The company must be profit making for you to be able to withdraw dividends from your business. If the business is making a loss and has no retained profit then dividends can’t be paid. If you make a dividend payment from a loss making company, the payment would technically be a director’s loan which would need to be repaid.

Dividends can be issued at any time but shareholders and directors will generally make dividends at regularly internals, such as every month or quarter. If you are the sole shareholder in the business you can receive 100% of the dividends being paid. If there are other shareholders within the company, dividends would normally be paid out on the basis of those shareholdings. For example, if there were two shareholders who each hold 50% of the shares, each shareholder would be entitled to receive a dividend payment at the same time.

A director’s meeting must be held to declare the dividend and a dividend voucher must be produced to confirm the details of the dividend payment.

Any tax due on the dividend income received, is reported on each shareholder’s personal self assessment tax return each year. Any tax due on the dividends will then be paid by the recipients by 31 January each year.

Need help?

Our annual Director’s Salary report gives more information and examples showing how dividend tax is calculated as part of a salary and dividend remuneration package. Please contact us if you’d like a free copy.

We support our clients by making sure they pay themselves as tax efficiently as possible whilst making the process easy for them. We take care of all the HMRC payroll and ensure that help and advice is always on hand. Of course, we take care of all the company filings and the personal tax return side of things too. Please contact us if you’d like to discuss your personal tax planning then please contact us on 01386 366741 or email here and one of our advisers will be in contact.

The Accountancy Office has been selected as part of SmallBiz100 Line Up

Exciting news alert! 

 

Following a nationwide search, we’re absolutely delighted to have been selected as part of this year’s SmallBiz100 line-up, which showcases 100 of the most impressive independent businesses from across the nation as part of the countdown to Small Business Saturday on 7th December 2024 

 

We’ll be bringing Evesham into the spotlight on 27th October 2024!

Watch out for further details coming soon!

https://smallbusinesssaturdayuk.com

Sole Trader or Limited Company?

When most people have decided to set up their own business, the first issue they encounter is how to do this. This inevitably leads to the question, should I operate as a sole trader or start my own limited company? There is no right or wrong answer and it depends. There are many factors to consider and many advantages and disadvantages to setting up as either.

The decision often depends on the personal preference of the person who owns and runs the business and the type business they are operating. There is never one standard answer for all businesses so it is worth spending the time to consider this carefully. It is about finding the right business format for the individuals involved as there is no easy answer. The decision should always be made on the specific business and what is important to the individuals concerned.

Firstly, lets get the formalities out of the way. Any individual of any nationality may register a limited company subject to a few conditions:

• They are not an undischarged bankrupt
• They have not been restrained by court order
• They are not subject to UK government restrictions

You can become a director of a limited company from as young as 16 years old.

The Advantages of a Limited Company

• Perhaps the most attractive benefit of trading as a limited company is the aspect of limited liability. Essentially this protects the personal assets of the officers should the company run into financial difficulties. Financial liability is limited to what has been personally invested.

• There are potential tax savings in terms of remuneration. The most efficient strategy is to pay the directors a low salary which is supplemented through payment of dividends and subject to lower tax rates (8.75% for basic rate taxpayers, 33.75% for higher rate taxpayers and 39.35% for additional rate taxpayers). A dividend is is a payment made to the company owners from the profits of a company after corporation tax has been accounted for.

• The ownership of a limited company can easily be divided up through the sale of shares – the shares can be further used as a means of generating capital.

• A company is more than just the people in it, and still exists even when members resign, retire or die.

• Companies can create mortgages or floating charges over assets, making it easier to borrow money.

• Perception. Limited companies tend to instil added confidence in suppliers and creditors. Many large organisations will only conduct business with limited companies. An example of this is the IT sector where it can be difficult to obtain contracts unless you trade through a limited company.

The Disadvantages of a Limited Company

• Setting up a limited company means a lot of paperwork due to a higher level of regulation and legislation. There is also ongoing administration, such as filing annual accounts and the annual return with Companies House each year.

• Company accounts and shareholder details are publically available on Companies House website.

• Shareholders and directors may have to personally guarantee contracts entered into with lenders or suppliers.

• Winding up a company is more complex and expensive than a sole trader business or a partnership. Consideration should be given to the longevity of the business.

• Mortgages and insurances such as critical illness cover may all be affected by a typical Limited Company form of remuneration which involves the payment of a low salary supplemented by a higher level of dividends.

If that’s not enough, there are other considerations too:

• Losses can potentially be relieved sooner through a sole trader than a limited company.

• Company cars are rarely tax efficient – unless electric vehicles. Business use versus personal use of a car or van needs some thought and whether this is to be owned personally or by the company.

• The extent to which profits will be retained in the company to fund capital expenditure and expansion.

• It’s also important to be aware that companies pay corporation tax on their profits. The taxable profits of a company are arrived at after deducting all salary payments including those paid to the directors. Dividends are not considered a business expense when calculating Corporation Tax. Company law requires that dividends are paid out of a company’s retained profits – whatever is left after corporation tax has been charged on the profits. It is illegal to pay a dividend if your company does not have sufficient profit after tax available to cover the dividend amount.

• You can earn up to £1,000 in dividends in the 2023/24 tax year tax free. This is reducing to £500 in the 2024/25 tax year.

• In a limited company the profits stay in the business until you pay them to yourself as a dividend. You can pay yourself a tax efficient salary below the tax and National Insurance thresholds, avoiding tax and National Insurance yet still qualifying for national insurance credits against your National Insurance record.

• Sole traders pay both tax and national insurance on their profits and are very restricted as to how they reduce these payments, a limited company gives you greater control and flexibility in how you pay yourself. Sole traders also have to make payments on account in advance of their next tax bill twice a year, which can create cashflow issues. Limited companies do not need to make payments on account (unless a large company).

• The amount of corporation tax depends upon the level of profits. From 1 April 2023 the main rate of Corporation Tax increased from 19% to 25% but the small profits rate of 19% applies to single companies profits of less than £50,000.

There is no ‘best way’ and all options should be considered in conjunction with professional advice to ensure your personal circumstances and preferences are fully taken into account.

Based in the Heart of Evesham, The Accountancy Office are here to help with all of your accountancy needs.

If you wish to discuss any aspect covered in this article please don’t hesitate to call 01386 366741 or email us here.

The Accountancy Office has been selected as part of SmallBiz100 Line Up

📣Exciting news alert! 📣

 

⭐🎉Following a nationwide search, we’re absolutely delighted to have been selected as part of this year’s SmallBiz100 line-up, which showcases 100 of the most impressive independent businesses from across the nation as part of the countdown to Small Business Saturday on 7th December 2024 ⭐🎉

 

We’ll be bringing Evesham into the spotlight on 27th October 2024!

Watch out for further details coming soon!

https://smallbusinesssaturdayuk.com

What does the UK general election mean for my business?

General Elections can bring uncertainty due to whoever wins making their own polices which affect us all.

We’re going to focus on the key points of the leading parties’ manifestos ahead of the next general election on 4th July and how they may affect small businesses.

Conservatives

  • abolishing “the main rate of self-employed National Insurance. The party’s long term ambition is to scrap National Insurance entirely “when financial conditions allow”
  • further cut tax for workers by reducing employee National Insurance contributions by another 2p
  • no plans to raise corporation tax or capital gains tax
  • keep the VAT registration threshold under review  and exploring options to “smooth the cliff edge” at £90,000
  • uphold triple lock pension, raising state pensions by 8.5%. plan to introduce a “triple lock plus,” increasing the tax-free state pension allowance by at least 2.5%.
  • to expand tax free childcare – 30 hours a week of free childcare from when a child is nine months old until they start school.
  • To tackle late payment, promote digital invoicing, improving enforcement of the Prompt Payment Code, building on the creation Laof the Small Business Commissioner with “powers to tackle unfavourable payment practices
  • Continuing programmes including the Invest in Women Task Force and the Lilac Review to encourage more female and disabled entrepreneurs.
  • Work with the British Business Bank and private sector fund managers to secure a £250m Invest In Women Fund to support female entrepreneurs.
  • Take more companies “out of the scope of burdensome reporting requirements” by lifting the employee threshold allowing more companies to be considered medium-sized. This is expected to save small businesses at least one million hours of admin per year.

Labour

  • no plans to increase taxes on working people
  • not to expect increases to National Insurance contributions, as well as basic, higher, or additional rates of income tax, and VAT.
  • to cap corporation tax at 25%
  • modernising HMRC in order to tackle tax avoidance (this will involve even further increasing reporting requirements)
  • providing more training opportunities
  • remove zero-hour contracts and ban ‘fire-and-rehire’ practices.
  • to make it easier for small businesses to access funding and investment
  • to introduce tough new laws to stamp out late payments 
  • Scrap business rates and replace it with a system of business property taxation that is “fairer for bricks and mortar businesses”
  • To rejuvenate the construction industry – build 1.5 million new homes, create opportunities for small builders and tradespeople and to reduce red tape in the current building planning system
  • Retain annual investment allowance for small business, and “give firms greater clarity on what qualifies for allowances to improve business investment decisions”

Reform UK

  • raising the income tax threshold to £20,000 a year 
  • removing VAT from energy bills
  • raising the minimum corporation tax profit threshold to £100,000 – as well as reducing the corporation tax rate to 20% (and eventually 15%)
  • abolishing existing IR35 rules
  • raising the VAT threshold to £120,000
  • abolishing business rates for high street small businesses
  • Cut entrepreneur’s tax relief to 5%.
  • Reform the tax system.

Liberal Democrats

  • cut income tax by raising the tax-free personal allowance
  • Abolishing business rates and replacing them with a commercial landowner levy to help high streets.
  • support HMRC in hopes they can better tackle tax avoidance
  • review IR35 reforms (also known as off-payroll working) to make sure the self-employed are treated fairly
  • Setting a 20% higher minimum wage for people on zero-hour contracts attimes of normal demand.
  • Expand parental leave and pay
  • Supporting small employers with statutory sick pay costs
  • Reforming capital gains tax to “close loopholes exploited by the super-wealthy by adjusting the rates and basing them solely on capital gains while increasing the tax-free allowance from £3,000 to £5,000, on top of a new tax-free allowance for inflation, and introducing a relief for small businesses”.
  • boost trade for small businesses by bringing down trade barriers
  • enforce the prompt payment code – requiring companies with more than 250 employees to sign
  • Tackle the problem of late payments
  • protect triple lock pensions so they rise in line with inflation, wages, or by 2.5% (whichever is highest)
  • plan to establish a new employment status: the dependent contractor, which will sit between employed and self-employed. This will provide entitlement to minimum earnings levels, sick pay, and holiday entitlement.

What are your thoughts? What policies would you like to see implemented to support small businesses?

Will you be voting this year?

Did you know we have expanded our service offering?

We are very excited with our new diversified service offering. This is a fantastic step towards providing our clients with comprehensive and tailored support throughout their business lifecycle and personal financial journey.

We have added Independent Financial Advice to our existing suite of services.

Expanded Services
Expanded Services

As your accountants we work with you to ensure your tax affairs are optimal.  When it comes to your personal wealth there is far more to it than just tax planning.  This is why we believe that in the same way you receive expert advice relating to your tax affairs and business management, you should ensure you receive expert financial planning advice from a qualified financial planner.

Our separately branded financial planning business TAG Financial Planning are able to offer advice in all areas of financial planning, such as:

  1. Pensions – review existing pensions, company contributions and commercial property.
  2. Investments – portfolio review, ISAs, Bonds, Trusts etc
  3. Insurance – shareholder protection, key man insurance, Mortgage life cover, income protection and critical illness cover
  4. Goals Based Financial Planning – identifying goals and objectives, current position, strategy & progress modelling, implementation of plan to achieve success.

A member of our financial planning team will work with you to identify, quantify, and bring to life your life goals. They will assess your current financial plan, review the strengths and weaknesses, and advise what adjustments are required align it with your desired outcome. 

Together with the financial planning we can also provide additional services as follows:

  1. Corporate Restructuring
  2. Share Schemes
  3. M&A Tax Services
  4. Capital Allowances
  5. R&D Tax Credits
  6. Tax Investigation
  7. Exit Planning
  8. Trust Planning
  9. Inheritance Tax Planning
  10. Property Portfolio Planning
  11. Valuations
  12. VAT Advice

We all know the benefit of receiving timely professional advice when it comes to financial matters, especially when big changes are required. 

For more information or to arrange an initial conversation with an adviser please contact us on 01386 366741 or email hello@tpitdev2.uk and one of our advisers will be in contact.

You work hard for your money, it’s important that your money works hard for you!

How can I raise cash to grow my business?

This is often one of the biggest hurdles that growing businesses face, raising cash. You’ve increased your sales to maximum capacity, you’ve got a team and processes in place but you can’t plan for further growth without further financial investment.

Raise cash
Raise cash

It’s a great position to be in but you need to consider your options for funding.

Firstly, be sure of what you’re setting out to achieve. Have a clear plan in place and clearly define your goals:

  • What’s your action plan for the next 12 months?
  • The next three years?
  • The next five years?
  • How much cash do you need for each of the above stages?

There are several different approaches to guiding your business to the next level. Here we list some potential options for consideration:

Personal Funding

The quickest and easiest way to raise finance is often to utilise personal savings. The disadvantage is that the amount of funds may be limited and insufficient to fund the level of growth required. Also, there may be a level of risk with no guarantee that the company will be able to repay those funds. Raising money from friends and family is also another option but again there is a level of risk and no guarantee that the money will ever be returned which can lead to strained relationships.

There are then only two other options – Equity or Debt.

Equity

Equity means you are looking for investor to give you money, in exchange for a stake in your business. 

The benefit of raising cash this way is that it doesn’t need to be repaid and you may get to benefit from an investor with extremely valuable experience which will help the business grow in the direction you want it to. However, you’re also giving away a portion of your business which means you will have less control so it’s important to make sure you choose the right investor. 

Here are some examples of equity investments:

Private Equity – investors who provided cash to established businesses in return for a large or controlling stake, to help them grow to the next level.

Corporate Venture Capital – an investment made by a large company into a smaller business, in return for a share of that business.

Expansion Capital firms – give established businesses money to grow and reach maturity.

Angel Investors – act as mentors and invest their own money in early-stage businesses for a share in the company.

Venture Capital – invest in businesses with high growth potential, often after Angel investors have got the business started. The money comes from established entrepreneurs, investment banks and other financial institutions.

Crowdfunding – Using an online platform, investors buy shares in a company to help it grow.

Debt

Debt financing means you are borrowing money that needs to be repaid, usually with interest being paid on the amount you borrow.

Debt is often a scary word and managing any borrowing needs to be done carefully when looking at raising cash. Some debt is straight forward and short-term. Other debt is longer term. This is why you need to be clear of the purpose for your lending requirements. 

Always consider all the options and think ahead to your 5 year plan. Raising equity can be complex and is a lengthy process. Make sure you have sufficient cash to meet your plans. Having a strong financial business model and cashflow plan is essential. 

Here are some debt options for consideration:

Overdraft – short term lending, typically from a compay’s bank and up to an agreed limit. Overdrafts can be expensive but a business will only pay interest on the amount they actually borrow.

Credit cards – another short term option and easily accessible but usually with a high interest rate.

Invoice factoring – selling your unpaid sales invoices to a third party who will collect the debt from your customer, paying you a percentage of the invoice value up front, minus their fee. A fairly expensive option but useful if you have a large amount of outstanding invoices with slow payers.

Asset financing – raising funds to purchase physical assets such as vehicles and equipment. A fairly quick form of finance, also giving the lender tangible assets to recover should you default on the repayments. Useful for asset intensive businesses with the option to consider refinancing the assets and releasing cash to the business. 

Supplier Credit terms – often overlooked as a form of financing and another short term option. Negotiating extended credit terms with your key suppliers can free up working capital. 

Business loans – borrowing money from a loan provider such as a bank and then paying it back with interest over an agreed period. Loans can be both short-term and long-term. There are also various Government backed loan schemes such as the Recovery Loan Scheme and start-up loans.

Peer to Peer Lending – a business borrows money through an online platform and pays it back with interest over an agreed period.

Direct lending funding – A business borrows money from a fund and repays it with interest. A fund may be able to provide loans where a bank will not.

There is also one other option – Grant Funding. A Grant is a non-repayable type of funding, usually awarded by governments, organisations, or companies to invest in certain assets or activities, or to help a business achieve a particular goal.

Exactly what level of debt is suitable for your business depends on your precise requirements at any one time. Whatever level of debt you undertake, it’s important to measure it. Keep track of your level of gearing and monitor your debt to equity ratio – a simple formula to show how capital has been raised to run a business. This is an important financial metric because it indicates how financially stable a company is when facing problems with trading or other operational considerations and what ability it has to raise additional capital for growth.

How an accountant can help you

There are a number of ways in which a qualified accountant can help make your business more efficient, especially when it comes to managing your debt. Every business is different but monitoring cash and debt, is equally as important as measuring profit. 

An accountant can support you in creating a cashflow forecast to make sure you’re in good cash health and by spotting any potential cash shortfalls early on. You also need to understand what you owe as well as what cash you have in the bank. Looking at your bank balance every day won’t tell you all you need to know.

Associated Companies for Corporation Tax 2023

Associated Companies for Corporation Tax – New Rules from April 2023 

closeup-low-angle-view-of-a-woman-using-adding-machine

The rules around corporation tax changed on 1 April 2023. The amount of corporation tax that a company will pay will depend on the level of its profits, and also whether or not it has any associated companies.

From 1 April 2023, companies with profits below £50,000 will pay corporation tax at the small profits rate of 19% whilst companies whose profits exceed the upper limit of £250,000 will pay corporation tax at the main rate of 25%.

Where two or more companies are “associated” with each other, the Corporation tax limits are divided by the number of companies concerned.

What is an Associated Company?

A company is an associated company of another at any time when:

  • One of the two has control of the other or
  • Both are under the control of the same person or persons

Companies are considered associated for the full accounting period, even if they are only associated for part of that period. Associated companies can also include both UK and Non-UK tax resident companies. 

Dormant Companies which are not carrying on any trade or business are excluded from the associated company calculation.

When considering whether a person has control over more than one company, the most common test for “control” is the voting power of a shareholder. In a simple case, where each of the company’s shares carries one vote, any person or persons who own more than 50% of the shares will “control” the company.

It is important to understand the number of associated companies as soon as possible to estimate tax liabilities. If you are forecasting to produce significant profits for your company and you have one or more Associated Companies, you may wish to considering restructuring your activities to minimise any loss of marginal relief.

If you wish to discuss any aspect covered in this article please don’t hesitate to call 01386 366741 or email us here.

Do I need an Accountant if I’m using Xero?

Xero accounting-businesswoman-learning

As much as we love Xero, yes you do! Don’t be fooled – it’s great software but it doesn’t replace professional advice!

You may expect us to say that because we’re accountants but here’s a few reasons why we strongly advise that every business owner still needs an accountant, even if they’re using fantastic software such as Xero.

1: Software is a tool. It automates labour intensive tasks, enabling the user to perform specific tasks far more efficiently. It doesn’t replace the knowledge of a highly skilled bookkeeper or accountant. The software relies on the user entering data correctly and it doesn’t identify errors made by the user. Mistakes happen, it’s human nature but mistakes can sometimes be costly, if not identified and corrected promptly.

2: If you don’t understand the purpose of a journal in your accounting records, you probably should leave it to a professional that does. Bookkeeping is a highly skilled job and is far more than data entry. If you don’t understand double entry bookkeeping, you probably won’t understand how to correct any mistakes you make. Journal entries are often required to make corrections to your accounting records.

3: Your accounting software won’t accurately calculate the tax you owe. Various adjustments to the accounts are required to arrive at your taxable profit. This will include adding back items such as personal expenses and depreciation. Capital allowances also need to be considered. These items are adjusted on the tax return. Your accountant will ensure your tax bill is minimised and that everything is claimed correctly.

4: Many small businesses start off with a great idea but lack the financial knowledge required to make good commercial decisions. Many businesses fail due to incorrect accounting data, lack of legislation knowledge, poor advice and lack of expert guidance. Your accountant will be able to support you through all these challenges, ensuring you make timely and accurate decisions to ensure successful business growth – and to keep your business running smoothly.

5: The human touch. People forget that many accountants also serve as business advisers. Keeping your business on track, identifying mistakes and offering support throughout the year whenever it’s needed, are just a few things your accountant can help with. Accountants carry a wealth of knowledge through working with clients from all walks of business. Most experienced accountants will have seen most of the problems and challenges that a business may encounter. As a result, an accountant can provide an unbiased sounding board for your ideas, warn you of potential risks and alert you to any opportunities that you may have missed.

6: Running a business is tough and extremely time consuming. Your accountant should be a partner to your business, taking care of the many financial tasks involved in running your business – reducing your workload and saving you both time and money.

7: Using an accountant that specialises in Xero will ensure that you’re getting the most from the software. They will be able to provide you with training in using Xero but also suggest other add-on applications that will integrate with Xero and automate your processes, saving you time.

8: If you’re looking for financial borrowing, you will need the help of an accountant to support any financial applications such as mortgages and bank loans.

9: Tax laws are always changing. With the full roll-out of Making Tax Digital around the corner, you will need an accountant on side to help you understand and implement the changes.

10: Your accountant will act on your behalf with HM Revenue & Customs. Contacting HM HM Revenue & Customs can be a very time consuming process so your accountant. Your accountant can save you lots of time by speaking to them for you, saving you the pleasure!

For qualified advice on Xero Accountants contact The Accountancy Office in Evesham were we will be happy to discuss your requirements. Visit us at our website,  email us or call us on 01386 764761