Category: News

Last year, The Accountancy Office won the Accounting Excellence’s coveted ‘Client Service Firm of the Year’ award, amongst stiff national competition.

This year, AO’s founder and Director, Sarah Sallis, is delighted to have been invited to the Accounting Excellence awards as a Judge for the ‘Client Service of the Year’ category.

Entries for the awards have now closed with Judging taking place later this month. The awards evening will be held in London on 12 September.

Sarah said “I’m honoured and delighted to be invited as a Judge this year. As an entrant last year, it was a fantastic experience although I was unable to attend the ceremony presentation due to my late mother’s illness. I’m really looking forward to being part of the awards process this year, it’s very exciting!”

One of the most common questions we get asked is ‘How much are accountancy fees for a limited company?“

“It depends” is the straight answer. Think of buying accountancy services as if you were buying a holiday. There’s a lot to think about and you’ll find a host of varying prices on the internet. How many people will be travelling?What standard of hotel would you like? Would you prefer an all inclusive resort or self catering? What hotel facilities do you need? All of these options affect the price you pay.

We don’t offer ‘one size fits all’ accountancy packages. Whilst we do ‘bundle’ together a range of services to ensure you have all you need to move your business forward on a monthly basis, the package is tailored specifically for your business, so you can be assured you only pay for what you actually receive value from.

We have a fully qualified in-house bookkeeping team who can handle all of the day to day accounting entries, VAT returns, Payroll etc for you, saving you from the hassle and headache of bank reconciliations and leaving you to focus on where your time matters, your business. However, some clients may prefer to carry out these tasks themselves, if they have the time and resources to do so. This is one reason why accountancy fees for a limited company can vary so much – it depends what you actually want from us.

Before we work with any client, we will hold an initial telephone call (we call it a ‘Discovery Call’) to find out a little more about you’re looking for. As part of that process, we’ll ask what’s working well for you at the moment and what isn’t. If we think we can help and if we believe that we’re a good fit, we then arrange a meeting to delve deeper into your business. During that meeting, we’ll prepare a proposal for you, clearly setting out the services we’ll provide to you and the cost of those services. Our fees take into account many factors, such as the level of your business turnover, the number of staff you employee and the services required. There’s no hidden surprises either, what you see is what you’ll pay and not a penny more.

We’re firm believers in that accountancy isn’t just about profit and loss. Profit is only part of the successful outcome of business growth. We believe as accountants, we’re here to make sure your business is giving you the life you dream of. It’s not just about ticking boxes but setting goals and helping you achieve them. To do this, we use the latest technology and software, not only to tell you how much profit you’ve made each month, but to also focus on budgeting, cashflow and detailed reporting. We’re here to work with you on a monthly basis and to help you see the bigger picture, so that you know exactly how your business is performing in every aspect.

If you’re looking for more certainty in your business, we can help you through financial insight. The future starts now!

It sounds too good to be true, but yes you can – providing certain conditions are met!

A staff Christmas party or annual function (such as a summer barbecue) qualifies as a tax free benefit for your employees and it’s also a tax deductible expense for your company.

It’s important to note that this applies only to limited companies and not sole traders.

• The party cannot cost more than £150 (including VAT) per person and this includes any travel or accommodation expenses.
• The party must be open to all of your employees.
• You can also claim an additional £150 per person for a plus one for each employee, providing they are a family member or partner.
• You can claim back input VAT on the party cost but this may be restricted where you are also entertaining customers

This is an exemption and not an allowance. This means if your party costs £151 or more per person, you won’t be able to claim the first £150 as a business expense, the whole benefit becomes taxable.

The exemption also covers the whole year, so the combined cost of all parties held in a single year cannot exceed £150 per person.

If you have any further questions, please give us a call on 01386 366741 or contact us here. We will be delighted to help!

The rules surrounding off-payroll working will change on 6th April 2020 affecting end-clients, recruitment agencies and contractors.

IR35 was introduced in 2000 to tackle the avoidance of tax and NICs where individuals supplying their services to clients via their own company, often known as a ‘personal service company’ (PSC), who, in the eyes of HMRC were considered to be ‘disguised employees’.

A brief summary of the key points for April 2020 is below:

If you’re a PSC working for a client, the end-client will be responsible for determining the IR35 status of a contract but this only applies if the end-client is a ‘medium to large’ business. If the end-client is a ‘small‘ business there is no change.

The end-client will be considered to be ‘small‘ providing it meets two or more of the following criteria, the existing rules continue and responsibility for determining the IR35 status will still remain with the contractor/PSC:

• Annual turnover is not more than £10.2 million
• Balance Sheet total is not more than £5.1 million
• No more than 50 employees

If IR35 applies, the liability to pay PAYE and NICs will become the responsibility of the ‘fee payer’ rather than the person providing the worker. The fee payer is the organisation paying the PSC for the worker’s services. The end-client and the fee payer are often the same person, but not always, for example when an intermediary such as a recruitment agency is involved in the supply chain.

The fee payer will need to deduct PAYE and NICs on the payment as if the worker was a direct employee. The fee payer is also responsible for employer NICs.

Employment status factors still apply. IR35 continues to be a complex area so professional advice should always be obtained.

If you’re looking for any help with IR35 please get in touch!

A cash flow forecast is a plan which sets out how much money a business expects to receive and how much it expects to spend over a certain period of time. It helps you understand how much cash you’re likely to need in the future and make informed decisions on that basis.

A misconception is that a cash flow forecast isn’t needed if you have a profit and loss account. That’s incorrect. The two are very different and will never match.

A profit and loss will tell you how much income has been earnt and how much expenditure has been incurred but it doesn’t necessarily mean that all of the income shown in the profit and loss is in the bank account, especially if you provide your customers with credit terms.

You may have already invoiced your customer (which will show in your profit and loss account straight away) but if the customer doesn’t pay you until six weeks later, you haven’t received the cash at the same time as handing the invoice to the customer, there’s a timing difference. This timing difference impacts your cash flow.

Every business should have a cash flow forecast, even small businesses can find a simple, visual cashflow forecast really valuable.

A cash flow forecast can help in the following ways:

• plan for how much money you expect to receive from your customers
• plan for how much money you expect to pay out in bills, tax etc
• plan for any cash shortages or surpluses

Planning for expected and unexpected eventualities means you can adapt quickly. Perhaps you’re looking to recruit new staff or invest in new equipment but don’t know when the time will be right to commit. An accurate cash flow forecast will help you plan for when you can do this. If you’re aware of a bill VAT bill coming up, you can plan for the payment, and if you identify a cash shortage, you can plan how you’re going to bridge that gap.

If you’re looking to grow your business then an accurate cash flow forecast is critical. If you’re looking for investment or funding, lenders will expect to see a cash flow forecast before lending any cash.

Plan for the ‘what ifs’. Not even the greatest of accountants have a crystal ball so it’s important to plan for every scenario and build these into your cash flow forecast. Planning for multiple scenarios demonstrates to lenders that you’re able to adapt, make strategic decisions and avoid cash flow disasters.

We integrate the latest cash flow forecasting software into Xero, enabling us to help our clients plan for the cash future.

We populate a cash flow forecast, build in potential scenarios, pull in real-time actual results from Xero and then review what’s actually happened compared to what was expected to happen. We then support our clients in understanding the cash impact and work with them to make the right decisions to keep them on track going forward.

The Bitterness of Poor Quality Remains Long After the Sweetness of a Low Price is Forgotten – Benjamin Franklin

I love this quote.

Cheap doesn’t always mean quality and whatever you’re looking to buy as a consumer or business owner, you’ll always find a cheaper alternative. However, the cheapest option isn’t necessarily the best option and can often lead to problems.

How do you view accountancy services? As an investment or cost you could do without?

If you’re only interested in paying the lowest possible costs, you’re missing a trick. You’re failing to invest in your future.

How much are you investing into the future of your business?

As an indicative guide, I usually recommend a business should be investing a minimum of 2-3% of it’s turnover into its finance function. If you invest less than this, the service you receive is likely to be undeliverable long term or you’re not going to achieve the future you want.

When pricing services for your customers, the price should be based on the value you provide and you should have confidence in that value together with the price you charge.

When buying a service, it’s quite common for experts in certain fields to charge a premium so always think about the quality of the service you’ll likely to be getting when comparing to the cheapest.

Our monthly fee for the preparation of limited company accounts with two shareholders/directors, corporation tax return, confirmation statement, payroll and a self assessment tax return is typically £150.00-£180.00 per month.

When a prospect asked recently if we could match £95 a month for the same service but with tax planning advice thrown in, I very politely declined.

There are two main reasons why:

1. We would not be able to deliver the level of service that the client was looking. We’d be under servicing the client who would become very frustrated, very quickly that they weren’t getting the service they’d signed up for. We wouldn’t have charged sufficiently in order to spend extra time with that client to add the greater value they were looking for.
2. We would be servicing the client at a loss which is fundamentally flawed. How can a loss making accountant advise their client on how to run a profitable business? Personally, I wouldn’t feel assured if I was to appoint a professional advisor who wasn’t walking the walk! We’d also be doing a disservice to ourselves and our profession.

When you pay for a professional service, it’s the years of skills, knowledge, training and qualifications that you’re paying for. I’ve studied and worked hard for many years and I don’t believe that all of those years should be considered to come at a cheap price.

As accountants, if we don’t value our service, how can we expect others to?

When a client is open to investing more money into their accountancy service and is looking for an accountant to become an integral partner to their business, they will receive much greater benefit and a higher level of service.

Examples of this higher level of service may include regular engaged conversations to establish what’s going well and what isn’t going so well in the business, carrying out research, making recommendations, performing analysis and providing critical financial insight to support important decision-making which enables the business to grow.

We’ve all heard “You get what you pay for” and it’s very true!

I do understand that some businesses will have a budget to work with and may only be looking for the core compliance services. When clients are really keen to work with us, we will always have conversations with them to try and achieve their budget wherever possible, even if it means sacrificing the preferred level of service for the short-term. We will agree where their current budget can be put to greatest use and place additional services onto the future plan.

Selling your service cheaply is the easiest form of pricing strategy, on the basis that you’re likely to win the majority of work you bid for and the volume of that work will compensate for the lower pricing. However, attracting cheap clients, will result in them constantly quibbling on price and they will ultimately shop around for a cheaper deal again.

Price sensitive clients aren’t the answer to building a long-term sustainable business.

If you buy a cheap service, it’s likely you’re going to be one of a large number buying into that service which means that ultimately the quality of that service may not be at the standard you need, this can be potentially damaging to your business and cost you more in the long-term.

We’ve always been very proud of our award winning high level of customer service and we will never compromise that.

I’m glad that I’m not in the market for an accountant because there are literally thousands of us out there, all offering similar services at very different costs.

It can be very confusing for business owners to choose the right accountant for their business or even know where to start. Watch out for my next blog ‘How to choose an accountant’ with my tips on how to select the right accountant.

The personal allowance remains at £12,500 during the 2020-2021 tax year, meaning your first £12,500 of income is tax free.

The tax bands and tax rates for the 2020-2021 tax year are:

20% – income between £12,500 and £50,000 (basic tax rate bracket)

40% – income between £50,001 and £150,000 (higher tax rate bracket)

45% – income above £150,001 (additional tax rate bracket)

There is no change to the dividend allowance, this remains at £2,000. This means that your first £2,000 of dividend income is free.

Any dividends over £2,000 will incur tax at the following rates:

Dividends falling within the basic tax rate – 7.5%

Dividends falling within the higher tax rate – 32.5%

Dividends falling with the additional rate of tax – 38.1%

If you have any unused personal allowance from your £12,500 annual allowance, then the remaining element can be allocated against your dividend income, that element of dividend income is then tax free. For example, if you take a salary of £9,500 in the 2020-2021 tax year, you will have £3,000 remaining from your personal allowance. The £3,000 can be offset against your dividend income, giving you a further £3,000 of dividend income free of tax.

Employers Allowance

The Employer’s Allowance (note, this is for employers and not employees) continues for companies employing staff, enabling your company to reduce its annual national insurance bill by £4,000, increasing from last year’s allowance of £3,000. This means that employers do not pay the first £4,000 of employers national insurance contributions.

From April 2020, you will need to make extra checks to confirm your eligibility to claim the Employer’s Allowance.

Where a limited company has two directors, possibly spouses, providing both are paid above the secondary threshold (£8,788 2020-2021), the company is eligible to claim the Employment Allowance for the tax year.

Sole director companies without additional employees cannot claim the Employment Allowance.

National Insurance

The Lower Earnings limit increases from £6,136 to £6,240 in 2020-2021. At this level of earnings, you are protecting your entitlement to state benefits such as a pension, but you do not have to make any national insurance contributions.

The primary national insurance threshold increases to £9,500 from £8,632 for the year from April 2020. If you earn above this amount, you are personally liable to pay national insurance contributions.

The Secondary threshold increases from £8,632 to £8,788. If you earn over this threshold then your employer will pay employer’s national insurance on your earnings.

A major change in 2020-2021 is that the secondary threshold is lower than the primary threshold. Therefore, as a Director, you can potentially earn a salary of up to £9,500 per year (£792 per month) but your company will then become liable to pay employer’s national insurance contributions of just under £100 for the year which will need to be paid to HMRC.

If you’re eligible to claim the Employers National Insurance Allowance, your company won’t need to pay the £100 national insurance contributions.

In this instance, our recommendation is to pay an annual salary of £9,500 per year as you’ll have an extra £712 in your own pocket and the company will also save around £150 in corporation tax for the year.

Companies who are not eligible to claim the Employers National Insurance Allowance may decide that the admin burden of having to make such a small payment of national insurance to HMRC may outweigh the saving, which is small. Therefore, opting for a salary of £8,788 per year (£732 per month) will avoid any national insurance issues. Your take home salary is £60 less a month but you don’t have to worry about remembering to pay the employers national insurance contributions to HMRC.

It is certain that COVID-19 will have a huge impact on our daily and working lives over the coming weeks. Due to the rapid spread of the COVID-19 coronavirus, AO has contingency plans in place to support your business and maintain our levels of service.

As a fully cloud based practice, we are in a fortunate position where we are very agile. We can adapt our working environment when needed.

During the week commencing Monday 16th March, we will be trialling working remotely as a team. We will be working from our individual homes and for most of us this isn’t unusual, it’s actually a common way of working for us.

The only difference is that we haven’t collectively all worked from home at the same time or for any length of time. The trial period ensures that we thoroughly test our internal remote working processes, meaning that we can confidently adapt to changing situations very quickly in the future.

We have access to a secure network and data security is in place. Employees have all the necessary technology to enable us to continue to deliver the level of service and support expected.

We do not expect any disruption to our normal services. Our telephone line will be diverted and emails will be responded to as normal.

We have taken the decision to suspend any office-based face to face meetings or training sessions that are not essential until further notice. We will communicate with our clients via telephone, email and video call meetings.

Basepoint Business Centre continues to operate as normal and will do so whilst following Government advice.

We have made the decision to cancel our ‘Xero & Receipt Bank – Work Smarter’ demo on 8^th April which will be rescheduled later this year.

We are monitoring the situation daily and will respond to to Government directives as they arise. It is still business as usual for us in these highly unusual circumstances. It is our intention to continue to deliver and develop our services to the highest standard and support our clients in every way we can.

Thank you in advance for your understanding and support.

We are fully committed to supporting our clients during this exceptionally difficult time.

The current health and economic crisis is outside anyone’s control but what we can control is how we respond to it.

Naturally everyone is overwhelmed and fearful of what the future holds. We need to focus on the now and address each day at a time. Yes, we’re in some very uncertain and scary times but we will all find a way through it. Sometimes a different approach is necessary.

We’re committed to supporting the local business community and happy to help in anyway we can. Even if it’s just a chat, sometimes a listening ear can help to see things a bit clearer.

Ways in which we are currently helping our clients:

✅ 1-2-1 calls to understand initial concerns

✅ 1-2-1 calls to develop a forward strategy

✅ Support with cash flow forecasting

✅ Support with applying for grants and loans

✅ Support with arranging a ‘Time to Pay’ agreement with HMRC

For those looking for a higher level of advice and tailored support we can:

✅ Provide access time Xero accounting software, completely free of charge for 6 months

✅ Provide access to Float cashflow software, completely free of charge for 3 months

✅ Provide free weekly cash flow updates as part of our cash flow management package

✅ High level business continuity planning – devising a plan to ensure your business survives the stormy waters

The Government have provided further clarification and guidance for the Coronavirus Job Retention Scheme (CJRS) as of 4th April 2020.

A few of the main points to note are:

1. Employees you made redundant, or stopped working for you on or after 28 February 2020, can be re-employed, put on furlough leave and their wages claimed through the scheme.
2. Employees can start a new job when on furlough (if allowed under their employment contract).
3. Furlough agreements need to be made in writing and kept for 5 years.
4. Employees can be furloughed multiple times, subject to each furlough period being a minimum of 3 weeks.
5. Company directors can be furloughed but can still perform their statutory duties but not other work for the company.
6. Employers can reclaim 80% of compulsory (contractual) commission, as well as basic salary.
7. Apprentices can be furloughed and can continue to train whilst furloughed. Employers must cover any shortfall between the amount you can claim for their wages through this scheme and their appropriate minimum wage.