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Keeping track of restricted funds and grants

183:808545900 (Christina Gorham) — Fri, 25 Jun 2021 08:23:57 GMT

And reporting back to donors

Depending on where you get your charitable income from, this can be the most challenging part of charity bookkeeping and reporting with levels of complexity not found in other sectors.

It sounds so simple. The charity commission reporting requirements only want you to categorise your charity transactions according to restricted, unrestricted and endowment. But what do you do when a donor asks you how you have spent their donation, as is their right to know? How do you separate out what their money was spent on without opening lots of bank accounts? How do you ensure their money was spent on only the items they have asked you to spend it on? What if the donor set a time limit on the grant, requiring unspent funds are returned to them?

This is when you need to be able to categorise your transactions twice, according to the charity commission headings and according to who gave you the money in the first place. Some charities go a step further by requiring a third level of filtering and categorisation for management reports that may group a number of donations together as they were given for the same purpose, or even split donations up if they were given for multiple purposes.

If your charity is small and has a large number of grants/ restricted donations. You may find it easier to do this sort of filtering using Excel spreadsheets by adding categorisation columns similar to the ones shown below.

However, spreadsheets can be very labour intensive. As the charity grows you will, no doubt be looking to join the cloud. This is where an experienced charity bookkeeper can come into their own. We know where to find cloud accounting packages that allow for this kind of multilayer filtering & categorisation. We already have the templates needed to produce the reports your donors are requesting and the ability to produce something tailor made if needed. And we have the ability to track your grants and tell you when any are running low or out of time.

Get in touch if you need help keeping track of your grants and donations.

Sole Traders Part 2

183:808545900 (Christina Gorham) — Fri, 18 Jun 2021 11:29:05 GMT

Preparing for your first Self-Assessment

So, you’ve finally managed to complete setting up your Government Gateway access and have found where to click to submit your first Self-Assessment. You’re all ready to go……Or are you?

Before you click that button to begin your Self-Assessment there are a few things you need to consider and prepare for.

• Do you know your business income and expenditure figures or are you just guessing?

• Are you working from home? Could part of your household bills be regarded as allowable business expenses? What about milage?

• Do you have any employed work? Have they given you a P60, P45 or P11D?

• Do you have any other sources of income? For example, share dividend, bank interest or pension income.

• Have you received any start-up grants or Covid related support?

• Have you donated anything to charity? Did you Gift Aid it?

• Have you paid anything extra towards your pension or student loan repayments?

There are more questions your accountant should be asking you when they are helping you prepare your accounts, but this is a good place to start as the answers to all of these questions will affect your final tax bill.

“But Coronavirus has hit me hard. I can’t afford an Accountant!”

Are you sure you can afford not to use one? Qualified Accountants can save you hundreds, if not thousands of pounds on your tax bill by asking the right questions. And qualified Bookkeepers can save you a lot on your Accountants bill by helping you provide the numbers in the best way to help them sort your Year End reports and Self-Assessment as efficiently as possible.

If you don’t know the answers to the questions above. 64 Bookkeeping can help you find out by going through your bank statements, invoices and receipts (all your business paperwork) to produce accurate bookkeeping records uniquely tailored to your business. By gathering together all the information you will need into one place and by sorting out your documentation, we make it easy for your accountant to find all the numbers they need to save you money.

But there is more. Did you realise that the accounting records we produce for you can be used for more than your Self-Assessment? These records can be used to help your business grow throughout the year. The more often you update your records the better your idea of how your business is doing, enabling you to make the wisest decisions for your business.

Sole traders

183:808545900 (Christina Gorham) — Fri, 11 Jun 2021 12:41:19 GMT

Registering with HMRC

One of the most important, yet often forgotten steps, when setting up as a sole trader is to register with HMRC for tax. Yes, even hobbyists need to register if your income is over £1000 per year (this includes all your non-employment income such as interest, casual sales, and independent trading).

But first, let’s look at what a sole trader is. Usually they are a “one man band” though many have employees and a rare few grow surprisingly large while retaining the original person as the owner and figurehead. HMRC states, “You’re probably self-employed if you:

• run your business for yourself and take responsibility for its success or failure

• have several customers at the same time

• can decide how, where and when you do your work

• can hire other people at your own expense to help you or to do the work for you

• provide the main items of equipment to do your work

• are responsible for finishing any unsatisfactory work in your own time

• charge an agreed fixed price for your work

• sell goods or services to make a profit”

“You could be classed as a trader if you sell goods or services. If you’re trading, you’re self-employed. You’re likely to be trading if you:

• sell regularly to make a profit

• make items to sell for profit

• sell items on a regular basis, either online, at car boot sales or through classified adverts

• earn commission from selling goods for other people

• are paid for a service you provide”

As you can tell, the definition of what makes a sole trader is very wide to include all commercial activities that have not been registered with Companies House or the Charity Commission.

Now we need to consider when you will need to register as Self-employed. HMRC state you must register with them if;

• you earned more than £1,000 from self-employment during one financial year (Eg. 6th April 2020 to 5th April 2021)

• you need to prove you’re self-employed, for example to claim Tax-Free Childcare

• you want to make voluntary Class 2 National Insurance payments to help you qualify for benefits

I would add to this list that registration becomes compulsory if you are required to by your licencing body, if you are a CIS employee who has agreed to pay the CIS related taxes yourself, or if you have non-trading income that must be declared via Self-Assessment.

As soon as you realise you are a sole trader, you need to register with HMRC for Self-Assessment. The absolute latest you can leave it is 5th October following the end of the tax year in which you became self-employed. That means that if you started selling crafts during the second lockdown (before 5th April 2021), you only have until 5th October this year to register for self-assessment; but if you decided to open a café with no outdoor space or online ordering, you would have been obliged to open after 6th April 2021, meaning you don’t need to register until 5th October 2022.

Having established if and when you need to register with HMRC, the online registration process is fairly straight forward, if a little long winded due to security checks.

1. First you need to create your Government Gateway Account.

2. Next HMRC will post to you your Unique Taxpayer Reference (UTR) number. This should take no more than 10 working days, but delays are normal during busy periods.

3. Then you will need to log into your Gateway account using this UTR number so you can request an Activation Code is sent to you by post in a separate letter. This should take an additional 10 working days but can be delayed if HMRC are busy.

4. When the Activation code has arrived, you need to log back into your Gateway account and enter the activation code. Now you should be able to access all your tax information and you will be able to submit your Self -Assessment.

Top tip*

Keep your UTR letter and your password somewhere safe yet memorable as you will need to use this every time you login. You really don’t want to register now and forget where you put your login details next year when you’re wanting to sort your Self-Assessment submission, as a lost UTR can cause even more delays that could result in late filing penalties.

Top tip 2*

The sooner you start sorting your gateway login the better as the longer you leave it the longer the delays get. I’ve heard of businesses taking three months to register. Don’t risk late filing penalties just because you didn’t register soon enough!

Self-Assessment

183:808545900 (Christina Gorham) — Fri, 14 May 2021 11:33:46 GMT

Are you due a refund?

Did you know that every year many businesses owners are due a refund with their Self-Assessment? This is especially common among business owners who have an employed role alongside their own business.

Times when you may have overpaid tax include:

• Paying too much in your payments on account

• Being put on an emergency tax code when you start a new job

• Being put on the BR tax code by a second job when you still have some Personal Allowance available from your first one

• Being put on the wrong tax code by an employer (deliberately or accidentally)

There are other reasons for being owed tax by HMRC and if you think you may be due a refund it’s well worth having a chat with your accountant. Remember to ask about allowable expenses.

While most employees are automatically assessed and issued with a P800, some of us slip through the net and need to submit a claim. If you think you’ve paid too much tax but have not received a P800, you’ll want to take action.

The easiest way to get your refund is to submit a self-assessment before the deadline of 31st January. If this is your first Assessment, you can’t leave it to the last minute because you will need to set up your individual Gateway account and this can take a month or more.

I always recommend sorting your Self-Assessment as soon as possible following April 5th. After all, your money is of more benefit to you in your bank account than the tax man’s and it’s not worth delaying the job just because you can. There are also the late filing fines to consider that could completely wipe out any refund you are owed.

If you have never submitted a self-assessment it’s worth reviewing the last four tax years as you may be able to claim more than you were expecting. UK law allows you to claim overpaid tax for up to the last four tax years, providing you get the claim in before 5th April when a new tax year will begin.

So, what do you need to prepare in order to submit your self-assessment? You will need a full and accurate breakdown of all your income sources including documents such as your P60 to prove how much of your income has already been taxed, along with calculations of pension contributions, gift aided donations and all business-related expenses (including personal utility bills if you work from home).

Any good bookkeeper will be able to help you setup and complete a set of personal books that will give you certainty you have the correct figures, even if you have multiple businesses and employers.

If you want help sorting out your personal books, get in touch. How much you will get back?

Year-end review - Last year’s books

183:808545900 (Christina Gorham) — Fri, 30 Apr 2021 10:56:14 GMT

The importance of clean data.

When preparing to close last year’s books it’s important to check the data is correct because it’s not always easy (and certainly not advisable) to edit the books in a closed period and you should definitely avoid editing data that has been submitted to the tax man.

You, or your bookkeeper, should check and confirm the accuracy of all the data you will be submitting to your accountant for your year end reports. Try to correct every error you find if you know how to do this and don’t worry if you have a few things you don’t know how to correct, most accountants will appreciate you stating upfront, “I’ve found this error but don’t know how to sort it. Can you please help me?” It’s better to point out unresolved errors than to leave them to hurt you later.

How can these errors be found? Well, it depends a lot on how you are recording your data. If you are using a spreadsheet most data entry errors can be found using filters and pivot tables. If you are using cloud software there will be a variety of methods, specific to your program, for finding these mistakes.

The first place I always look is the year-end reports as most accounting software allows you to dig into the data from the reports. There is also usually an easy-to-use transaction search function that will allow you to confirm, for example, all of the Electricity invoices have been coded to Electricity and not Gas and you have all 12 invoices recorded.

Once you have checked all the recorded transactions are correct, it’s important to look for any transactions that may have been missed, duplicated or added in error. This is where good paper records/ online filing comes into its own and where some accounting packages trump others. Your bookkeeper will need to check every document you have against the bookkeeping program, simultaneously confirming your filing and bookkeeping records are complete and accurate while removing any documents and transactions that have been recorded twice, correcting bank reconciliations at the same time.

Yes, you probably perform many of these checks monthly when you reconcile the bank, but it’s advisable to come back later and confirm nothing is missing from the records. After all, have you never started to reconcile the bank and found a direct debit payment you didn’t have the invoice for yet or received and invoice which you have put into the online system only to enter the payment separately weeks later when reconciling the account? This is the sort of thing that’s easy to miss on a monthly basis and why it’s important to check again.

Larger businesses will prefer to perform this sort of deep-data check on a quarterly basis as well as annually, while non-micro charities may schedule the data deep-clean to coincide with trustee meeting report generation.

This may sound like a lot of work, but it’s worth it. Some businesses have discovered errors that could have cost them thousands of pounds if they had not checked their records carefully enough.

If you want help checking your records, please use the “Contact Us” button below.

Yr end review - Understanding your year end reports

183:808545900 (Christina Gorham) — Mon, 26 Apr 2021 19:56:27 GMT

Checking the Income and Expenditure and Balance sheet reports.

Why is it so important to check my annual reports? Isn’t that what I pay the accountant for?

Yes and no. You pay your accountant to produce your annual statements and to submit your self-assessment, but you are still legally required to check the reports before they are finalised. It’s important that you understand the reports you are given.

If you are a charity trustee, it’s even more important that you understand the reports as you are required by the charity commission to confirm that you are happy with them. How can you do this if you don’t know what you’re looking at?

Let’s begin with the Income and Expenditure report (or I&E), also called the “Statement of Financial Position” (or SoFA) and the “Statement of Profit and Loss” (or SPL), depending on who has produced it and whether it is for a charity or not.

Every good Income and Expenditure report will begin with a summary of all the income received in the year, then summarise all the expenses incurred in the year and end with a profit or loss calculation (this can also be called the “Net movement in funds figure”). The basic income figures can be broken down into various categories such as donations, trading income, grants, and legacies while the expenditure figures will probably be subdivided into cost of sales, payroll, utilities etc. Charities have an extra line between their total expenditure figure and the net movement in funds to show any transfers between funds.

While business accounts usually only display this year’s figures in one column beside last years figures for easy comparison, charity accounts are subdivided into several columns indicating the proportion of funds received and spent from unrestricted and restricted funds, and endowments or legacies. This way of presenting charity I&E reports can make their year-end reports much harder to read if you’re not a numbers person.

Moving on to the balance sheet (also called the “Statement of Financial Position”, or the SFP). For charities and normal businesses this report has more similarities making it easier to understand if you are accustomed to looking at reports produced for a different business or charity setup..

Your balance sheet should always include sections for your assets and liabilities. Your assets will include things owned by the business (your physical assets like the building you operate from and stock waiting to be sold), the amount of money available to the business (in the bank, as cash in hand and as unpaid invoices) and any investments made. While your liabilities will include summaries of any unpaid supplier invoices, any payroll liabilities (such as any tax due to HMRC by the 19th of the following month) and any loans owed by the business or charity. By subtracting the liabilities from the assets, you get the total net asset or liability figure. I hope it’s always a positive, net asset figure for you as this indicates the business is in a much safer long-term position even if your profit figure is negative for the short-term forecasts.

Below these figures on the balance sheet, you will find another set of figures. This is where things get most different between charity and business reports. At the end of a charity’s balance sheet it must have an analysis of its retained funds, where a business balance sheet will detail the owner’s capital and drawings. However, it is essential that the total figure at the end of this summary matches the total net asset or liability figure further up the balance sheet, as this is a key check that the reports have been prepared correctly.

In this final section you should also find a figure you recognise from the Income and Expenditure report. Charities call it the “Accumulated Funds”, and small businesses give it various names including “Current year Earnings”. This is the profit or loss figure or the Net movement in funds figure. This is also another check you need to make to confirm the reports are consistent. If you can’t find the bottom-line figure from your Income and Expenditure report in the analysis at the end of the balance sheet, a mistake has been made somewhere and you are well advised to refuse the report until the discrepancy has been resolved.

You should now have a basic understanding of your two primary End of Year reports. If you need more help understanding them, please get in touch.

Saving money on year end – filing

183:808545900 (Christina Gorham) — Fri, 16 Apr 2021 15:33:09 GMT

Where should I file this?

Does your filing system look like this? Are you in the habit of stuffing your financial records in a shopping bag or shoebox in the order you remember to add the bits of paper to the collection, trusting your bookkeeper or accountant to know what it all means? Did you realise we can spend more time sorting out records stored like this than we spend on the actual bookkeeping and this will be one reason your fees are so high?

If you want to save money on your year end, it pays to invest a little time and effort throughout the year in sorting your records out a bit and in checking nothing is missing. Even sorting the records into Bank account statements, income, and expenditure will save a considerable amount of time and money.

If filing is not your thing, a good bookkeeper or administrator with bookkeeping experience will be able to set up and maintain your records. They will also chase you for missing receipts and invoices while you still remember what they are for and will be able to easily locate any bit of paperwork you or your accountant may require.

A good bookkeeper will go further than an administrator. They will keep accurate records of who owes you money, how much is owed and how old the debts are. This makes it a lot easier to keep on top of cashflow as you will be able to chase your outstanding debtors, confident in the knowledge that the debt is truly outstanding. Good bookkeepers will keep an eye on your outstanding invoices too, pointing out whenever an invoice received has not been paid, helping you to avoid late penalties and to claim early payment discounts.

But there are other advantages to a good filing system. Good filing leads to good computerised records, and the ability to report on the financial state of the business as often as you want. Accurate reporting on the current state of the business can help you respond to surprise events such as supplier price rises and pandemics. I’ve covered the potential impact of good reporting in a different article.

To summarise, good filing results in:

• Lower year end fees

• Searchable records

• Accurate debt and debtor management

• Current reporting on the businesses financial position and sustainability leading to security, confidence and new business opportunities for growth and investment.

How much are you missing out on because, “Filing is not my thing”?

Preparing for the end of C19 financial support measures

183:808545900 (Christina Gorham) — Fri, 12 Mar 2021 11:57:02 GMT

Are you ready?

Many in finance are still processing the potential impact of the chancellor’s budget announced last week and how it will directly impact their clients. In this blog, I hope to help you understand some of the potential financial impacts as we look forward to leaving lockdown and embracing a vaccinated new world.

So far as grants are concerned, the new date to watch out for is September 30th. On 30th September the CJRS grant and the SEIS grant will end (following a three-month tapering off period). This is also when the reduced VAT rate of 5% for hospitality, accommodation and attractions will end, rising to 12.5%, and when the extended Apprenticeship incentives will finish.

Why is September such an important month? Because Mr Johnson wants to remove all restrictions on 21st June. If all goes according to the latest road map, the last restrictions to trade will be lifted on 21st June, though many businesses are hoping to open again from 12th April. This gives us three to five months to get back on our feet before the support ends and businesses will be back to fending for themselves.

Is this long enough for businesses to get back on their feet? Probably. A quick google search reveals it can take a start-up business up to five years before it starts making a profit (if at all) but that the business wants to have a maximum of six months’ worth of debt on its books.

Given your business is not a start-up and, presumably, has an established customer base and reputation, you won’t need to work as hard to re-establish your position within the market (especially if you have been working on this throughout the pandemic). You will already have most of the resources you will need, so you won’t have this extra outlay before you can “open the doors” and you will already know your preferred suppliers. Your already past the starting point meaning your primary focus will be on persuading customers it’s safe for them to come to you and spend their money.

This is where the uncertainty lies. None can predict how long it will take for “Jo Public” to emerge from the protection of their homes and start spending again. Especially given what happened last time, when we flocked out of our homes only to be sent back having caused a second wave. I suspect people will be much more cautious this time, afraid of causing another national lockdown and of loosing another summer. If you have the financial capacity, it may help to go above and beyond when it comes to cleaning, safety and informing potential customers this is what you’re doing. The added reassurance may help encourage them to visit you first.

Equally, no one can predict how many will prefer to save their money, investing “for a rainy day” instead of splashing out on non-essential goods and services. After all, it’s the people and businesses that had reserves allowing them to pivot in those first few months that have survived and thrived during lockdown.

Successfully getting the economy back on its feet will involve a lot of reassurance and confidence building combined with innovative marketing strategies many developed during lock down, and you will need to start laying the groundwork now (if you haven’t already) to get that important commercial advantage. It’s time to invest in the future.

Spring Budget 2021

183:808545900 (Christina Gorham) — Fri, 05 Mar 2021 16:21:27 GMT

How has Rishi Shunak promised to help businesses struggling under C-19?

In his second budget as chancellor Rishi Shunak made a number of promises. Here are the ones I think most likely to affect small businesses and charities.

• CJRS scheme extended to September 2021, starting to taper off from July.

• SEIS extended to Sep 2021 and includes people who filed their 2019-20 returns on time.

• New Restart Grants now available as a one-off grant for hospitality, accommodation, leisure, personal care and gym businesses in England.

• New Recovery Loan Scheme to help businesses of all sizes through the next stage of recovery.

• 5% VAT reduced rate for hospitality, accommodation and attractions extended until September, rising to 12.5% until 31st March 2022.

• Extension of Apprenticeship hiring incentives to September and introduction of new “flexi-job” apprenticeship, enabling apprentices to work for more than one employer.

• New Taxpayer Protection Taskforce to crack-down on COVID fraudsters who have exploited UK Government support schemes.

• Duty on fuel & alcohol has been frozen, not raised as some feared.

• “Future Fund: Breakthrough” to invest in highly innovative companies such as those working in life science, quantum computing & clean tech.

• Minimum wage increasing to £8.91 per hour from April but the PAYE & NI rates have remained unchanged.

• Tax-free Personal Allowance frozen at £12,570 until 2026.

Charities working in these specific fields have been promised extra support.

• Extra financial support for veterans with mental health needs.

• Extra funds to provide “respite Rooms” for homeless women and those suffering domestic abuse.

• Extra funding for museums.

• Extra funding for spectator sports, sports clubs & their governing bodies.

• Funding for various green schemes, infrastructure & job creation.

• Community Ownership Fund will allow communities across the UK to invest to protect the assets that matter most to them such as pubs, theatres, shops, or local sports clubs.

Cash heavy businesses

183:808545900 (Christina Gorham) — Fri, 26 Feb 2021 11:50:25 GMT

The importance of accurate counting

In the tutorial “ How to reconcile your cash book and bank account, ” I said that it’s important to know your records are correct and explained some simple ways to check the accuracy. But what happens if you have a lot of cash and card transactions? What happens if someone counts the wrong change or enters the wrong numbers into the card machine?

In brief, if the salesperson makes a mistake, it will appear in the records and it’s up to you to find it while remembering that it’s a lot easier to hide mistakes in a business that has a lot of small cash transactions than a few large online ones. To paraphrase my first boss “a 1p mistake found at the end of the day could be hiding £100.99 worth of mistakes accumulated throughout the day.” It could also be used to reveal fraud from dishonest employees. If you are not careful to count takings accurately, these mistakes could be missed to the detriment of your business.

So, what can be done to prevent these mistakes happening? I’d recommend starting with some basic training in the importance of accurately recording every transaction and how to correct any mistakes, if possible, while setting up a system where employees can safely admit to any mistakes including those they have corrected. Some employees may need extra tools to help them, for example calculators or a special colour filter.

Once you are happy your employees are able to record transactions accurately and correct or report any errors they make, the emphasis moves from recording each transaction to the cashing up process. Some businesses get the employees to cash up their own tills at the end of each shift, others have a shared till that is counted by management at regular intervals throughout the day. Regardless of who does the counting or how frequently it’s done, you need to ensure they do the job accurately while taking into account any reported errors and corrections.

Remember, the figures from the till report and the cashing up make your foundational documents. These can be compared to your stock take figures to discover if someone is entering incorrect or fraudulent transactions. I know of a business that used accurate bookkeeping to catch a thief.

If you are in the habit of paying for expenses (business or personal) from the till. Stop!

Paying for expenses using cash from the till makes cashing up at the end of the day more complicated and opens you up to another level of potential errors. Expenses should be paid from the business account or the petty cash account. If a supplier insists on cash, ask yourself why. Could they be trying to hide income from HMRC so they don’t need to charge VAT? If so, can this supplier be trusted and what is the probability of you getting dragged into things if HMRC came knocking on their door?

If you are VAT registered, the implications of inaccurate records are far more significant. If HMRC suspect you have been submitting incorrect VAT returns, they can visit you and raise an estimate for the VAT they think you should have paid, and they don’t take into account poor record keeping as a reasonable excuse.

How can poor counting impact on your business? You could lose a lot of money and your good reputation. In extreme circumstances, you could even loose the business, personal assets and find yourself in court. This is entirely avoidable by implementing robust checks at every stage.

Contact me if you want help ensuring the accuracy of your record keeping.

Loving your books

183:808545900 (Christina Gorham) — Fri, 12 Feb 2021 11:23:55 GMT

The power of good bookkeeping

It can be hard to love your books, especially in a season when so many businesses are unable to trade. If you didn’t understand your books before the pandemic, only completing them once per year because you had to file a tax return, now is a brilliant time to review this habit and discover the power of good bookkeeping.

Good bookkeeping, with monthly reviews, enables you to make wise and informed decisions for your business.

In my last tutorial (Knowing I’m making a profit), I pointed out how a fictitious business owner who did their books monthly, noticed a dramatic drop in profits and was able to take remedial action. This could have been caused by a sudden drop in sales, a dramatic increase to expenses or a more subtle combination. It’s important to recognise and understand the causes of fluctuations in your bottom line.

Most business owners would notice a dramatic change in sales or expenses, it’s hard to miss suddenly making half the sales you were expecting to make or receiving a bill ten time higher than normal. But would you notice a more subtle change that combined a small reduction in sales with a slight increase in expenses? A drop in sales of only 5% and a slightly higher returns rate combined with a small, perhaps 1%, extra on your monthly bills and just three or four modest extra expenses. This combination is easy to miss if you’re not regularly reviewing your books but can have a significant impact on your bottom line.

Learning to love your books will help you avoid financial pitfalls, and it will help you discover better ways to manage your money well.

I’ve heard, many times, about business owners who come to their new bookkeeper with no idea about their financial position. They are just about able to pay their bills each month and can’t afford to pay themselves properly. A few months later, the bookkeeper has helped them get a much better idea about the state of their books, make some small but important changes and chased outstanding debts improving cash flow. Suddenly, the business that was only just getting by can afford to pay the owner a proper wage and is looking at investing in the future.

Will you show your books some love this Valentine’s day? Given time, care and attention, they will love you back.

2020 Self-Assessment review

183:808545900 (Christina Gorham) — Fri, 05 Feb 2021 19:30:00 GMT

Making next year less painful

2020 has been hard for all of us. Some businesses have failed, and some have begun. It’s important to look back and learn from those who have walked this path before us.

This year I came across a new business owner who didn’t allow enough time for HMRC to issue their registration codes. If the treasury had not made their last-minute decision to allow late filing until the end of February, they would definitely have suffered the £100 fine. As it is, they have had to pay premium rates for leaving their paperwork so late and probably suffered interest on the tax not paid before January 31st.

I hope you were wiser; paying your tax bill for 2019-20 and filing your paperwork well before January 31st. If you were a late filer, please take heed of your accountant’s warnings. Get your year end paperwork in as soon as possible and you will be blessed with peace of mind and possibly a tax refund (depending on your unique trading situation).

Looking back on 2020, many accountants and bookkeepers are expecting the self-assessments for next year will be much more complicated and will require far more time to prepare. This is because of the many Coronavirus emergency measures that have been introduced during this financial year. You would be wise to act as soon as possible to get your paperwork in order, making your accountant’s life as easy as possible, if you want to avoid significantly higher fees that take into account the extra work needed to process your books for 2020-21.

If you are a new business or thinking of changing accountant, you would also be wise to act well before January 2022. Indeed, many accountants now have a deadline in early October for taking on new clients for self-assessment and this is likely to become earlier in 2021 due to the expected high demand from start-up businesses.

If you think you will need help getting your books in order before October 2021, get in touch sooner rather than later. Let’s see how much you can save by being organised and outsourcing.

Tutorial - How to know I'm making a profit.

183:808545900 (Christina Gorham) — Fri, 29 Jan 2021 11:47:03 GMT

Avoiding making a loss

The last tutorial helped you reconcile your books to the bank account. Now you need to learn what the figures mean and how to use them in business.

You should have something that looks a bit like this.

In this example I’ve shaded the income green, expenditure red and the remaining balance blue. We can use these figures to create a basic income and expenditure (profit and loss) report.

· Open a new sheet in your spreadsheet and copy the income and expenditure headings into column A.

· Next copy the highlighted green and red figures into column B.

· In column C add a formula that will add up your income and expenditure. If you have included a column for total income and expenditure in your cash book (the figures shown in darker green and dark red in my example), they should match the calculated total income and expenditure on your new spreadsheet. To make the total expenditure figure negative try adding “-“ between “=” and “Sum” in your formula.

· Finally, below the total income and total expenditure figures add a formula that adds the income and negative expenditure figures together (note: if you did not change the expenditure figure into a negative, you will need to subtract this from the income figure).

It should look like this.

D id you notice how the profit or loss figure is different to the balance brought down figure? This is because the figure you have calculated is the profit or loss figure for this period of time whereas the balance brought down figure should match the figure in your bank account and includes any profit or loss left from the preceding periods (the starting balance in the example above). This figure is used on your balance sheet.

You can make a Profit or loss statement every week or month. By comparing the figures, you can see any trends early and take action before problems become too big.

I n the example above, the business owner took action in August, as soon as they had the figures for July and could see they had made a significantly smaller profit than in previous months. Because they had the monthly figures, they are now on track to return their monthly profits to the expected level early in the new year, minimising the impact of the unexpected summer slump. If they had not had the figures or taken prompt action, it’s possible the business would have been making a loss by the end of August and could have finished the year in the red, unable to pay the year-end tax bill.

If you need help to understand your figures; drop me an email.

Tutorial - How to reconcile your cash book and bank account

183:808545900 (Christina Gorham) — Fri, 22 Jan 2021 10:49:38 GMT

Checking the books

Anyone who has been in business a while will know how important it is to check your records are accurate; as my teacher once said, “a 1p error in one place can be disguising £1000.01 of errors in other places.” Reconciling the books is an excellent way to check your records are accurate.

The process of reconciliation has a number of checks and cross checks so that if you make a mistake in one place, it gets found in another. But before beginning to cross-check, you will need to enter any missing data, such as bank fees.

You’ll need your bank statement, something to “tick” each item off with (I like using a pencil), your cash book, and all relevant paperwork (receipts, invoices, bills etc.). I also like to have a ruler as not all bank statements have the grid lines marked; a ruler makes it easier to keep my place.

Starting with the cash book; check all transactions you have paperwork for have been recorded accurately. This will make it much easier and faster to reconcile your cash book to the bank statement. If you are using different methods of payment (e.g. card and bank transfer) it will help to make a note in your cash book as these will take different amounts of time to show on the bank statement.

Next; starting with the oldest transaction on the bank statement, check each item has been recorded correctly in the cash book. Mark every item on the bank statement and cash book when it has been checked. If something is missing, add it in. some transactions are always on the bank statement but don’t come with backup paperwork, for example bank fees. If something is already in the cash book but not on the bank statement, don’t worry, it’s probably on the next one (this is most likely to happen with cheques and transactions that occur close to the end date of the statement). I like to copy the missing item a few lines below the last entry so I can easily find it next month.

Using the paperwork to confirm the figures in the bank are correct is a good way to confirm, for example, that the rent bill for £200 was paid in full and the money for invoice 156735 has been received. If you find only part of a bill has been paid, look later in the month to find out if the error has already been spotted and corrected. If it’s not been sorted, correct the cash book entry to match the bank statement and add a line below (where the missing items are) showing the outstanding amount. It’s also worth making a note to sort this as soon as possible as some businesses charge late fees. Do similar with all of the invoices, making a note of any not yet paid in full so you know which ones need chasing. I also recommend marking every bill that has been paid in full as “Paid in full” to help you keep track.

If you’re using spreadsheets, it’s time for your first cross-check. Look at the running total. If this agrees with your bank statement, you’ve probably got all of the transactions recorded correctly. Don’t worry too much if the running total mid-month doesn’t agree; you’ve probably entered the transactions in a different order to the bank. But, if the month end figure disagrees, you’ll need to check the cash book against the bank statement again. If the figures still don’t agree, check the formulas in the spreadsheet for typos.

The next check looks at the grand totals. At the end of the month (or on the date your bank statements are produced if this is different) draw a line under the last entry and total up every column for that month. This will give you the monthly total income and expenses. Next enter a formula that takes the starting balance (or closing balance from the previous month), adds the income and subtracts the expenses, as shown in the spreadsheet below. If the figure matches the closing figures on the bank statement and the final figure on the running total, happy days. If they do not match, there is an error that must be found. The error is most likely to be an item of income recorded as an expense, or vice versa.

If you have an analysed cash book, there’s one more important check you need to make. Look at the totals for every column of income and expense and ask yourself if that figure makes sense. Would your start-up business really spend £5000 on Paypall fees?

Many accounting packages try to do this for you, but it’s important you check it. As my brother (and IT fix-it) says “A computer program is only as clever as the person who programmed it,” or put another way, “If you give the computer bad instructions, it’ll keep following them because it can’t tell the instructions are bad.”

If you’re struggling or you need further help reconciling your accounts, get in touch for some expert one-to-one advice and tuition.

Tutorial - How to make a simple cash book in Excel

183:808545900 (Christina Gorham) — Fri, 15 Jan 2021 15:49:17 GMT

Record keeping for start-ups

Knowing you are making a profit is important, especially when starting out and every penny counts.

When most businesses are new, it’s normal for the business owner to leave their “salary” in the business to help it grow. It’s also normal for the business owner to want to know how soon they can start drawing a small wage. This is where accurate accounting comes in. Accurate accounting (recording of all financial transactions) will enable you to know how soon your business will be making a profit and how much longer until it can afford to pay you or will enable you to invest in other ways that will facilitate growth.

How can you do this? If you can’t afford a bookkeeper yet, but still want to manage your business well, a good start is to maintain a cash book.

Your first cash book is usually produced in Excel as you can set it up to do the maths for you, but you can use word or even a pen and paper satisfactorily. The simplest ones look like your bank statements, with columns for the date of the transaction, what the transaction was for, how much money came in to or out of the business, and how much money is left. The key difference between the bank statement and your business cash book is that the bank statement only looks at what is in your bank account while the cash book looks at everything (bank, cash in hand and cash in the till). If you are issuing invoices you will need to record this separately.

To set up the most basic cash book, I recommend you copy the table below.

I f you’re using Excel and have put the titles in the top row of the spreadsheet, you can make the running total column automatically calculate how much you have left by putting in the first row how much you are starting with and in the next row down entering this formula

=E2+C3-D3

You can copy it into the cells below by hovering over the bottom right corner of the cell where there is a small square. Your curser will change from a white cross, to a smaller black cross. When you click, hold and drag down as far as you want to go the formula will be copied, automatically adapting to provide you with a running total. In the image below, I’ve circled the small square you’re looking for.

N ow you’re set up, all you need to do is update the spreadsheet with every transaction no matter how small, and you’ll know how much cash is available to your business.

Once you’ve got the hang of this sort of record keeping, you may decide to move on to using the more detailed analysed cash book. Here’s a fictional example. You can make it as simple or complex as you want, even splitting items between category as I have done with the hand sanitizer in this example.

I t can be hard remembering to record every transaction. This is why it’s important to reconcile your books regularly. I’ll produce a separate tutorial on how to do this.

Self-Assessment – Last call

183:808545900 (Christina Gorham) — Fri, 08 Jan 2021 14:27:04 GMT

31st January is fast approaching are you ready?

With the end of the month fast approaching and so many accountants and bookkeepers already working overtime with C19 compliance and support, it’s essential you don’t leave your self-assessment to the last minute.

If you want to guarantee your self-assessment is submitted in time this year, you need to be more organised than usual. Turning up on your accountant’s doorstep with a bag of receipts, invoices and bank statements after the 25th will almost certainly result in a late filing fine.

“Why?” I hear you cry, “My accountant has been fine before when I’ve arrived with the entire years records on the 31st.”

It’s possible you think that, because your business has been closed with all your staff on furlough most of 2020, your accountant has been equally short of work, and your accounts are easier this year anyway.

I can assure you this is not the case. Many accountants have been run off their feet. Some have been so busy they’ve had to hire extra staff just to deal with the extra work generated by Covid19. Also, as most businesses have their year end at the start of April, the self-assessment needing filed this January is virtually unaffected by Coronavirus. This year will be as complex as normal. Add in the document quarantine rules and restricted visits to the office due to lockdown, and no amount of working late will get your self-assessment in by midnight on the 31st if you don’t get the paperwork to them by the deadline they have given you.

You can, however, make your self-assessment a lot easier and less stressful by hiring a good bookkeeper.

A good Bookkeeper will transform your collection of receipts, invoices and bank statements into a properly reconciled cash book and trial balance that is ready for your accountant to prepare with appropriate yearend adjustments and allowances that provide you with the best tax liabilities possible.

Many accountants regard having a good bookkeeper as obvious good business management and as important as hiring a good accountant. They are not only valuable for preparing your yearend accounts but can provide you with up-to-date financial records and management accounts that can guide you to make the wisest financial decisions. Some can even help you plan for the tax bill you will need to pay in January, avoiding penalties and interest.

If 2020 has taught us anything, its’ that having a good understanding of your businesses finances is essential. Let’s start 2021 in the best way possible for your business.

The 12 months of Corona

183:808545900 (Christina Gorham) — Fri, 04 Dec 2020 12:33:55 GMT

To the tune of “The 12 days of Christmas”

Here's a light-hearted variation on a Christmas classic looking at this year from the perspective of accountants and bookkeepers.

In the 1st month of 2020, Corona gave to me

A deadly Coronavirus

In the 2nd month of 2020, Corona gave to me

2 countries locked down

And a Coronavirus

In the 3rd month of 2020, Corona gave to me

3 emergency measures

2 countries locked down

And a Coronavirus

4 new business support schemes

5 business forecasts

6 weeks extended lockdown

7 redundancies

8 weeks of furlough

9 illegal loan requests

10 business closures

11 new CJRS claims

12 self-assessments

Becoming a sole trader

183:808545900 (Christina Gorham) — Fri, 06 Nov 2020 12:37:40 GMT

Why become my own boss?

For some this is a constant nagging question. Why should I leave my comfortable life and become a business owner? For others it’s a lifelong ambition to own your own business and being employed is merely a stepping-stone towards your goal. I was somewhere in-between.

A few weeks ago, I posted the story of how I became a bookkeeper, now it’s time to tell you how I came to be my own boss.

I’ve always known I’m different and this has made it challenging to get full time employment despite many impressive talents. After all, how many bookkeepers do you know who can also bake cakes, make bags you want to use, and tell from a map if your home is in a flood risk zone? It was the boredom resulting from a season between jobs that encouraged me to begin investigating becoming my own boss but, just like when discovering my bookkeeping talent, I had a few false starts before finding the right path.

At first, I simply wanted a hobby business, something small to fill the time and easy to stop when a “proper job” came along. I investigated which of my creative talents could be used to earn some pocket money. Having learnt to make sponge cakes that are better than supermarket speciality options, this was my first thought. I quickly decided this was not a viable option for me, as our kitchen would need an expensive refit first. I also toyed with the idea of making clay coasters and embroidered gifts, but soon realised I am too slow to earn a basic wage from these endeavours despite the joy I get from crafting.

Then my father in law asked me to hem some curtains for him. He was so impressed by the quality of the stitching that he encouraged me to set up as a seamstress, after the example of his mother. I followed his advice and, for about six months, ran a small sewing business from home offering minor repairs and alterations. Unfortunately, I had neglected to do any market research and was targeting people who prefer to buy new BOGOF’s made in Taiwan instead of repairing or adjusting old favourites for UK minimum wage, especially when the cost of the repair is more than the original cost of the garment.

When the sewing business closed, I became bored again and began investigating other things I could do with my spare time. This time I remembered my love of books and had a go at writing one. It’s not been published, but the act of writing gave me the confidence and skills I needed to produce this blog.

It wasn’t until I eventually decided to stop looking for a small side hustle, and make the leap properly into self-employment, that I finally investigated what it takes to become a self-employed bookkeeper. The list of requirements provided by my accounting licensing body was comprehensive and designed to guarantee that anyone becoming a bookkeeping sole trader would do it properly. Thankfully, they provided templates for the most important documents I had to produce and guidance for every step. As I was doing it properly this time, I also attended a training course and conducted my own investigations online to provide the grounding I knew I needed in how to set up a new business. On the 1st December 2019 I was finally able to open the doors of 64 Bookkeeping and have faced the challenges ahead with the dedication and determination possessed by all business owners.

If you’re considering setting up a new business, my training and experience could help you, avoid the pitfalls and delays I faced, to set up for success. Please get in touch to find out more.

Dates for your diaries

183:808545900 (Christina Gorham) — Fri, 23 Oct 2020 11:34:48 GMT

The financial calendar for sole traders and charities

These dates and deadlines won’t change every year. If you want to find out about the dates and deadlines associated with the Covid-19 government grants, please get in touch .

Charities must submit your annual return to HMRC & the Charity Commission within 10 months of the end of your financial year unless you have arranged an extension.

For example, if your financial year end was 31 December 2019, your deadline to submit your accounts is 31 October 2020 unless extended for a valid reason (Covid-19 can count as a valid reason for needing to extend the deadline but you will need to check).

Sole traders have a few more deadlines to consider the most important ones are –

• 5th April, The old tax year ends.

• 6th April, The new tax year begins. Most of the changes announced in the spring budget will come into effect today.

• 31st July, Second payment on account (payment of half of next years predicted tax is due)

• 31st January, Online self-assessment tax return deadline, any balance of tax due for the preceding year, now you know how much tax should have been paid, plus your first payment on account for the next tax year need to be paid by midnight.

If you run Payroll you must remember these deadlines or risk incurring a fine.

Annually

• 31st May, send P60’s to every employee working for you on April 5th

• 6th July, Report expenses and benefits using P11D, P9D (to employees) and P11D(b) (to HMRC)

Monthly

• 5th, Month end. You can not file payroll for the previous month after this date and call it current.

• 22nd, Pay HMRC all PAYE, NIC etc they are due by direct transfer (if paying by post the deadline is the 19th). If you have special dispensation to file quarterly your deadlines will be the 22nd of March, June, September and December.

Dates for your diaries – Coronavirus grants

183:808545900 (Christina Gorham) — Fri, 23 Oct 2020 11:28:28 GMT

Important dates for CJRS, JRB, SEISS and JSS

Updated 05/11/2020

This article only looks at the dates relevant to grants set up in response to Covid-19. If you need details, please contact us .

CJRS (Coronavirus Job Retention Scheme)

• Has been extended until the end of March 2021.

• The rules and grant percentages will be reviewed in January 2021. I'm expecting an announcement relating to staged reductions in government support, although, when this will start I've no idea.

• Eligible employees must have been recorded on a payroll submission (RTI) to HMRC before midnight on 30th October 2020.

• Last chance to submit a claim is 14days after the month it relates to unless this falls on the weekend when the last submission date is the next working day.

• Last chance to correct a claim is 90days after you either receive the CJRS grant or circumstances changed causing your claim to be incorrect.

If you need to contact HMRC regarding CJRS, use this link to find the dedicated team contact details.

https://www.gov.uk/government/organisations/hm-revenue-customs/contact/get-help-with-the-coronavirus-job-retention-scheme

JRB (Job Retention Bonus)

• This has been delayed due to the extension of the CJRS scheme. As yet we don't have a date relating to when this will happen or details regarding what it will look like. I'm expecting an update to be announced shortly before the end of the CJRS scheme and that the bonus will be timed for 4 months later.

SEISS (Self-Employed Income Support Scheme)

• Grant 3 is for 1st November 2020 to 31st January 2021

• Grant 4 is for 1 February 2021 to 30 April 2021

The government has yet to release submission dates and deadlines. As soon as I know, this page will be updated.

JSS (Job Support Scheme)

• Was due to occur on 1st November 2020 until 30 April 2021 but has been postponed until the end of the CJRS scheme. I expect further changes to the rules before this scheme begins.

Family Finances

183:808545900 (Christina Gorham) — Mon, 19 Oct 2020 09:04:24 GMT

How hard can it be?

In some ways managing the family finances is a lot easier than those of a business. After all, there are no invoices to write or debtors to chase. In other ways family finance management can be a lot more challenging.

When I went to school, household budgeting was not on the curriculum, and Maths was generally regarded as something to be endured. Most parents did not teach their children financial management, resulting in a generation for whom household bookkeeping is much harder than it should be.

I first learnt basic bookkeeping from my mum’s family business and applied those skills at university, leaving with a significant saving on my student grant, and no need to work during term time. Here are a few of the things that helped me.

• I set up a spreadsheet based on my bank statements to record money in and out of my account.

• I recorded all bank expenditure (even if it was just £1).

• Every month I checked the spreadsheet against the bank statements. Yes, banks do sometimes make mistakes and sometimes scammers target private accounts hoping to get away with stealing more before they get found out. By checking my bank statements, I discovered, and reversed, an overdraft fine.

• Researching my known expenses and planning ahead. I memorised how much I needed for perishable food each week, the cost of the various groups I attended, where to find value for money items I would use, the cost of the bus and how far the walk to the shops was. Knowing my options enabled me to make wise money saving decisions and an accurate budget.

• I had two budgets. One for my regular spending (eg, food and entertainment) and one for my non-regular spending (eg, annual rent and transport home for the holidays). The regular spending budget was subdivided into a weekly and monthly allowance while the non-regular spending was set aside as untouchable unless the expense had been planned for.

• The surplus from one week’s budget was not allowed to roll into the next week’s budget. By using a fixed budget, I was able to save even without a regular income.

• Being willing to compromise. For my monthly big shop, I took two rucksacks, some shoulder bags and a strict rule, “If I can’t carry it, I can’t have it.” This made it a lot easier to stay within budget and to stick to my shopping list.

• Write a shopping list and stick to it. Yes, I always included “a treat”, but I knew it had to be small or it would not fit in my bags and I would need to return it or go without something I needed.

• Being willing to say, “No.” saved money for other things. By walking instead of taking the bus and by being tea total I was able to have a full social life, go home every holiday and make huge savings.

• If it’s cheaper to make it myself, I did. Many friends commented on the coasters I made from recycled yogurt lids (the big ones). This is also when I began learning how to cook.

• Looking after and maintaining my property caused it to last a lot longer meaning I didn’t need to budget for replacements. Simply being able to repair holes in clothing must have saved me a fortune.

There are lots of other tips available online for managing your family budget well. These ones worked well for me. If you would like help setting up a spreadsheet so that you can monitor your income and expenditure, please get in touch.

Bookkeepers v's Accountants

183:808545900 (Christina Gorham) — Fri, 09 Oct 2020 14:28:24 GMT

What is the difference between bookkeepers and accountants?

To some the answer is obvious but to others it’s a mystery; after all, aren’t you both trained and experienced in finance?

Yes, we are all experienced in finance and most of us are highly trained, but bookkeepers and accountants have been trained to emphasise different skills. While bookkeepers have focused on everyday skills connected with document management, ensuring the detail of every transaction is accurately recorded; accountants have focused on the non-everyday skills required to take the bookkeepers work and use it to file tax returns and provide business advice.

The table below outlines the different services we can provide. I have included a column listing the services an AAT Licenced Accountant can provide as this is the highest qualification offered by the AAT.

It is worth remembering that while AAT Licenced Accountant is the highest qualification offered by the AAT, it is the equivalent of gaining a foundation degree while Chartered Accountants have gained the full degree. The difference between the last two columns in not just the range of services but the complexity of service the different qualifications have trained the accountant to perform. A wise bookkeeper or licenced accountant will always refer you to a someone else if you ask them to do something they don’t have the training and experience to offer.

Becoming a bookkeeper

183:808545900 (Christina Gorham) — Fri, 02 Oct 2020 14:21:00 GMT

Well I didn’t expect that!

“Thank you so much for your support and hard work over this period.” It’s encouragement like this that makes me realise what a big difference I make to businesses by using skills I didn’t even realise I had. In retrospect it’s obvious, but my path to becoming a bookkeeper was a wandering one. Let’s rewind to high school.

Tearing open the envelope in the school hall, I read my all-important GCSE results. Had I achieved enough to make it into the 6th form? Yes! Two of my favourite subjects Design and Technology, and Chemistry had good results. But what about the one subject I absolutely wanted to take? Geography was one of my lowest results! How did that happen? I left the hall upset but returned encouraged by mum and dad. Approaching the head of Geography, I asked if they’d still let me in. Yes! Now, what about my fourth option? We were told to choose four subjects and I only had three favourites. Well, my highest mark is in Maths. I may have loved the creative subjects at school and hoped to work for the Met Office one day, but I didn’t realise what a talent I had for maths.

During 6th form I had a holiday job in a farm shop and proudly excelled in identifying the different varieties of fruit (wild and cultivated) picked by customers. It was a vital skill because some customers innocently picked dangerous fruit and it was my duty to identify and remove everything harmful. I didn’t realise I also excelled in keeping accurate stock records and had no idea this was the start of a beautiful career in finance.

Knowing I was on a tight budget that had to last the entire year at university, I took care from day one to stay within my weekly and monthly allowances, refusing to allow one week’s surplus into the next week’s budget, and thought it odd that my peers didn’t also set and monitor their budgets, checking it against bank statements every month. Perhaps their families subsidised all those nights out. I'd no idea this was proper bookkeeping, to me is was simple common sense.

Of all the units studied, I loved Geophysics most. Not because I was instinctively good at it, handling the detailed diagrams and complex maths with ease, but because the teacher was outstanding, using the same lateral thinking as me, making lessons fun and memorable.

“You could do that.” Said my boyfriend pointing at an advert for preschool workers. I still didn’t recognise my talent for bookkeeping as I left university and started looking for work, despite being able to buy and insure a good quality second hand car with my surplus savings. So began several years of wrong careers, slowly leading me towards the correct one. During the last job held in this season I invented a price comparison spreadsheet in Word (Excel wasn’t on my computer) which included the percentage profit on RRP. I’d no idea this was management accounts. To me, it was an obvious step to fill a marketing gap.

When redundancy hit, I finally realised I was good at maths. I applied for a six-week Sage 50 course. This is what finally persuaded me that bookkeeping was the right path for me. Not the training course, that was easy; or the teacher, he couldn’t compare to my university lecturers; or even being offered a guaranteed place on the next AAT2 course before reaching week four. What finally persuaded me that bookkeeping was the career for me, was needing to wake my brain up on the drive home by repeatedly mentally calculating the average cost of fuel per mile.

Working Mum

183:808545900 (Christina Gorham) — Fri, 25 Sep 2020 08:28:14 GMT

Juggling working from home and being a mum

If anything was going to test the working mum to her limits, the last 6 months probably did. We’ve had to transform our day from comfortably balanced between part time mum and part time business owner to full time mum, part time teacher and still find time to run a business; only to have everything change again with the start of the new academic year.

Some have found these dramatic transitions easier than others. Some women business owners are true multi-taskers (I’ve only met one) who are literally able to hold a serious conversation about Peppa Pig while writing a technical proposal for their business and planning the school lessons for the next day and not make a single error. Other mums in business are able to run everything on significantly less sleep, meaning they could be mum and teacher in the day and businesswoman at night. A few may have found it all too much, throwing in the towel and dedicating the day to children’s TV, only to start again a few days later, refreshed, and able to handle the conflicting priorities.

Speaking for myself, as a business owner, employee and mum, I prioritised time to completing work for my employer after providing the best education I could for my children. This left me with very little time for my business without compromising on sleep (anyone who knows me will testify to how important a good night’s sleep is to the following day). I took the difficult decision to temporarily close 64 bookkeeping, enabling me to focus my remaining time on SEO and CPD (Continuing Professional Development) including learning new cloud accounting skills which I knew would be valued by businesses using my services.

And now, having got used to juggling being a teacher with my other roles, the children are back at school. I’ve got 25 hours I didn’t have before. Some mums are feeling the “empty nest syndrome,” having come to enjoy having the children around 24/7. Others will have been so relieved to say goodbye at the school gate they may have had a small party at home before deciding how to use the extra time. I took the practical option of planning as much work as possible for the first weeks back including an advertising campaign using the skills gained during lockdown. It felt a bit odd to begin with, but now I know it’ll be hard if one of my children gets a cough. Like many small business owners, I’m preparing for a surge in demand as we emerge into “the new normal.”

How have you managed lockdown? Did you need to set something aside like I did? Would your business benefit from a helping hand to get the books back in order as you prepare for, or indeed manage, the increased demand on your business? Get in touch to find out how 64 Bookkeeping catch-up service can help you.

What’s in a name?

183:808545900 (Christina Gorham) — Mon, 07 Sep 2020 14:38:40 GMT

"A rose by any other name would smell as sweet!"

What is the difference between an Accountant, a Bookkeeper, and a Finance Administrator? As Juliet said to Romeo “What's in a name? That which we call a rose by any other name would smell as sweet.”

In truth, the answer is “Not a lot and a vast amount.” Let me explain. Not one of these terms is restricted meaning anyone can call themselves by any of these names however, only a fool would claim to be an accountant if they could not add up, read or write.

Let’s go a bit deeper. Anyone can call themselves an Accountant or a Bookkeeper but change the names to Chartered Accountant or Certified Bookkeeper and these become restricted titles that have to be earnt in the same way you can’t call yourself a Childminder or Dietitian without first qualifying to a high enough standard in that discipline and gaining the licence to prove your claim.

But what about the other titles? Aren’t Bookkeeper and Accounts Assistant the same job?

Again, the answer is both “Yes and No.” A Bookkeeper has a wide range of skills as does an Accounts Assistant however, generally speaking, a bookkeeper would be expected to know more and be able to do more than an Accounts Assistant, because the Accounts Assistant will be working in a team while the Bookkeeper may be the only finance person in the business, required to do everything finance related from record keeping to year end reports and management accounts.

There are many different names for the different aspects of bookkeeping, for example the Accounts Payable Clerk will only deal with the authorisation and data entry of business expenses while the Accounts Receivable Clerk will only deal with recording and sending invoices and the Accounts Clerk would do both jobs but may not have responsibility for checking this data entry against the bank statements.

Confusingly, many Accounts Administrators will spend significant amounts of time filing, ensuring that the financial documentation is complete and up to date, but in smaller businesses they would also be expected to do the data entry and reports. In some instances, this role can be more diverse that that of a Bookkeeper by combining all the bookkeeping duties and all the administration duties into one job. I’ve even seen an advert that included HR duties.

Having attempted to clear that up, what can a Certified Bookkeeper like me do? The diagram below outlines the basics.

From this diagram I can’t offer you any of the services in blue yet as my licence won’t cover them, but I can offer you Payroll support even, though this is not on the diagram.

But why can 64 Bookkeeping offer some services and not others?

I am licenced to practice bookkeeping by my accounting body, AAT. A condition of keeping my licence is that I restrict the services on offer to those I am licensed for even if I have the knowledge or experience to supply a wider range of services.

Mums are Accountants too

183:808545900 (Christina Gorham) — Fri, 20 Mar 2020 11:24:51 GMT

It's not just flowers that make us happy

I wrote this before the crisis hit but thought it would still bring someone encouragement.

I smiled as they walked back towards me with a bunch of flowers each. But today was different. My eldest child (still in primary school) didn’t stop and turn into our row. She continued to the next row and held out her hand to a different lady. “These are for you.” Having delivered her bunch, she skipped back to the front to collect more flowers. Would this bunch make it to me? Did her little sister copy her example? I’ll leave that up to your imagination.

Our church always encourages the children to collect a bunch of flowers from the front and take them back to their mum on Mother’s Day. The teenagers are encouraged to take more than one bunch and give them to the women who don’t have children with them in church and the grownups are encouraged to take a bunch for a neighbour regardless of whether they have children.

Did you get a special treat this Mother’s Day? And, how does this relate to mums being accountants?

How many of you had a mum who had to manage the family budget, ensuring you never ran out of the essentials and ideally had enough money left for an occasional treat? That’s bookkeeping in its most basic form and the principle that you need to have more money coming in than you have going out applies to every family and business regardless of its size.

There are many mums who run small businesses from home. Often, they have set up as sole traders selling their hobby to friends and working around their young children to earn some extra pocket money.

Some of these businesswomen will close their businesses when their children are old enough to allow them to go back to work. They never intended it to be a career and were happy to make small profits never drawing a wage. Others always wanted to be their own boss and having children was simply the extra motivation needed to take that lifelong leap. These mums are true entrepreneurs who grow their home businesses of today into the mega businesses of tomorrow.

Entrepreneurial businesswomen and good mums know the value of investing in the future. By investing time, energy, skill and money wisely your children will grow into wonderful adults to be proud of. The same applies to business. By investing time, energy, skill and money wisely your business will grow into something you and your family can be proud of.

Equally, I have yet to meet a mum or business owner (including myself) who never needed any help of any kind. We can’t be an expert at everything. I’m very good at bookkeeping but needed help to set up my website and am still learning social media.

What are your strengths and weaknesses? I can guarantee your strength is someone else’s weakness so lets get together and commit to supporting our fellow mums in business.

The Budget 2020

Fri, 13 Mar 2020 21:06:33 GMT

How will it affect small businesses?

On Wednesday Chancellor Rishi Sunak presented the new budget for 2020-21. He covered a wide range of measures aimed at providing a happier, more stable economy but what does it mean for small business owners and mums in business? I have attempted to tease out the key points with the help of the BBC and the official transcript .

Short term response to Coronavirus

• All those advised to self-isolate will be entitled to statutory sick pay, even if they have not presented with symptoms.

• Self-employed workers who are not eligible will be able to claim contributory Employment Support Allowance (ESA). The ESA benefit will be available from day one, not after a week as now.

• Firms with fewer than 250 staff will be refunded for sick pay payments for two weeks only.

• Small firms will be able to access "business interruption" loans of up to £1.2m.

Payroll

• The tax threshold for National Insurance Contributions will rise from £8,632 to £9,500 taking 500,000 employees out of paying NI tax altogether. This means those earning less than £9,500 will be, on average, £85 a year better off.

• National Living wage (NLW) will rise to £8.72/hr in April and is forecast to reach £10.50/hr in 2024, meaning an employee working full-time on the NLW anywhere in the UK will be over £5,200 better off compared to April 2010.

• Employment Allowance will be increased from £3000 to £4000, benefiting and estimated 510,000 businesses by further reducing their NI burden.

Business

• The system of High Street business rates to be reviewed and reported on in the autumn.

• Businesses with a rateable value below £51,000 will have their rates in England abolished for firms in the retail, leisure and hospitality sectors.

• Firms eligible for small business rates relief will get £3,000 cash grant.

• Entrepreneurs' Relief will be retained, but lifetime allowance will be reduced from £10m to £1m.

• The Start-Up Loans Programme will be extended to ensure would-be entrepreneurs can access the finance they need.

• VAT on digital publications, including newspapers, e-books and academic journals is set to be scrapped from December.

Environment

• Plastic packaging tax will come into force from April 2022.

• £640m "nature for climate fund" to protect natural habitats in England will be set up, including planting 30,000 hectares of new trees.

Transport

• Significant investment in the network of electric charging stations, combined with tax incentives will make electric vehicles a more economic and viable option for many businesses.

• £2.5bn will be available to fix potholes and resurface roads in England over five years.

Schools

• Schools will be given extra funding towards PE teaching & facilities, Art and extracurricular activities in addition to a general funding increase.

• Extra capital for colleges and adult training to boost science, technology, engineering and maths in the UK.

Why is it called “balancing the books?”

183:808545900 (Christina Gorham) — Mon, 02 Mar 2020 13:45:20 GMT

And how do I do it?

In my second blog on bookkeeping basics we are looking at "balancing the books" or double entry and how this affects your record keeping.

You may not know this, but your accounts are arranged in a series of T accounts, even if it’s hidden in the background of a computer program. These T accounts follow the same basic rule, “everything has an equal and opposite reaction.”

No, I’m not quoting Newton’s third law of motion. This is an accounting principle that existed long before he was born. It means that for every entry in the left (debit) side of your accounts there must be another equal entry on the right (credit) side of your accounts. This is where the saying “Balancing the books” comes from.

There are six categories a transaction can fall into. These categories are divided into debits and credits depending on how increasing its value will affect the records. Remember, debits are always recorded on the left and credits are always recorded on the right. To decrease a value you enter it on the opposite side of the T account.

Assets are anything of physical value, like your computer, stock or money.
Liabilities need to be paid. For example, a loan from the bank will need to be repaid, but not immediately.
Expenses are things you spend money on that are not physical assets, such as rent and insurance.
Income indicates money that has come into the business as a direct result of trading. If your business is selling books, then your income is the cash generated by book sales.
Drawings reflect every time the business owner takes money out of the business or buys something for their own use, often using the business bank account or petty cash instead of their own bank account.
Capital is the money put into the business by the business owner, plus any profit the business has made.

So, when you buy a printer and enter the purchase into your accounts there will be a Debit entry in your office equipment T account and a credit entry in your bank account to show that money has been payed out. Or, to use accounting language, the printer is an asset because you own it and so is the cash in your bank account. This means that the purchase of the printer has increased your physical assets and has decreased your financial assets. The exchange of assets has caused the transaction to balance.

Another example is when you sell something. You are exchanging an asset for income (the product for money). If you get a loan from the bank you will be increasing your assets (cash in the bank) and your liabilities (the loan still needs to be re-paid).

The important thing to remember when balancing the books is that if they don’t balance (if the total debit entries do not equal the total credit entries) there is a mistake somewhere in your records that must be sorted out. Balancing the books is a way of checking the accuracy of your record keeping.

If you find this hard or confusing, get in touch to find out how we can help you make sense of your books.

Pancakes, not just for pancake day

183:808545900 (Christina Gorham) — Mon, 24 Feb 2020 09:10:38 GMT

And bookkeeping is not just for January

“Pancakes! Pancakes! Pancakes!” chant the children. It’s not Pancake Day. They just love eating pancakes and will ask for them whenever they think they might persuade me to make a batch. I never outsource the job by buying supermarket pre-made pancakes and I don’t take shortcuts, buying pancake mix. We prefer the taste of fresh, homemade pancakes and have found that this is also the best way when cooking on a budget.

Have you ever, metaphorically, chanted “Bookkeeping! Bookkeeping! Bookkeeping!” to the person who is supposed to sort this out for you only to find they thought it didn’t matter and could be left for the accountant to sort in January? How much better to find someone who understands the importance and benefits good bookkeeping can bring to your business.

Perhaps, like my pancakes, you prefer to keep everything in house. Have you ever noticed how homemade pancakes always look different? It may be fun trying to toss them but, how often do they end up on the floor, work surface or folded in the pan? This is because we’re not experts at making pancakes. To get a consistent, perfect pancake I should be buying the supermarket ones instead of accepting the variability of homemade.

The same can be said of bookkeeping. By keeping it in house and not hiring a trained professional you’re opening the door for various errors to occur that could be costly. I would not eat the pancake that landed on the floor, would you?

“Ah but we ask our accountant to sort our bookkeeping for us,” you say. Have you considered the cost? Accountants are much more highly qualified than bookkeepers and often charge more than twice the hourly rate bookkeepers ask for. It’s a bit like going out to a restaurant every day. You can ask your accountant to do a lot more with the figures you give them but must be willing to pay the price.

Have you ever looked at the ingredients list for pancake mix? After the essential flour there are a lot of extra ingredients that don’t go into my homemade pancakes. These are included by the manufacturer to help the dry mix keep well on the shelf, improve the vitamin and mineral content of the mix so it becomes a healthier option and to make the pancake taste better.

Good bookkeepers will have an array of extra services available that will benefit your business, even if you have no idea they are available. These services often include a range of management reports, so that you know your how the business is doing and how to make things even better.

Yes, I still like to make my pancakes at home using grandma’s recipe, but I know my limits. For the amount of pancakes I make, it is cheaper to mix the batter from the raw ingredients, but if I wanted to cook for more than just my family I would look at the alternatives available, knowing the high probability of not getting to enjoy my hard work.

Similarly, when your business is small, it’s better to get some advice from an expert on how to set up your bookkeeping and then run it yourself. But a point will be reached when it makes more sense to outsource your bookkeeping to a trained professional. You may think you are saving money by doing it yourself, and you are right to say you are not paying someone else to do the books. But you are paying yourself and forfeiting time you could be spending earning money.

Get in touch if you would like some help setting up, learning to keep your own books or outsourcing your to us.

Why is my debit your credit?

Fri, 07 Feb 2020 12:27:48 GMT

Mirror, mirror on the wall, why when I move left do you move your right?

Mirror, mirror on the wall, why when I move left do you move right?

In this, my first blog on bookkeeping principles we look at the bank statement and why it appears to be back to front when compared to our accounting records.

Imagine you are sat at a table opposite someone and there is a row of toy cars on the table in front of you. You can add as many toy cars to the left end of the row as you like but you can only take the cars from the right end. The other person is keeping a record of how many cars you add and take away. From their perspective, on the other side of the table, you are adding the cars to the right and taking them from the left. This means when they pass you the record of cars added and taken away it will be back-to-front.

Now let’s try to apply this illustration to our situation of the bank records versus your records. Replace the toy cars with your money and the person sat opposite you keeping record with the bank. Hopefully you can now see why the bank appears to record your cash flow back-to-front.

If this explanation is as clear as mud, perhaps this slightly more detailed explanation will help.

The debits are always shown on the left and the credits are always shown on the right, but they can represent different things. Let’s look at the cash book (also called the sales book if you don’t tend to deal in cash) and how this relates to your bank statement.

In your cash book all money received is recorded on the left in the debits column and all money spent is recorded on the right in the credit’s column. This is linked to where the final records will appear in the accounting record. (I’ll cover this in a different blog as it’s a huge topic.)

So, why does my bank statement show the income on the right and the expenses on the left? Simply put, the bank has produced your bank statement from their perspective, not yours. (The mirror scenario mentioned above may help you).

From their perspective every time you pay money into the bank it’s a liability as the bank must eventually return the money to you, it’s not their money so it can’t be recorded as their income. Liabilities are always recorded on the right; hence the bank records your money in the bank in the credit column.

Similarly, every time you pay for something or withdraw cash from the bank, the bank views it as paying off their liability to you, so they record it on the debit side of the account to reduce the amount owed to you.

Saving money on your Self-Assessment

Tue, 14 Jan 2020 09:56:14 GMT

Saving money on your Self-Assessment by keeping in your accountants' good books

Everyone wants to reduce cost where they can. Here are some industry tips to reducing your Self-Assessment fees and keeping in the good books with your accountant.

Tip 1.

Be early

Business owners who contact their accountant just after the financial year end asking what they will need to complete their Self-Assessments tend do to be regarded a lot more favourably than the ones who arrive with missing information on January 31st. Some accountants even offer discounts for the early birds.

Tip 2.

Be organised and accurate

Get all the necessary paperwork together first time and your accountant will be very happy with you, as they won’t need to waste time chasing you for the missing information or checking figures. Even better, provide all your paperwork neatly ordered in a folder complete with a fully analysed cash book. This will save your accountant so much time that they won’t need to add bookkeeping fees (at accountant hourly rates) to your invoice. Admittedly not all accountants have bookkeeping fees as an itemized extra, but it’s always factored into the fee you are charged. Prove you are reliable and you are likely to be charged less next time.

Tip 3.

Reply promptly

If you have inadvertently missed something or the accountant needs to ask you a question, it pays to answer promptly and with as much detail as you can provide. You never know, the extra detail may answer a question the accountant would have needed to ask you next time. All this time saving is time off your invoice. And added “brownie points” for you.

Tip 4.

Do not be late

Yes, I’ve already said you need to be early but if you can’t be early, at least avoid being late. Many accountants increase the fees for Self-Assessment a lot as the January deadline gets closer. Some even include late fees in addition to the late filing fees issued by HMRC.

Tip 5.

Remember your manners

Sounds obvious, but you’d be surprised how often I’ve heard of people arriving at their accountants needing their Self-Assessment completed and using the most shocking language because they’re stressed. Being rude and using bad language is a very good way of getting your return moved to the bottom of the pile and adding a little to the final bill. A much better way to get your Self-Assessment at the top of the pile is to ask politely.

Tip 6.

Remember to sign

Many accountants will not submit your Self-Assessment until you have signed it as accurate. I’ve heard of someone who’s Self-Assessment was ready to file in December, but they did not sign the paperwork issued by their accountant until HMRC had issued them with a late filing fine.

By being early and organised, fast to reply with accurate details, using good manners, following the instructions given by your accountant and avoiding leaving things to the last minute you are certain to make yourself savings. But the biggest savings come from avoiding filing in January and providing high quality records every time.

My advice is to aim to file by the end of October and hire a reliable bookkeeper if record keeping is not your forte.