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What could go wrong with your business

Murphy’s Law is the law of unintended consequences, or more commonly known as, if it can go wrong, it will go wrong.

An example might be, your internet connection will fail when you are doing something that is really important to you – like running a cloud accounting training session, or paying a supplier via online banking or even during an important Skype meeting. We’ve all been there.

Research has shown this is one law that people perceive to be true, whether it is or not.

So, what are the advantages to you, of being a little bit more prepared for those unintended, but inevitable consequences? Well, having a feeling of control helps keep things on track. And having a plan B for those moments is a good idea. So if you run a training course and your internet fails big time, you may well find the power of your iPhone hotspot coming to the rescue.

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In terms of bookkeeping and accounting, what could go wrong?

Well, you could always miss a deadline if you do it all yourself. You could incur a fine or penalty for missing the deadline, and you could find yourself low on cash, or out of cash if you don’t negotiate a payment plan with HMRC. Just one example. You could think everything in the business is rosy, only to find that in real terms your profits are falling as costs creep up and you can’t raise your own prices, or gain enough new business. Being able to mitigate these risks will be a big help to you.

Once you have all your bookkeeping data in your cloud system – QuickBooks online or Xero – you could use some great low-cost apps to extract that data so you can see the wood for the trees.

Analysis going back as far as records allow can be a real eye opener. This week we’ve been pulling data from QBO and Xero into Fathom. This app allows businesses to see trends, growth, cash usage etc – it gives a really good overview of what’s going on. And when trouble strikes the data is available to help mitigate the impact – or, even better,  you could see it coming.

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The way small businesses are run today has changed dramatically in terms of technology. There’s always a business app on the market to help deal with a problem, and if integrates into your workflow and accounting system – even better. Top Tip – Low cost, monthly paid apps can help you be better prepared for trouble.

You can follow us on Twitter @shaperaccountants.co.ukaccounts or check visit our website for cloud accountancy help.

 

 

Payroll – what you need to know

So you need to run a payroll?

When you decide it’s time to pay yourself through a payroll, if you’re already on Xero, you’ll need to get the Xero Payroll Add-On at £5 for 5 staff plus VAT – and away you go!

As with all things in life there are a few payroll basics you need to know, and do, first. Here’s some of them;

  1. Have a directors/owners pay strategy: this means making sure you pay yourself in the most tax efficient way, and from April 2016 you know the expected impact of the Governments tax changes planned for dividends.

2.  Register your business with HMRC for PAYE Tax. They’ll give you a PAYE reference which you need to run a payroll in the UK. You will also get a PAYE On-line login.

3.  Understand the Auto Enrolment Pension rules. Every employer will have duties under AE, even if it’s to assess only yourself and let the Pensions Regulator know you’ve done so. Follow the link below to the employer’s duties checker.

http://www.thepensionsregulator.gov.uk/en/employers

  1. Xero are introducing the AE functionality needed for assessment of workers soon too. If your business is Staging in 2016 this may well cause you some anxiety and extra work – but we are told to expect the catch up functionality by 2016 – Yay!
  1. Once you get your PAYE reference number, check up on your company’s staging date for Auto Enrolment. At the moment this can’t be helpfully stored on Xero Payroll – but that functionality is coming very soon.
  1. Know all you need to know about how to report to HMRC, how to actually pay any Tax and NI due, and how to send a Real Time Information return on time to HMRC. All modern payroll software will deal with this for you – but you remain responsible for ensuring it’s done at the correct time.

Check out the HMRC guideline here.

7.  You will usually pay HMRC every month – but if you expect to pay less than £1,500 a month, you can arrange to pay quarterly if you wish. Contact HMRC on the above link for this.

8.  Decide who is going to run your payroll. You can do it yourself or pay a payroll provider like a bureau or an accountant to run your payroll for you. Remember, you remain responsible for keeping employee records, and you must give them a payslip. Xero Payroll software deals with all of this and payslips are e-mailed to the staff.

9.  From April 2016, the government is allowing employers to payroll certain employee benefits in kind. Payrolling is where the employer includes a value for benefits in kind as taxable pay so the income tax is collected in real time. You may need to give this some consideration.

Here’s a summary for Setting up Payroll

If you decide to run payroll yourself, you need to complete certain tasks to pay your employees for the first time. You can choose when and how often to pay your employees.

  • Register as an employer with HMRC and get a login for PAYE Online.
  • Choose payroll software to record employee’s details, calculate pay and deductions, and report to HMRC. Xero Payroll does this, so do all cloud payroll solutions.
  • Collect and keep records.
  • Tell HMRC about your employees.
  • Record pay, make deductions and report to HMRC on or before the first payday.
  • Pay HMRC the tax and National Insurance you owe.
  • You’ll also need to complete certain annual reports and tasks

 

You can check out how-to videos for Xero Payroll here.

To talk payroll and Automatic Enrolment duties get in touch at info@shaperaccountants.co.ukaccountants.co.uk or contact us here.

 

 

Late Payment reminders

Chasing Debts

This week Xero released it’s Invoice Reminders functionality.

Invoice reminders gives you the basic ability to remind customers about the invoices you’ve sent them, that they haven’t paid yet. This seemingly small and low-key feature highlights the importance of consistent debtor chasing for all small businesses. In a climate where cash is still King it’s well worth looking at this feature.

Debt Collection

Here’s a list of 6 other things you can do to minimise the risks of late payments:

  1. Have a consistent approach to credit control – that’s the fancy name for collecting what’s owed to your business. If you keep your receipts reconciled and up to date, you can set Invoice Reminders in Xero, to automatically go out to customers – but beware – if you automate this and you don’t keep the accounts up to date you may send a payment prompt to a customer who’s paid you.
  2. Be clear and transparent at the beginning of a business agreement so both parties fully understand the payment terms. If your business operations would benefit from a Ts&Cs document, create one and send it to your customers, so it’s clear what’s expected.
  3. Look at alternative payment methods to avoid late payments like having on-line invoices with a PAY NOW button on them. You can sign up to payment gateways like PayPal or GoCardless. They do charge a fee but you can factor that into your prices, or consider it’s a much lower fee to pay than you having to spend hours chasing the money.
  4. Always print your bank account details on your invoices so the customer has the details to hand.
  5. Encourage customer to pay by direct debit or offer an incentive to pay early.
  6. If you have stubborn late payers, you could introduce a charge for late payments – but this is best documented in your Ts&Cs

For more complex debtor management tools – or if you have a larger volume of late payers you need to regain control of –  you can check out the Xero Add On market place to find software that can automate the debt collection process for you, saving time and thought, as it means your business will have a firm and consistent approach to debt chasing. Chaser, in particular, adds the human touch to debt collection, and offers a free 90 day trial. This software has a polite and persistent email chase approach, but with a UK human voice tone to it. When we trialled Chaser we found it to be very effective and there’s a much smaller chance you’ll upset those repeat customers, that you want to pay you, and you want to keep!

What You Can Do With Xero’s Invoice Reminders

You can set a track of up to five different reminder emails.
You can set these different reminders to go out at a set number of days by reference to a given invoice’s due date.
You can switch off reminders for particular customers or invoices that you don’t want to receive a reminder.
On the appointed day by reference to due date, a reminder about each outstanding invoice will be sent out to your customer from a Xero Robot address – invoicereminders@post.xero.com between 4am and 8am in your timezone.
You can set an email address of your choosing for replies to those reminders to be sent to.

Invoice Reminders is a simple, chasing tool built into Xero. It may well be all you need to keep on top of prompt payment, and if you need more – you know where to look.