How can Xero benefit your business?

If you are a small business owner or self-employed, you will know how important it is to ensure your finances are managed well.
Ensuring you have a clear picture of your finances, better enables you to deal with challenges that arise in running a business.
That, along with the implementation of Making Tax Digital (now due in 2026), it’s never been a better time to get on board with accounting software.
As an accountancy practice, we use and recommend Xero, and in this blog we will cover the benefits of using Xero for your business.

Ok, so what is Xero? In a nutshell, it’s a cloud accounting software designed with the small business owner in mind. It is multi-functional and offers a clear picture of your finances at any given time.
From sending invoices to tracking projects, you can do it all on this piece of software.

What are the benefits of using Xero?

Anytime, Anywhere. In the words of Xero themselves. The software comes with an app so you can access what you need wherever you are. From creating invoices on the go, to reconciling payments, Xero makes it easy to do any accounting business quickly and efficiently. You can also have multiple users meaning team collaboration is at your fingertips.

You can sleep well in the knowledge that the software Is secure, data is protected and accurate, and can easily be used in collaboration with your accountant, saving time so you can get on with business. You’ll get handy analytics too so you can really build a picture of your business finances.

Late payments messing with your cashflow? With Xero you can get paid up to twice as fast by linking the software with online payment platforms, meaning you can add a ‘pay now’ button to your invoices making payments easier to track and easier to pay. You can even automate chasing late payments!

Would you like to eliminate having to sift through boxes of receipts and invoices? Xero is cloud based meaning all your documents are stored safely – no need for paper copies!
Another way this software saves you time is by linking your bank feed taking away the need for manual bookkeeping processes and ensures bank reconciliation.

As business owners, we know you wear many hats. By using an accounting software such as Xero, you are winning back much valued time to dedicate to growing your business.

Have any questions? Get in touch and we will be happy to chat!

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Autumn Statement 2022 – Lowdown for Small Business

The much-anticipated Autumn Statement – announced by Chancellor Jeremy Hunt yesterday – included a number of measures that will have an impact on small businesses and landlords in the UK. Here’s a roundup of the key takeaways.

Business tax and National Insurance changes
Rate of Class 2 National Insurance to increase
From 6th April 2023, the rate of Class 2 National Insurance for self-employed people will increase to £3.45 per week.

VAT registration threshold to remain at £85,000
The Chancellor confirmed that the threshold for VAT registration will remain at £85,000 worth of VATable sales until 1st April 2026.

Employment Allowance to remain at £5,000
The Employment Allowance – which reduces or cancels out employer’s National Insurance for certain employers – will remain at £5,000.

Corporation Tax rate to remain at 19% for smallest companies
From 1st April 2023:

companies that make a taxable profit of £50,000 or less per year will continue to pay Corporation Tax at the ‘small profits rate’ of 19%
companies with taxable profits between £50,001 and £250,000 a year will pay Corporation Tax at a rate of 25% with a ‘marginal rate relief’ deduction
companies with taxable profits of £250,001 or more a year will pay Corporation Tax at a rate of 25%
National Minimum Wage thresholds increased
From April 2023, all thresholds for the National Minimum Wage will increase. Meanwhile, the National Living Wage will increase by 9.7% to £10.42 an hour for those aged 23 and over.

Increase in bills capped for the smallest businesses affected by reductions in rate relief
For the smallest businesses affected by reductions or changes in eligibility to small business rate relief or rural rate relief, the increase to their bills will be capped at £600 per year from 1st April 2023.

Research and Development (R&D) changes to be implemented
For expenditure on or after 1st April 2023, the Research and Development Expenditure Credit (RDEC) rate will increase from 13% to 20%. The small and medium-sized enterprises (SME) additional deduction will decrease from 130% to 86%, and the SME credit rate will decrease from 14.5% to 10%.

Personal tax and National Insurance changes
Additional rate of tax threshold reduced
The threshold for the additional rate of tax will be reduced from £150,000 to £125,140 from April 2023.

Changes to this and other Income Tax thresholds for non-savings and non-dividend income currently apply to England and Northern Ireland only. The Scottish government has yet to announce changes to Income Tax rates or thresholds. The Welsh government has the power to vary Income Tax rates but has never yet done so.

All other changes, including changes to the thresholds where they apply to savings or dividend income, apply UK-wide.

All other Income Tax and National Insurance thresholds frozen until April 2028
The existing thresholds for all rates of Income Tax and National Insurance will be frozen until April 2028, including the Personal Allowance.

Dividend allowance cut
In April 2023 the dividend 0% tax allowance will be cut from £2,000 to £1,000. In April 2024, it will be reduced further to £500.

Changes to the Annual Exempt Amount for Capital Gains Tax
The Annual Exempt Amount for Capital Gains Tax will be reduced from £12,300 to £6,000 from April 2023. In April 2024, it will be reduced further to £3,000.

Electric cars will no longer be exempt from Vehicle Excise Duty
From April 2025, electric cars will cease to be exempt from Vehicle Excise Duty.

To learn more about the changes announced in the Autumn Statement, you can read the full report on the government’s website.

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5 Ways to Get Support for your SME

Five ways you can get financial support for your business

1: Claim up to £5,000 with employment allowance

Employment allowance is a tax relief which allows eligible businesses to reduce their national insurance contributions bills each year. You can claim this is if you are a business, and your employer Class 1 national insurance liabilities were less than £100,000 in the previous tax year.

That’s a new tax cut that’s worth up to £1,000 for nearly half a million SMEs!

2:Get a discount of up to £5,000 on software, with Help to Grow: Digital

Help to Grow: Digital is a UK wide Government backed scheme that aims to help businesses choose, buy and adopt digital technologies that will help to grow their business.

Eligible businesses can receive a 50% discount on buying new software worth up to £5,000 per SME, alongside free, impartial advice and guidance about what digital technology is best suited to boost their business performance.

3: Get up to half off your business rates 

From April this year, small retail, hospitality and leisure businesses can benefit from 50% off their business rates bills. The business rates multiplier has also been frozen.

4: Invest in your business with Super-deduction and Annual Investment Allowance

To spur business investment, the super-deduction allows companies to cut their tax bill by 25 pence per every £1 they invest in any qualifying machinery and equipment. This can include the purchase of computers, most commercial vehicles and office furniture. This allows businesses to spend up to £1 million on qualifying business equipment , and deduct in-year its full cost before they calculate their taxable profits.

5: Benefit from the cut in fuel duty

The government has cut fuel duty on petrol and diesel by 5 pence per litre for 12 months – effective from 23 March 2022.

This cut, plus the freeze in fuel duty in 2022-2023 , represents a £5 billion saving worth around:

  • £200 for the average van driver
  • £1,500 for the average haulier

 

Information on behalf of HMRC – for more information visit Gov.uk or Call us for a no obligation Consultation. 

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Why should I hire an accountant?

Hiring an accountant to look after your business finances can be a savvy move. DIY finances aren’t for everyone, especially when your accounts start looking rather complicated. Whether you’re just starting out, or if you’re up and running but looking to expand, here are some ideas why you need an accountant helping your business develop.

 

Saves you time

The majority of people start businesses doing what they love, and what they’ve always dreamt of doing. For most people, this unbridled enthusiasm generally doesn’t extend to spending hours on financial records and paying taxes.

Accountants can help you focus your business efforts on the really important (money-making) stuff, whilst they take care of the other important (tax paying) stuff. It’s a win-win; you don’t get to waste time crunching numbers, and you get to spend time making more money.

 

They’re up-to-speed

Tax deadlines, limits, and amounts due have an annoying habit of changing on a semi-regular basis. Overlook one critical change, and you could end up massively underestimating your next tax bill.

Using an accountant guarantees that deadlines are met, and that you’ll be paying the correct proportion of tax at the right time (and to the right people). Understanding how the system works can be a bit of a minefield; an accountant will help you tread carefully.

 

 

 

You could save money

Think hiring an accountant is expensive? Think again. A good accountant will be able to highlight any areas where you could be saving money (such as claiming for all of the expenses you’re entitled to), which means that not only could they drastically cut your tax bill, but they could even end up paying for themselves.

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Business support and advice

It might be that being a sole trader isn’t very financially efficient any more, and that you’d be better off running as a Limited Company of operating through an Umbrella company.

Accountants aren’t there just to help with finances; their support can improve your whole business setup. If you’re just starting out, they can cast a beady eye over your projections and financial plans. As your business grows, they’ll be able to run you through the various options available and point you in the right direction if you decide to change the structure of your business.

 

Full account management

Although you’ll still be legally responsible for their accuracy, you can handover full management of your accounts to your accountant. This means they’ll be able to do everything on your behalf, from completing your tax return, managing PAYE to filing your accounts with Companies House. You could even nominate them to manage your communication with HMRC. No more wasted hours listening to dreary hold music? Yes, please.

 

You might need investment

At some point, most businesses will need investment. Whether it comes in the form of a bank loan, business angels, or investors, you’ll need a solid plan detailing both your forecasts and your accounts to-date.

An accountant will be able to offer guidance and ensure you’ve thought of everything, and provide reassurance to those looking to invest that your figures are accurate and realistic.

 

It makes life easy

Spreadsheets, invoices, and tax returns aren’t for everyone. If the thought of just opening up your accounts gives you a spreadsheet-induced migraine, hiring an accountant would be a good shout – and some may even give you access to software so you get a hands-on picture of your finances.

 

Not only will an accountant keep your accounts in order, but you’ll also have the added assurance that you won’t be penalized for late payments. Plus, you’ll get to spend January feeling smug about having a hassle-free tax return; now, who said you can’t buy happiness?

 

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