Although the distinction between bookkeeping and accounting has become increasingly blurred as software and computers have been used more widely, we refer to bookkeeping as "keeping the books" - recording transactions, posting invoices, bills and expenses to accounts, and compiling routine VAT returns and management reports. Here we focus on the value a professional bookkeeper can add to your business.
All bookkeeping and accounting, starts with accurate records. If you're a Director of a limited company, you have certain legal obligations to keep records -these must contain:
- entries showing all money received and expended by the company
- a record of the assets and liabilities of the company
Also, if your company’s business involves dealing in goods, the records must contain:
- statements of stock held by the company at the end of each financial year
- all statements of stock takings from which you have taken or prepared any statements of stock
- statements of all goods sold and purchased, other than by ordinary retail trade. This should list the goods, the buyers and sellers
Cloud accounting software makes this really easy; for example, we have 3 different and easy ways to get expenses into the accounting system in a recent article. Invoices can be sent by email and tracked - when did the client read it? Did it get to them? Did they respond? Once a payment's received, it's straightforward to match the invoice to the payment using direct downloads (or "feeds") from the bank, and a built in matching process. Expenses can be recorded by photographing a receipt on a smartphone, or forwarding a bill by email. Either way, there's no longer a need to keep paper copies if you're using a cloud accounting system.
Our bookkeeping service will help you manage all of this without impacting your time significantly. We can provide discounted cloud accounting software, and manage the whole process of invoicing and recording expenses for you - or just advise if you prefer.
Once we reach month-end we'll make sure the bank records line up exactly with the contents of the accounting system. This process - known as "reconciliation" - is a vital control to make sure nothing's been missed and your records are accurate.
For a startup or very small business, cash management is often done in people's heads; who owes me money? When are they likely to pay? How about the bills coming in - do I pay it now or later? But as a business grows, trying to hold everything in your head can become impossible, and we often find people with unpaid bills, suppliers chasing invoices which may have been misplaced, and cash management becomes time consuming with calls to ask for copies of invoices, payments coming in late but unexpected, and expenses missed or not claimed.
Cash management, like all bookkeeping and accounting, relies on accurate records which tie up with "reality" as it's shown in bank records and cash. Once the books are reconciled to this, it's relatively straightforward to run a report of who owes you money - invoices not yet paid - and who you owe money to. We can show this according to how late the client or supplier is, allowing you (or us) to prioritise that phone call to chase payment. We can also set up automatic email reminders to go out before, when and after an invoice is due for payment, politely reminding the client that they need to pay your bill.
When a supplier phones up chasing payment, you'll quickly be able to see the expense entered in your books, and pull up the original paperwork so you know they're asking for the right amount.
Reasons why you should trust Whitehill with your bookkeeping and cash management;
- Access to the latest cloud accounting at discounted prices, giving you electronic storage of paperwork, easy capture of expenses, and ability to generate invoices and send these to clients at any time
- Fully qualified, professional staff to manage and/or oversee the recording of invoices, bills and expenses, making sure nothing's missed
- Real time reports of bills to be paid and unpaid invoices sent to clients, with details of the amounts and dates due
- Options for automated reminders to be sent by email to clients, ensuring they're aware the payment is due or overdue
- Options for our bookkeepers to set up payments for you, or even provide a full cash management service, paying bills and chasing late payments from clients
Management reports translate financial information into knowledge. Processes such as bank reconciliation, invoice processing and VAT returns may be essential to keep track of incoming and outgoing cash and value, but management accounts will help you to track and grow your business.
For many, the "basic" reports such as accounts receivable, accounts payable, profit or loss (which includes income and expenses) and balance sheet (which gives a "snapshot" of the value of the business) are enough. Most cloud accounting packages will give you these reports as standard, presenting a "dashboard" of reports showing how the business looks.
More complex management reports use categories you define to track income and expenditure - against a job, or types of income and cost. Did this job cover its costs and make a profit, seen as a standalone project? How is our investment in a particular type of service or product looking in terms of income?
Using this type of information enables you to see what's making money and what's not; where the profits are coming from, and which customer is the most valuable. In other words, what pays off and what doesn't.
The world of management reporting has progressed rapidly in recent years and the type of analysis which was only available to major companies is now available to small and medium sized businesses. We use a range of methods to generate management reports for our clients; we can link Excel spreadsheets directly with cloud accounting software, extracting live data and then presenting it in a format which makes sense to the business. We are also strategic partners with certain providers of management reporting add-ins for cloud accountancy packages, and can tailor these to your needs. These present data graphically, and allow you to include non-financial targets such as number of product made, attendance at an event, and so on. With these in place, you can track exactly what's happening in the business at any time.
Whatever technology works best for you, we can generate the management reports you need or even set up access online so you have real time information at your fingertips.
Reasons why you should explore management reports with Whitehill;
- Access to the latest cloud accountancy software at discounted prices, with free migration from your existing software.
- Basic management reports and graphs included in the base package
- Experienced staff who can help put together management reports for your business which will give you insight into the business and how it's progressing
- Optional meetings with Whitehill staff to review progress and agree next steps
Value Added Tax
Value Added Tax (VAT) is charged on the sale of goods or services by UK businesses. Small businesses may not need to register for VAT - contact us if you're not sure whether to register or not.
VAT is collected on behalf of HMRC by Companies and sole traders. However, to make sure you're paying the right amount, it's vital that the books are kept up to date and include all expenses (on which VAT can be claimed) including VAT receipts, and invoices on which VAT has been charged.
We can provide a full VAT service as part of our bookkeeping support, including entering expenses and invoices with the VAT element clearly identified, and compiling and submitting VAT returns to HMRC. The latest information from HMRC on "Making Tax Digital" indicates that VAT returns will be replaced by digital returns from April 2019, and we'll make sure you are able to move seamlessly to the new processes when they are in place.
Which VAT scheme?
If you're not already VAT registered, but your business is approaching the VAT threshold, you'll need to decide what VAT scheme is appropriate for you.There are a number of options which can be used (see below), and each may benefit certain types of business. For all schemes, VAT is charged on sales of goods and services when the Company or trader is VAT registered. However, it's worth noting that goods and services may be either VAT-rated or VAT-exempt. VAT-exempt items may include things like rent, private education, health services, postal services, finance and insurance, and gambling.
For goods and services which are VAT-rated, there are different levels of VAT to charge. The current standard rate of 20% applies to most items, but a Reduced Rate can be applied to many items such as mobility aids for the elderly, smoking cessation products (nicotine patches and gum), electricity and gas for domestic and residential use, children's car seats, booster seats and booster cushions. In some cases the Reduced Rate may be zero (so-called "Zero Rate"). This applies to items such as Cycle helmets (CE marked), Protective boots and helmets for industrial use, children's clothes and footwear, baby wear, printing of brochures, leaflets and pamphlets and building services for disabled people.
Standard VAT schemes
The Company collects VAT on sales, and then pays the collected VAT to HMRC by calculating the amount of VAT charged to customers minus any VAT they have paid on their own purchases. The calculation can be made on a cash or accruals basis; there are potential benefits to both of these options. Please get in touch if you need help in understanding the differences between cash and accrual VAT accounting.
Flat rate VAT scheme
For smaller businesses, there is an option to collect VAT on sales, and then pay the collected VAT as a percentage of the collected amount (i.e. a "flat rate"). The flat rate varies according to the type of industry, and from April 2017, an additional test needs to be applied before the flat rate is decided. However, the flat rate VAT scheme may have benefits both in terms of simplicity and potentially in financial terms under some circumstances. Since the rules can be complex and change from time to time, it's worth getting help with this decision.
Finally, there are specialist VAT schemes such as the Travel Operators Margin Scheme (TOMS) which can be used for specific sectors. Please get in touch if you want to use TOMS or another specialist scheme, and we can advise you.
Reasons why you can trust Whitehill with your VAT support:
- Experienced professionals who are expert in all types of VAT scheme will manage your accounts and VAT submissions
- Latest software technology will ensure your business is future-proofed as HMRC introduce "Making Tax Digital" for VAT
- VAT processes are integrated into other aspects of your bookkeeping, ensuring all VAT is claimed and collected
- Registered agents with HMRC for VAT, which means we can deal with VAT queries on your behalf