Terry Cartwright's Articles in Finances

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Filling The Self Assessment Tax Return Detailed Profit And Loss Account Sole traders and self employed business in the UK are required to complete a self assessment tax return. Accurate accounting records are required to complete the self assessment return with income and expenditure of different types being entered against specific box numbers. These notes explain how those accounting records should be entered in the income and expenditure section of the self assessment tax return form. Pros And Cons Of Doing The Bookkeeping Or Outsourcing To A Bookkeeping Service All small businesses have to choose between keeping manual records of financial transactions and the benefits, advantages and disadvantages of utilising bookkeeping software and or employing bookkeeping services for this purpose. The correct choice will vary from business to business but a choice should be made to achieve the best financial performance. Wages Salaries And Paye Administration The PAYE system is a payroll administration system whereby employers deduct on a weekly or monthly basis income tax and national insurance contributions from employees wages and salaries. The PAYE administration involves the calculation of deductions, often performed by payroll software, and the tax returns and forms required by the tax authority which in the UK is the Inland Revenue. Most Frequently Asked Paye Questions And Answers Employers and particularly new employers ask a variety of questions in administering the PAYE scheme. The top questions and answers include tax codes, week 1 basis, employee or self employment status, national insurance, statutory sick pay and what happens when an employee does not provide a P45 from previous employment. Simple Bookkeeping Spreadsheets For Small Business There is a major difference between sophisticated accounting software used by larger businesses for financial control purposes than is required for small business where a simple bookkeeping spreadsheet is sufficient. An Introduction To Registration And Accounting For Value Added Tax Value added tax is the tax amount added to the value of goods and services by a vat registered business when sold or transferred. Vat is not charged by businesses that are not registered for vat. This guide covers the vat threshold, accounting for value added tax, registration and submitting the quarterly vat tax return online. Things You Need To Know Before The Vat Inspection Trained vat officers do inspect company accounts on a regular basis and know exactly the types of errors likely to be uncovered. Up to date accounting records are required by all vat registered businesses and may contain common errors and misunderstandings which can cost the business dearly. Getting Paid On Time And Debt Recovery When The Credit Crunch Bites Making sure customers pay on time within the terms and conditions of the business is a serious issue and critical in days of a credit crunch, Late payments and bad debts cause liquidity and cash flow problems and in the most crucial cases can force a business into insolvency. Save Cash And Improve Liquidity By Stock Management When times get hard and 2008 has all the hallmarks of being a difficult financial year control over cash flow is critical. The best defence in these days of the credit crunch is to introduce and monitor cash flow liquidity at the earliest stage of which stock levels and inventory control can be crucial elements Cash Flow Management Issues Relating To Funding And Investment In A Credit Crunch Cash flow management is a critical business area every business must get right to survive. This article suggests a number of areas that a business might address to ensure the business have sufficient liquidity and working capital to survive the credit crunch and continue in business to generate profit. Improve Cash Flow By Managing Debtors And Creditors Cash flow management is a critical of the financial control that every business must get right to survive. Debtors and creditors represent two major areas which business might address to ensure sufficient liquidity and working capital to survive the credit crunch and continue in business to generate profit. Cash Flow Early Warning Signs Are Crucial When The Credit Crunch Bites Preparing a cash flow forecast can be an effective business tool in identifying adverse liquidity trends within a business at the earliest stages. Of particular importance during a credit crunch when cash flow is tight the cash flow forecast can indicate where positive action is required before those warning signs become critical. Accounting Periods And Basis Periods For Self Employed Business Accounts are required each year for tax and financial control purposes with preset dates by which those accounting records must be submitted and penalties for failure to deliver on time. While in the UK self employed business can use its own accounting period the tax position can become more complex if the accounts use a basis period rather than the standard financial tax year. Increase Small Business Profits Through Business Review And Planning There are several ways a business can improve profitability. The single most important tip for a small business owner is to take time out from the day to day routine and focus on the business and its activities. Emphasis being placed upon cost management a financial budget and business plan which should include sales and working capital requirements Business Tax Reform In The UK Introduces Annual Investment Allowance From 1st April 2008 for small limited companies and 6th April for unincorporated self employed businesses in the UK the previous capital allowance structure of first year allowances and writing down allowances changes to a combination of annual investment allowances and writing down allowances. Mileage Allowance Expenses Can Lower The Tax Burden Mileage allowances are approved rates at which anyone in the UK using a private vehicle for business journeys can claim tax free expenses for that journey. Small businesses can legally increase the tax allowance claimed by keeping better records of business journeys in the small business accounts. Employees Can Claim Tax Relief Using Their Vehicle For Work Employees in the UK who use their own vehicle for work can claim tax free expenses. If an employee keeps records of business journeys and the amounts paid by an employer the employee may also be entitled to receive mileage allowance relief in addition to those expenses for the past six years. What Happens Next After A UK Limited Liability Company Formation After forming a company in the UK the directors have a number of immediate responsibilities in regard to the newly registered company. Share certificates should be issued, statutory registers implemented and updated, affixing the company name and noting critical dates to avoid penalty fines and the implementation of a financial control system. New Tax Returns In The UK For Self Employed Business HMRC published new self employment tax returns in April 2008 to replace the previous self assessment tax returns for self employed business in the UK. The self employment tax returns are applicable from the financial year ending 5 April 2007. Similar to the previous self assessment forms the new tax returns are in two versions, full and short returns, dependent upon the level of sales income. Small Business Accounting Software Selection And Priorities Maintaining accounting records can be difficult for any business, especially self employed and small business organisations where a lack of accounting knowledge can be prohibitive. Selecting the right accounting software for your business can seriously improve financial performance. Lower Tax Bills And Bookkeeping For Small Business Financial record keeping and bookkeeping by small business is occasionally accurate but often produced once a year for tax purposes. By maintaining a diary, retaining all receipts and updating the accounting records on a regular weekly or monthly basis small business can seriously account for all costs and reduce the final tax bill. DIY Accounting Spreadsheets Accounting Questions And Answers DIY Accounting small business accounting software package is a series of accounting templates written on excel accounting spreadsheets, suitable for UK self employed business whether producing an automated monthly profit and loss account and self employed tax return form. These notes detail the typical questions and answers by clients. DIY Accounting Payroll Software Questions And Answers Common questions and answers from clients of DIY Accounting regarding the payroll software, many of the clients having never previously operated a paye system. Lower UK Tax Bills By Knowing What Business Expenses To Claim Tax bills can be reduced if all allowable business expenses are included in costs and receipts retained as supporting evidence. While all business expenses can be claimed it would not be unusual for particularly inexperienced small businesses to fail to claim some business expenses due to uncertainty over what constitutes a valid business expense. Avoid UK Tax Problems By Knowing What Business Expenses Are Disallowed Not all expenses can be claimed as valid business expenses for tax purposes. In a number of areas there is a grey area when an expense could be a business or private expense or may be a business expense used for private purposes. Tax problems can be avoided by understanding which expenses are allowed for tax purposes and which are not allowed. DIY Accounting Taxi Accounting Software Questions And Answers Questions relating to the DIY Accounting cabsmart package for taxi drivers are not frequent however the most common questions and the answers which have arisen over the past few years assist other cab drivers who may encounter similar taxi accounts questions. Tax Inspectors Are Professionals But Not Unbeatable The vast majority of tax returns are not enquired into by HMRC and are accepted as reasonable. When HMRC investigate the tax return of a small business the inadequacies of the accounting, lack of knowledge by the enquired and professionalism by the tax inspector often results in a higher tax bill. Comparing Cash And Accrual Accounting Every business is required by the tax authority to keep bookkeeping records to enable the net taxable profit or loss to be calculated. While complex accounting systems can be appropriate in some circumstances the choice for small business is basically cash accounting or accrual accounting. Accounting For Profit With Marginal Costing Marginal costing is an accounting term in which costs and expenses are identified by their variability according to the volume of goods bought or produced. By analysing costs according to the variability in prices can significantly improve profit efficiency levels within a business. Sales Accounting For Profit With Accounting Software Many small businesses concentrate on the job in hand and treat bookkeeping as an administrative burden. By adopting suitable accounting software as an essential tool of the business the financial performance can be improved by taking positive management action on the sales and profit generated. Cost Accounting For Profit With Accounting Software Small business often accepts business expenses as inevitable and while some effort is usually made to keep expenses down it is often done without reference to the accounts. Maintaining a regular system of bookkeeping using suitable accounting software can assist the cost accounting for profit exercise by providing the source and extent of the actions to be taken. Beat the Credit Squeeze With Flexible Business Finance Five proactive steps a business can take to beat the credit squeeze including business finance, planning and taking a positive approach to meeting and solving the problems that might arise. Accounting And Audit Exemptions For Small Companies In The UK Small and medium sized companies in the UK can take advantage of supplying abbreviated year end accounts to Companies House which have not been audited by independent accountants. This guide sets out the conditions under which abbreviated accounts can be submitted. Choosing Outsourcing Payroll Compared With Payroll Software Every business that employs people is legally bound to run a payroll system. The three alternatives to satisfy the requirements are outsourcing payroll, using a payroll software package or calculating the payroll manually. The choice for business depends upon knowledge of the payroll system and the time and potential costs involved. A Balance Sheet Is A Financial Statement Of Assets And Liabilities The balance sheet is a financial statement of the assets and liabilities of a business or organisation at a specific date. The main balances reported being separated between fixed and current assets, current and long term liabilities to provide a snapshot of the financial standing of the business. How to declare a dividend and produce the dividend voucher Procedures in declaring dividends are contained within the articles of association the formalities of which need to be observed in recording the transaction and preparing the dividend voucher. Accounting for dividend tax credit and income tax on dividends Calculating the dividend tax credit and understanding the position with regard to income tax on dividends. Networking Methods To Promote The Home Bookkeeping Services Networking by personal contact with prospective clients is undoubtedly the best way to start up and promote home bookkeeping services. There are a number of ways in which networking can be achieved by bookkeepers. In addition the range of bookkeeping services offered, qualifications and experience have an impact upon the success of each strategy. How ABookkeepers Can Advertsie Home Bookkeeping Services Internet and local media advertising are useful sources to start up and promote home bookkeeping services. By setting a financial budget for each sales channel the bookkeeper can manage the results to build the bookkeeping services. Tax Accounting Software Produces Self employed Tax Returns Tax accounting software for self employed accounts involves accounting software to produce the accounts combined with tax software to produce the self employed tax returns and tax liability. Tax Software and Company Corporation Tax Return Tax accounting software for UK companies involves business accounting software to produce the accounts combined with tax software to produce the CT600 corporation tax return. Vat Accounting Can Help Claim Vat Three Years Before Registration When a business completes the vat registration there are rules which enable vat registered companies to claim vat paid on goods for up to 3 years and on some services for up to 6 months incurred prior to registration. Paye P45 Form Tax Questions and New Employee P45 Forms Employers in the UK issue an employee that leaves with a P45 tax form stating details of that employment including the cumulative earnings and income tax paid to date. Not everything always go to plan resulting in a number of tax questions regarding the P45 form especially when a new employer may not have received the P45 form. Inland Revenue P46 Tax Questions With Notes On Accepting The P46 Form A new employee without a P45 should be asked to complete a P46 form which the employer submits to HMRC. Inland Revenue P46 forms can be downloaded from the HMRC website and also submitted online. Completing the P46 solves a number of tax questions a new employer may have regarding the new employee status and is essential to ensure the PAYE records start off on a correct basis How much is tax on income, tax percentage rates and income returns The answer to how much is tax on income and the income tax percentage paid is dependent upon the status of the individual being employed, self employed or incorporated as a limited company. Employees pay income tax and national insurance under the paye system while self employed individuals submit self employed income returns and although they receive the same UK allowances they pay different national insurance. Sole trader basic accounts income and expenditure basic tax account A sole trader in the UK can operate a very basic accounting system. Provided supporting evidence is retained to show the basic accounts are realistic and the income and expenditure statement accurate for basic tax purposes sophisticated accountancy, debits and credits are not required. Basic accounts for sole traders do not require the production of a balance sheet. UK tax codes explained, BR basic rate tax coding and new tax code UK tax codes are determined by HMRC, notified to employees and used by employers to calculate tax to be deducted from employee income. Inland Revenue tax codes explained as being made up of numbers or letters and usually both. When multiplied by 10 the number indicates the amount of tax free personal allowance the person is entitled to and the letter indicates the conditions which might be applicable to the UK tax code.

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