Tag Archive for Accounting

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Sole traders and VAT

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By Henry Williams on Small Business UK – Advice and Ideas for UK Small Businesses and SMEs

Whether or not you need to pay Value Added Tax (VAT) as a sole trader depends entirely on your taxable turnover. Basically, if at the end of any month your taxable turnover for the last 12 months goes over £90,000, or you expect it to go over £90,000 in the next 30 days, you need to register for VAT. You must do so within 30 days of the end of the month you went over.

You can also voluntarily register for VAT even if your turnover is under the threshold. Some sole traders choose to do this so that they can claim back the VAT on goods and services purchased for their business or to avoid financial penalties from accidentally going over the threshold.

Below, we explain how to register for VAT as a sole trader, how much you need to pay, VAT rates, charging VAT to customers, and MTD for VAT.

Registering for VAT as a sole trader 

You can register for VAT online with HMRC. Once approved, you should receive a unique VAT number relevant only to your business within a few weeks. 

It will be provided

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13 of the best prepaid business cards

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By Anna Jordan on Small Business UK – Advice and Ideas for UK Small Businesses and SMEs

What are prepaid business cards?

Prepaid cards offer a flexible way for small businesses to manage their cashflow and expenses. It can be an important tool for budgeting, as only the amount of money pre-loaded on the cards can be spent. You, as the business, can top up the card with funds and then give it to your staff to spend, imposing spending limits if necessary.

You and your employees can then use the card for a wide range of expenses including meals and entertainment or paying suppliers.

Physical and virtual cards are available. Virtual cards tend to be used for spending on one-off online purchases and subscriptions. On the flipside, a physical card is better if you’re making more purchases when you’re out and about.
Whether you opt for a physical or digital card will depend on what sector you’re in and what you plan to use the card for. A prepaid card is also more secure than a credit or debit card because there’s only so much the thief can be spend before you manage to deactivate it.

What’s more, both can be added to a digital

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What is the VAT threshold?

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By Tim Adler on Small Business UK – Advice and Ideas for UK Small Businesses and SMEs

The VAT threshold is the volume of annual turnover at which businesses are required to register for value-added tax (VAT).

Since April 2024, the UK VAT registration threshold has been £90,000.

VAT thresholds for previous years are as follows:

 

2014–2015 – £81,000

2015–2016 – £82,000

2016–2018 – £83,000

2019-2024 – £85,000

Since 1 April 2024 – £90,000

Once your business’s turnover reaches the VAT threshold, you have 30 days to register for VAT with HMRC. When this process is complete, your business has extra responsibilities including:

 

Charging VAT on your products or services

Paying VAT on the goods or services supplied by your vendors

Submitting your VAT return to HMRC every quarter (unless you opt into the Annual Accounting Scheme*) and maintaining a VAT account and records using Making Tax Digital (MTD)-compatible software

*Most VAT-registered businesses file quarterly VAT Returns (some monthly). If you opt into the Annual Accounting Scheme, you file one return per year with instalments. All VAT-registered businesses must keep digital records and file via MTD-compatible software

VAT registration

Registering for VAT is a legal requirement for businesses that exceed this threshold, and the threshold is reviewed regularly by HMRC.

You need to register for VAT

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Why every SME needs a regular business health check

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By Jonathan Cooper on Small Business UK – Advice and Ideas for UK Small Businesses and SMEs

Running a business can often feel like steering a ship through unpredictable waters – markets shift, costs fluctuate, and unforeseen challenges arise.

For small business owners and sole traders, it can be difficult to know whether they are on course for sustainable growth or heading towards stormier seas. This is where a business health check becomes invaluable – a vital tool for ensuring stability and resilience, giving leaders the insight to make confident, informed decisions.

What is a business health check?

A business health check is a review of key areas such as financials, operations and where you sit in the market. Health checks are used to identify a company’s strengths and weaknesses and how you’re progressing in relation to your goals. They can also be used to improve profitability.

Use a questionnaire or checklist to score different elements of your business. If you’re still completely l0st, ask your accountant or business advisor to help you to conduct a business health check.

Clarity in uncertain times

When a business begins to experience difficulties, owners are often unsure of the full picture. Cashflow pressures, creditor demands, or operational inefficiencies can

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The pros and cons of taking manual bank transfers as a small business

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By Anna Jordan on Small Business UK – Advice and Ideas for UK Small Businesses and SMEs

You might not be thinking about taking manual bank transfers in your business, perhaps because they’re divisive – mostly between the business and the customers.

These bank transfers are used by various businesses including car dealerships, removal companies and professional services. They can be used by companies that use invoices as well as those who take payments directly.

We explore the pros and cons to establish if they’re right for you, your business and your customers.

What is a bank transfer?

By this, we mean a bank transfer where the receipient gives the customer their bank details and the customer pays through their bank’s app or online portal or through a bank branch. We’re not referring to direct debits or bank payments that an online retailer or a subscription service might use.   

Pros

Let’s kick off with the positives.

Some bank transfers carry low or no extra fees

A lot of your fellow small business owners will tell you that the best part of bank transfers is no extra processing fees – the money goes straight into your account. Be warned that you are likely to incur fees on international an

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AI is changing everything. Here’s how to get on board

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By Jonathan Dowden on Small Business UK – Advice and Ideas for UK Small Businesses and SMEs

To demonstrate the potential of AI, Sage asked David Abrahamovitch, the founder of coffee chain Grind, to share the many ways he’s benefiting from it.

From empowering his finance team, to enhancing the way he works with his accountant, David finds generative AI and automation helps him perform faster and at a much higher level.

Read on for real-world takeaways you can implement today.

Become a strategic powerhouse

You’ve heard the grand promises about how AI is the future for small businesses. You’ve seen some impressive demos.

But how does automation and generative AI fit in with the things you actually do?

For David, the shift came when he realised generative AI could enhance how he works with his accountant.

He says: “I realised I couldn’t get the information, or the way that the accountant needed it, and it ended up just being like 50 or 60 individual PDFs.”

He used AI to consolidate everything he needed.

“In two minutes, I had [it] perfectly formatted,” adds David. “I was like, ‘OK, wow, this is amazing.’”

Automation is great but AI is even better

While automation makes life easier by automating process steps to get you from point A

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Why targeted AI is a business game changer

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By Jonathan Dowden on Small Business UK – Advice and Ideas for UK Small Businesses and SMEs

For small business owners, smart use of technology drives performance and growth. This has been true since the invention of the personal computer back in the late 1970s, and it’s no different today.

You’ve undoubtedly heard about recent breakthroughs in artificial intelligence (AI) and how they promise significant time savings, greater accuracy, and a superior work-life balance.

Interested in applying it to what you do?

Before you dive in, it’s crucial to approach AI thoughtfully and with a considered approach. Adopting AI just because it’s trending could become a time sink and, even worse, might not actually bring tangible benefits.

The true improvements come from strategically applying AI to targeted areas of your business, aligning technology with clear, specific goals.

Here’s where to start.

Accessible AI for small businesses

Integrating AI might seem daunting if you’re running a business with limited resources. It’s easy to think that AI is only for larger concerns.

However, AI’s accessibility today has made it far easier for small businesses to adopt than ever before – and in fact, it’s with small businesses where it can prove most effective.

For example, Sage Copilot found within Sage Accounting

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5 best business expense management solutions

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By Nathaniel Dalby on Small Business UK – Advice and Ideas for UK Small Businesses and SMEs

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However, relying solely on your business bank account for everyday expenses can be risky – it’s easy to lose track of how much you have and how much you need, even for the most cautious of business owners.

That’s why businesses are increasingly choosing third party expense management solutions, allowing you to easily maintain and manage an expenses account with just the tap of a button.

We’ve collected five of the best solutions you can find for your business in the UK today.
Wallester

Wallester prides itself on being an ‘all-in-one solution’ for business expenses, and with its wide range of features, it’s difficult to argue against this. Wallester makes business payments and expenses as simple as possible, with a three-step process:

Sign up

Set corporate cards

Control expenses in real time

Visa cards can be issued both digitally and physically, meaning they can be ready to use immediately if required. Once these are issued, you can monitor transactions in real time and approve purchase requests from employees, all through the app.

Accounting and reporting are also made easy, allowing

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Basics of small business accounting: tips and tools for beginners

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By Alice Feilden on Small Business UK – Advice and Ideas for UK Small Businesses and SMEs

Small business accounting can be daunting. But, this handy guide will help in getting your small business accounting right from the very beginning.

Step one: Know what’s required

It’s important to keep financial records from the very beginning of a business, no matter how incidental the expenses or how rudimentary the system. Companies based in the UK must be listed on Companies House and businesses must be registered with HMRC. Make sure to organise a financial record-keeping system too, which is legally required, and set up a business bank account. This will allow your business to take out a loan, use a business credit card and take card and online payments from clients.

Step two: Understand bookkeeping and accounting

Small business bookkeeping and small company accounting are often confused with one another or taken to mean the same thing. But they’re not! Bookkeeping is the process of recording and reporting company finances and acts as a small but crucial part of basic business accounting.

By extension, accounting is the process of analysing and examining financial information to create a business strategy, establish forecasts and make decisions.

As a small business,

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Top 5 accounting software providers for UK small businesses

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By Nick Ismail on Small Business UK – Advice and Ideas for UK Small Businesses and SMEs

Accounting software packages have become an essential tool for all modern businesses, of whatever size and type, and there is now a wide range of vendors to choose from. The key to purchasing a suitable platform is to find the right match to your company’s needs.

To help you with this important investment, check out this list of the top 5 accounting software providers for UK small businesses.

The top 5

Sage

Dedicated support for small businesses

90% off for first 12 months

MTD compatible and HMRC recognised

Say goodbye to endless admin with Sage Accounting – the HMRC-recognised cloud solution powered by AI automation. Ideal for small businesses that want to save time and manage their finances from anywhere.

Starts from £18 per month (not including discount).

Discover Sage

Moss

Automated accounting

Over 100 integrations

Streamline your workflows

Simplify your workflows, stay on top of your books, and close each month on schedule — all by seamlessly integrating Moss with your existing systems and tools.

Prices on request

Discover Moss

Xero

24/7 support

Automatic CIS reports

90% off for six months

Handle bills, track expenses, reclaim VAT — all from Xero’s intuitive, streamlined interface. With clear dashboards and fluid, dynamic graphs, managing your finances

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