Tag Archive for Accounts & tax

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Best UK small business accounting software 2019 – review guide

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Originally written by Timothy Adler on Small Business
As every entrepreneur knows, with everything going digital, more and more is being pushed onto the poor small business owner.
This year, HMRC rolled out its Making Tax Digital initiative, compelling 1.2 million VAT-registered businesses which earn £85,000 plus in turnover to file returns online. Those businesses now must submit their quarterly VAT returns under the new system.
However, it’s not going to stop there – MTD will be widened to include income tax and corporation tax from 2021 onward.
Given that moving to small business accounting software is inevitable for every SME, surely, it’s time to put away your paper and pencil (or your standalone Excel spreadsheet).
To help you decide, we’ve looked at the best UK small business accounting software packages on the market.
Best UK small business accounting software
Every small business is different. Most small businesses can make do with basic functions like invoicing, bank reconciliation, income and expense tracking and financial report generation.
Indeed, most UK small business accounting software offers the same features, it’s just that you may feel more comfortable with how one is designed over another – and then of course, there’s the cost.
Best accounting software for UK small businesses 2019

 FreeAgentSage Business

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Small businesses call for HMRC to delay IR35 tax change

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Originally written by Timothy Adler on Small Business
Small businesses have called for the Treasury to delay its controversial IR35 tax change, which is meant to clampdown on employees passing themselves off as freelancers in order to avoid tax.
The government has already restricted freelancers working full-time in the public sector as contractors, which means they pay less tax than equivalent employees. As employers are the ones who face penalties if they categorise full-time contractors wrongly, it makes hiring sole traders less appealing.
>See also: How to wind up your personal service company ahead of IR35 legislation
Now the Treasury wants to extend its IR35 legislation to the private sector in April 2020.
Mike Cherry, national chairman of the FSB, said: “The self-employed certainly don’t need an IR35 rule change that makes hiring contractors less attractive. We’ve already heard noises from big corporates to indicate that, if this change does take effect in April as planned, they’ll pull the plug on sole traders.
“Common sense dictates that a delay to the April roll-out of these rules is now needed.”
Back in September, chartered accountants also called for the IR35 tax change to be delayed. The Institute of Chartered Accountants in England and Wales (ICAEW) said the date

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6 of the best payment systems for accepting US dollars

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Originally written by Anna Jordan on Small Business
Whether your business offers a product or a service, markets these days are global so you need to be able to accept multiple currencies, including US dollars.
Before we crack on, a few definitions.
Payment system: A mechanism for transferring cash. As you’re collecting US dollars in this case, these will be online.
Presentment currency: The currency that the customer pays you in.
Settlement currency: The currency accepted by your account.
With most of these accounts, you can opt to open multiple separate currency accounts so that you can receive and withdraw US dollars directly. Otherwise, you’ll have to pay a currency conversion fee.
Airwallex
The Airwallex Global Account is an international collections platform which lets you receive foreign currency payment as if it’s local, using the local clearing system.
You can use the Global Account alongside Airwallex’s conversion engine and multi-currency wallet.
Fees: Free
Conversion rate: 0.5pc-1pc
Can I open multiple currency accounts?: Yes
Ideal for: Small businesses who deal with a larger number of multi-currency transactions
Worldpay
Worldpay accepts payments in over 120 currencies, including USD, as part of its multi-currency service. You can add up to five of a possible nine currencies: GBP, EUR, USD, CAD, DKK, HKD, NOK, SEK, SGD.
Fees: Free
Conversion rate: 4pc
Can I

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How to wind up your personal service company ahead of IR35 legislation

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Originally written by John Bell on Small Business
While the nation has been gripped by Brexit over the past three years, another hot topic for those in the contracting sector is the impact of the new off-payroll legislation, otherwise known as IR35. In particular, its ramifications when it’s rolled out to the private sector in April 2020.
We know that when the reforms hit the public sector in 2017 many public-service hirers put all contractors inside IR35 to avoid any comeback. Come April 2020 the same could happen.
Faced with being deemed an employee and unable to continue working through their own personal service company (PSC), many contractors will consider their options. Some could choose to work through a different model, such as an umbrella, but many contractors may decide to shutter their limited personal service company and pursue alternative paths.
So, how do you wind up your personal services company ahead of IR35 coming into effect next April?
‘Start the MVL conversation with your accountant now’
Voluntary strike off
A contractor closing a business can apply for voluntary company strike off at Companies House but a Members’ Voluntary Liquidation (MVL) may be more appropriate. A strike-off request could be turned down if a business has creditor

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It’s time for a modern tax system that works for the self-employed

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Originally written by Chris Bryce on Small Business
The self-employed are one of the UK’s great economic success stories. As their numbers have shot up in the last ten years – from 3.8 million to almost 5 million – so too has their economic contribution (including tax).
Self-employed workers contributed £275bn to the economy in 2018 – enough to fund the NHS twice over. They also provide businesses across the UK with vital flexibility and specialist expertise.
Despite the crucial contribution of freelancers, however, the fact is that today they are being stifled by a tax system that just doesn’t work for them. The analogue and outdated tax system in the UK was built with just two groups in mind: employers and employees. And as the number of self-employed has grown, tensions have increased in this creaking system.
The problem is that instead of redesigning the tax system to work for the self-employed, successive governments have just tried to patch it up and retrofit it. The result is confusion and heavy-handed, damaging policies like the off-payroll working rules aka ‘IR35’.
The latest iteration of this cumbersome tax law is basically designed to force non-employees into the employee tax system. It’s a crude policy that has

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Expat taxes for Americans living in the UK – how to fill out your return

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Originally written by Partner Content on Small Business
Q: What’s worse than dealing with HMRC every year?
A: Dealing with HMRC and the IRS
Life as an expat is complicated, especially around the end of the tax year.
Having to fill in two annual tax returns should be unnecessary because after all, Her Majesty’s Revenue and Customs (HMRC) does talk to the US Internal Revenue Service (IRS). However logic plays no part in the demands that government departments place on citizens, so you just have to grin and bear it.
>See also: Business rates reform key, says Labour business chairman Rachel Reeves
The bad
All US citizens need to file an annual tax return (Form 1040) with the IRS, even if they calculate that no tax is owed.
You must also notify the US Treasury Department every year of any UK and other non-US bank accounts and their balances using Form FinCEN 114. Your Foreign Bank Declaration (FBAR) must include any pension accounts and bank accounts where you are an authorised signatory, including joint accounts.
Failure to file either of these documents on time can cost you thousands in late penalties.
You will also need to file numerous extra forms with your Form 1040 to avoid being hit by late

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Why businesses should rethink their accounting software for Making Tax Digital

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Originally written by Ben Lobel on Small Business
Now that Making Tax Digital is here, you should be moving your accounting software to an online or cloud platform if you haven’t done so already.
Going from the consultation documentation available, HMRC has no plans to provide their own free software. This forces the majority of businesses to obtain a software which will be suitable for business use.
So, which accounting software should you go for?
It largely depends on the type of business you run. Each business has to decide based on their personal circumstances. For SMEs specifically there are a number of different cloud software systems currently out there which are capable of recording transactions online. Here are some to consider:
Xero
Xero has several plans which businesses can choose from depending on their needs. The prices below are only available for a limited time and will increase after three months.
Starter: £5 + VAT per month. This package is suitable for small businesses or contractors as it only allows you to send up to five invoices and reconcile up to 20 bank transactions per month. This price will increase to £10 after the first three months.
Standard: £12 + VAT per month. It doesn’t restrict you

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5 steps to take if a company you supply goes into administration

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Originally written by Rebecca Dunne on Small Business
With the risk of increased administrations, it is essential to be aware of steps you can take if you supply a company that is at real risk of going into administration.
Administration is when a company cannot afford to pay its debts, and an insolvency practitioner (IP) is appointed to run the company. The IP takes control over the company’s assets, allowing these to be sold to pay back creditors.
What if you suspect your client is heading into administration?
So, how can I avoid getting stuck in this tricky position?
Know your industry
Keep up to date on the activities of the businesses you engage with and supply. If you can see distressing signs, then you should reconsider your deal. Of course, sometimes you may hear rumours through the grapevine, but you can never be sure – so always gets your facts checked.
Use a credit rating tool
Companies like Experian, Creditsafe and Redflagalert track the financial health of companies. You can set up alerts for your clients so you will be told if there has been a CCJ raised against them or if their recent filed accounts point to problems. If you receive warnings, it would be wise

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HMRC’s new digital VAT rules – 6 steps for submitting tax returns correctly

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Originally written by Partner Content on Small Business
Making Tax Digital (MTD) for VAT is new HMRC legislation that forms part of a wider plan to eventually digitise all tax for UK businesses. All VAT-registered businesses with VAT-able sales above the annual VAT threshold (currently £85,000) are now required by law to keep digital records and file digital VAT returns through MTD-compatible software.
The majority of businesses need to do this for VAT periods that started on or after 1st April 2019 and around a million UK businesses are required to submit their VAT returns under the new system.
When you run your own business, changes to tax legislation can often seem intimidating but complying with Making Tax Digital needn’t feel that way. This checklist walks you through how to get up to speed with the new rules and how you and your business can benefit from the new system.
Register for MTD with HMRC
If you haven’t already done so, you’ll need to register for MTD with HMRC as you won’t be registered automatically. You can do this by visiting HMRC’s website. Once you’ve done this, you’ll need to connect your HMRC account to your chosen software. Be aware that it can take up

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Partnership tax – an end to the favourable tax treatment of partnerships?

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Originally written by George Bull on Small Business
A recent report suggests that almost one in three of the top 1% of UK income taxpayers are business owners, even though they account for only one in five of the workforce overall. Partnership profit shares and dividends suffer national insurance contributions at lower rates than salaries, although partners pay income tax on more than they earn. The report suggests an increase in partnership tax – that partners in firms should pay more NIC: we think that would be a mistake and ignores other issues.
The title of the recent report by the Institute for Fiscal Studies ‘The characteristics and incomes of the top 1%’ has ensured high levels of public interest. That’s hardly surprising. After all, people are genuinely interested in what share of the nation’s taxable income is received by the top 1% of adults (the answer is 12%) and the share of income tax that they pay (the answer is 27%).
The IFS analyses the income of the top 1% of income taxpayers in 2014-15 as follows:

Employment59.2%

Partnership17.7%

Dividends11.3%

Self employment3.6%

Pensions5.8%

Other*2.5%

*other income includes income from property, interest, share schemes and foreign income.
The analysis highlights that a substantial fraction of the top 1% earn their income

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