Bookkeeping

You’ve set up your business, sales are pouring in, the paperwork is piling up, you need some help with keeping on top of the accounts, but you don’t know who to turn to. You ask yourself “Do I need a bookkeeper or an accountant?”

By the end of this post, you will know what a bookkeeper does and what an accountant does.

A bookkeeper:

• enters all sales and purchase information
• enters all bank transactions
• enters all petty cash transactions
• keeps the sales ledger and purchase ledger up to date
• reconciles all bank accounts
• prepares and files VAT returns
• prepares accounts to trial balance

Some bookkeepers can also:

• calculate and submit all payroll info to HMRC
• prepare the profit & loss statement
• prepare the balance sheet
• submit self-assessments

An accountant:

• provides tax advice
• Help prepare budgets
• files self-assessments and corporation tax returns
• analyses the financial statements & provides advice
• prepares financial statements
• and many more tasks….

Bookkeepers and accountants regularly work together to ensure that a business is receiving the best advice and support possible.

It is very important that before hiring a bookkeeper or an accountant, you check that they are registered with a professional body and that they hold a valid practicing certificate and insurance. Do not be afraid to ask them to see their certificate or credentials.  A bookkeeper in the UK should be registered with either the ICB (Institute of Certified Bookkeepers) or the IAB (International Association of Bookkeepers).  An accountant in the UK will be registered with the ICAEW (Institute of Chartered Accountants in England and Wales), CIMA (Chartered Institute of Management Accountants), CIPFA (The Chartered Institute of Public Finance & Accountancy) or ICAS (The Institute of Chartered Accountants of Scotland).

Come back tomorrow to find out the Top 5 Reasons Why Your Business Needs a Bookkeeper!

If you would like to know more about the bookkeeping services we offer, have a look at our bookkeeping page, or contact us via the Contact Us Page, our Facebook Page, or on Twitter.

In yesterday’s post, we talked about the differences between a bookkeeper and an accountant which one you needed. Today we are going to talk about the top 5 reasons why you need a bookkeeper.

1. Frees up your time – By having a bookkeeper, the time you would have spent on your accounts is freed up. You can then put that time to better use by using it to promote your business and get more sales.
2. The accounts will be done correctly – A qualified bookkeeper will know exactly how the accounts will need to be done. This means that if HMRC checks your accounts, they are less likely to find any mistakes and fine you.
3. Better idea of the financial state – A bookkeeper will keep your accounts up to date on a regular basis. This means that you can have a more accurate picture of the financial status of the business, instead of waiting until the end of the tax year.
4. Know who you owe and who owes you – If you are struggling to chase your clients for payment, or you are being chased, a bookkeeper can help keep your purchase ledger and sales ledger up to date. They will be able to send statements to your clients and get payments in. They can also make sure you are paying your suppliers on time.
5. When you have employees – As an employer, it is more important to make sure you are paying the employees & HMRC the correct amounts and on time. A bookkeeper will make sure all of the payroll calculations are 100% correct and that everything is filed with HMRC on time.

If you think you might need a bookkeeper or want to have a chat about how we can help, contact us on the Contact Us Page, our Facebook Page, or on Twitter.

Last year HMRC brought out a major change to the way payroll information was to be submitted to them.  Employers would no longer be required to submit P35s at the end of each payroll year, as the information would now be submitted each payroll period and be called RTI – Real Time Information.  This change is meant to help with the Universal Credit when it is fully implemented, as it provides HMRC with an exact picture of what an employee is earning.  I get a lot of different newsletters from various associations and companies, and the best explanation I have come across for RTI is on the Sage One Blog.  The article was written on January 24, 2013, but it gives a very comprehensive explanation on RTI and everything that is required.  Now some of this information may have changed slightly since the article was first written, but it’s still a very good article.

The article starts out with a definition of RTI and why it’s been created:

“Real Time Information (or RTI for short) is an HMRC initiative to improve the accuracy of PAYE, reducing the need to send out corrections for overpayment or underpaying and the possibility of fraud. Under new RTI legislation, employers will be required to submit information electronically via the internet to HMRC on or before they pay their employees instead of just once a year.”

The article goes on to explain what it means for each business and what needs to be submitted under RTI.  It contains very good descriptions of the four different types of submissions that an employer is responsible for making:

• Employers Alignment Submission (EAS)
• Full Payment Submission (FPS)
• Employers Payment Summary (EPS)
• National Insurance Number Verification Request (NVR)

Further into the article it talks about how a business can prepare for RTI compliance:

“The key to successful implementation and compliance of RTI is simple‚ don’t leave it to the last minute! Familiarise yourself with RTI by reading all the great information and guides on the www.sage.co.uk/rti website and don’t be afraid to ask your payroll provider how they are going to help ensure your compliance with RTI. Invest some time in carrying out an audit of your employee and payroll data to ensure its accurate and up-to-date, as incorrect information such as Name, Date of Birth, National Insurance Number and Gender are used to match your records against the records HMRC store.”

The article continues through various questions that all employers were asking after HMRC made their announcement:

• What happens if you don’t comply
• How the way you do payroll has changed
• The different steps of processing payroll – taking on new employees, dealing with the forms when an employee leaves when employees are paid irregularly
• How you pay HMRC outstanding PAYE and NI
• The payroll year-end

If you are using Sage One, the article also explains how it can help you to be ready for RTI.

To read the full article, go to the Sage One Blog.  The article was written by Paul Lancaster on January 24, 2013.

As a qualified bookkeeper with a level 3 certification in both manual and computerised bookkeeping, I am able to provide more services than a bookkeeper who may not be qualified.  There is also the added assurance that I have the backing of a recognised professional body and hold a valid practicing certificate.

I am able to:

• bookkeeping to Trial Balance
• cash flow statements
• credit control
• draft final accounts for Limited Companies
• maintaining fixed asset register
• payroll, employee records & year end submission
• preparation of final accounts for sole traders
• VAT Returns

In addition, to my bookkeeping qualifications, I also hold a diploma in payroll.  This can be a very useful service to offer to any sized business who has employees.  You can be confident that the correct procedures will be followed and that all of the necessary information will be filed with HMRC on time.

On top of bookkeeping and payroll, Ihelm Enterprises offers website hosting and technical support.  Our head of IT has 18 years experience with computers in general, 15 years commercial experience with server administration and 17 years of experience with managing and working with databases.  Our clients can be confident that their websites are in good hands.

If you would like to talk to us about how we can help with your bookkeeping, payroll or website hosting needs, please contact us via the Contact Us Page, our Facebook Page, or on Twitter or leave a comment below.

Now all UK employers must put certain staff into a pension scheme and contribute: this is ‘automatic enrolment’

If you don’t employ anyone then you are excluded and you can tell the Pensions Regulator this. If you are an employer, you will have a staging date which is the date that automatic enrolment duties come into effect for your business. There will be a list of activities that need to be completed to set up and enrol staff into a Qualifying Workplace Pension Scheme.

So here’s why you need to sit up and pay attention and how!

• Staging dates vary but can be found at www.thepensionsregulator.gov.uk/employers/staging-date.aspx A Staging date can be brought forward but not moved later.
• Start acting within the first month of staging otherwise you are in breach of the regulations and could be fined
• It is always the employer’s responsibility to ensure that they comply with the Legislation but a business owner can ask a bookkeeper to take on the role of facilitating the auto-enrolment; the employer simply remains ultimately responsible for complying.
• A Declaration of Compliance must be completed within five months of staging.
• If you are not sure whether a particular worker is, in fact, someone that the rules apply to, businesses can get guidance from the Pensions Regulator via customersupport@autoenrol.tpr.gov.uk
• The minimum contributions are 2% (including 1% staff contribution) for staging dates up until 5^th April 2018 and then they are proposed to increase to a total of 5% and later 8% but are still subject to Parliament approval.
• There are special rules for the first deduction of contributions on automatic enrolment and after this, the Law requires that staff pay deductions must be paid into the staff pension scheme no later than the 22nd day (19th if you pay by cheque) of the next month.
• Penalties: Penalty notices can be issued to punish persistent and deliberate non-compliance. A fixed £400 penalty notice is issued if an employer doesn’t comply with statutory notices or if there’s sufficient evidence of a breach of the Law. If an employer failed to comply with a statutory notice there is also an escalating penalty with a daily rate of £50 to £10,000 depending on the number of staff an employer has.
• If you know you are already in breach of the auto-enrolment Legislation simply confess to The Pensions Regulator; they are friendly and will do their best to assist you.

How we can help?

Arianna Helm is a fully qualified bookkeeper with the ICB. She can become the secondary contact at any company for auto-enrolment and the person that will manage or handle implementation. Bookkeepers cannot provide advice about pensions schemes themselves but they can help with the official record keeping including opt-ins and opt-outs and also assess new starters.

In this article, please find the information provided in the e-mail sent to all client’s with regards to the new Money Launder Laws.

Changes that have been made

The first bit of information that you need to be aware of is something that we have been expecting for several years, and we are very happy about. Bookkeepers, indeed any business that offers financial services in any way, are now classed as a “regulated profession”. This means that to legally offer such services, Bookkeepers (individually) must now have a valid practicing certificate issued by a supervisory body registered with HM Treasury or be registered directly with HMRC. Ihelm Enterprises has had a valid practicing certificate for several years through my membership with the Institute of Certified Bookkeepers. For reference, my membership number is 61153985 and my practice number is¬†304657.

Whilst this doesn’t mean there will be any changes in the services we offer, it does mean that the industry as a whole is now answerable to HM Treasury and the government under several new legislations – the prime one is the Money Laundering Act that was passed in December 2007. Our delay in implementing this fully has been due to awaiting the Act to be interpreted by the associations and the pertinent parts to be disseminated to ourselves.

This does mean that Ihelm Enterprises must take more responsibility for understanding your business finances and you, our client, in order to protect you, ourselves and the government from illegal activities that can occur.

The Money Laundering Law (in simplistic terms)

There are three principal money laundering offences which are contained in sections 327, 328 and 329 of the Proceeds of Crime Act 2002.

There are also similar offences created under the Terrorism Act 2000 – section 15, 16, 17, and 18.

Depending on the type of business that you are, we will require different things – these are listed below – along with the reason for us requiring these items. Unfortunately, if we cannot obtain these items from yourself than by law, we may have to terminate your contract with us. Please don’t hesitate to contact us for more information.

If you are a Sole Trader/Partnership:

If you are in a partnership we will require all of the information below for each partner.

1) Please confirm your Home Address and if application your Trading Address if different:

2) Size and Sources of your capital to date and any future sources or predictions for your capital. This relates to any money you invest into the business either your own funds or from borrowing it from other sources.

3) The size of your personal income and source in the past, and predicted personal income in the future. If you are employed by another business, alongside running your own business, you will need to provide information relating to your earnings from the other business.

4) Confirm the type of business you are in, and the sector your business is in.

5) Have you ever been subject to bankruptcy proceedings? If so, can you give some details?

6) Have you ever been disqualified as a director of a company?

7) Can you confirm that you have registered with HMRC as a sole trader?

We are required to see proof of identity as part of the Money Laundering Regulations. This is because we have to indicate that we have identified yourselves and that you are who you say you are.

We will need you to send us either 1 piece of photo identity and an additional piece of evidence, or 1 piece of non-photo identity, proof of address or date of birth PLUS an additional piece of evidence.

List 1: Evidence of Identity

Acceptable Photo Identity:

i) valid passport; or

ii) valid photocard driving license (full or provisional); or

iii) national identity card (non-UK nationals issued by EEA member states and Switzerland); or

Acceptable Non-photo evidence of identity:

Documents issued by a government department, incorporating the person’s name and residential address or their date of birth,

i) a current UK full driving license old version (not provisional licenses); or

ii) evidence of entitlement to a state or local authority funded benefit (including housing benefit and council tax benefit), tax credit, pension, educational or another grant; or

iii) documents issued by HMRC, such as PAYE coding notices and statements of account (NB: employer issued documents such as P60s are not acceptable); or

iv)end of year tax deduction certificates

List 2: Evidence of address or date of birth

i) instrument of a court appointment (such as a grant of probate, bankruptcy); or

ii) current council tax demand letter or settlement; or

iii) current (within the last 3 months bank statements, or credit/debit card statements issued by a regulated financial sector firm in the UK, EU, or JMSLG equivalent jurisdiction (but not those printed off the internet); or

iv) a file note of a visit by a member of the firm to the address concerned (“home visit”); or

v) an electoral register search showing residence in the current or most recent electoral year (can be done via http://newcorp.192.com/search/index.cfm); or

vi) a recent (last available) utility bill (gas, water, electricity, telephone – not mobile phone bills); it must be a bill or statement of account (not correspondence); or

vii) valid photocard driving license (full or provisional); or

viii) a current UK full driving license old version (not provisional licenses); or

ix) evidence of entitlement to a state or local authority funded benefit (including housing benefit and council tax benefit), tax credit, pension, educational or another grant; or

x) documents issued by HMRC, such as PAYE coding notices and statements of account (NB: employer issued documents such as P60sare not acceptable); or

xi) a solicitor’s letter confirming recent house purchase or land registry confirmation (you must also verify the previous address)

If you are a Registered Company (e.g. Ltd):

1) Please confirm your Registered Company Name (as appears on Companies House):

2) Please confirm the company registered address and the main trading address if different:

3) Please, can you let us know the basic structure of your company. E.g. who controls and manages it – directors, shadow directors etc.

4) Has the company been audited in the past, if so were the accounts qualified? If they were qualified can you let us know who qualified the accounts?

5) In order to ensure we comply with the regulations, we require the following information if available. If it isn’t available please let us know why. We will return all documents by signed-for delivery within 2 days):

i) Certificate of Incorporation

ii) List of Shareholders

iii) List of people who have voting rights with their shares in the company

iv) Your position in the company

v) Your name

6) The main source of income for the company:

We will need to take copies of the information and store it in your client file. Every year we will be asking you to verify the information is still correct and to notify us of any changes.

Are you a small business and:

• trying to run your business
• develop your product or service
• market your business
• deal with the day-to-day bookkeeping

It isn’t always easy to do everything that needs to be done when you are running your own business, which is why it is a great idea to outsource the things that you aren’t very good at, so you can spend your time more wisely and focus on what you do best, which is sell your business! However, I know it isn’t always easy to just outsource everything, as there are costs when you do that, and if you are just starting out, the cash isn’t always available.

So what do you do if you can’t outsource? You have a couple of options – you could find someone who is trained and has experience in the field you want to outsource – let’s say bookkeeping in this case, and you can see if you can come to a mutual working agreement, where maybe instead of paying with cash, you trade services. This can work really well as long as both parties agree to terms beforehand and both parties feel they are getting a mutually benefitting deal.

Another option is to try and learn how to do some of the things you aren’t very good at, without spending a lot of money. So you could join a facebook group, or follow people on twitter, and read blogs that are published providing easy to follow tips. People who are experts in their field won’t always give away all of their secrets, but you can pick up some very good hints and tips on how to do the basics in things like marketing, publishing a website, handling the bookkeeping and accounts, and many other aspects that businesses need to be involved in.

At Ihelm Enterprises Limited, we offer bookkeeping and payroll for any sized business, and we are more than happy to speak with you and arrange an alternate type of payment, or even a payment plan. Our aim is to take away the stress and frustration of dealing with the day to day bookkeeping so that you can focus on your business and doing what you do best.  Why not contact us via the contact form on the website, our Facebook Page, or on Twitter (@ihelmenterprise) and see how we can help you with your small business bookkeeping.