Cloud Accounting Software: Is it really that good for your business?

Cloud Accounting Software: Is it really that good for your business?

Accounting shouldn’t be a chore

Small business accounting software that’s not available via the cloud can be tedious. Traditionally, it can suck up far too much of your business’ time and effort. This doesn’t add value, and takes the fun out of running a business.

Cloud accounting software, such as Xero, can save your company time and money. Find out how…

So how what is the cloud and how does it work?

Think about when you use internet banking. Every time you access this data, you’re using the cloud. The cloud is a platform to make data and software accessible online anytime, anywhere, from any device. Your hard drive is no longer the central hub.

Traditional accounting software and it’s problems 

  • The data in the system isn’t up to date and neither is the software.
  • It only works on one computer and data bounces from place to place. For example, on a USB drive. This is not secure or reliable.
  • Only one person has user access. Key people can’t access financial and customer details. This can also be a liability.
  • It’s costly and complicated to keep backups (if done at all).
  • It’s expensive, difficult and time consuming to upgrade the software.
  • Customer support is expensive and slow.
  • Why the cloud and accounting software are the perfect match.

The benefits of Cloud Accounting Software

  • You can use cloud-based software such as Xero, from any device with an internet connection meaning you always have access to your business finances 24hours a day, 7 days a week.
  • Online accounting means small business owners stay connected to their data and their accountants. The software can integrate with over 300 apps and third parties. It’s scalable, cost effective and easy to use.
  • In the cloud, there’s no need to purchase, install and run applications over a desktop computer meaning you have complete control over your cashflow and the cost becomes a operating expense rather than a capital expenditure.



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Cool Xero apps that will supercharge your business

Cool Xero apps that will supercharge your business

Xero benefits from 100s of third party apps that connect seamlessly with Xero to supercharge your data, effeciency and productivity.

We’ve picked out some of our favourite Xero apps here:

An all in one advanced forecasting and reporting tool designed for businesses who want to control cash flow and accelerate growth.

GoCardless allows you to take control of your payments, ensuring your invoices get paid in a timely manner via Direct Debit. With automatic reconciliation in Xero, GoCardless improves your cash flow and reduces your admin.

Unleashed provides online inventory software for Xero, allowing accurate costs, margins and stock control.

Trip Catcher
Tripcatcher helps you manage those pesky mileage claims, using mobile and web apps, and publishes them seamlessly to Xero or Receipt Bank

Service M8
ServiceM8 integrates seamlessly with Xero, allowing you to manage any field service business from the client’s first call to job completion, invoicing and payment.

Time tracking and scheduling that employees love, featuring mobile apps with GPS. 1-click sync to Xero for seamless invoicing and payroll.

Zoho CRM
Integrate Zoho CRM and Xero. Automatically sync quotes, invoices, contacts, and products. Save time & get accurate data without manual entry.

iZettle Pro
iZettle Pro is an affordable, cloud based EPOS solution for iPad tailored to hospitality and retail requirements. It helps sell more, generate loyalty, increase profits and grow.

Create a beautiful Shopify store and seamlessly connect your entire business to Xero for a single, real-time view of sales and small business finances.

Receipt Bank
Receipt Bank is the simplest way to get your client data into Xero! Say goodbye to chasing and data entry. Spend more time growing your business.

Chaser automates and improves your credit control, getting you paid faster and saving you time. The perfect complement to your finance team.

There are 100s more we could mention but hopefully these will give you an overview of the types of app that are available and how they can help to streamline your business. You can view all the Xero apps available here »


Xero integrates with 100s of effecicency apps leaving you free to tackle to day to day running of the business!

Contact us here or call on 01392 495483

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Year end accounts preparation and checklist

Year end accounts preparation and checklist

Year end accounts preparation and checklist

As the year looms closer, it’s time for business owners and Directors to get a real hold on their accounts. Doing a little bit of housekeeping, preparation and getting your accounts in order will make doing your tax and filing your accounts a breeze. Saving you time and money in the long run.


Here is some guidance on your year end preparation from Xero


1. Decide on employee bonus payments

If you decide to reward your employees with bonuses, don’t forget about tax. Bonuses are subject to income tax – just like regular pay. If understandably you want to wait to pay the bonus after year end, simply accrue for the bonus and employers’ national insurance cost and reverse when payment is made. This ensures the cost is included within the correct financial year and lower your Corporation Tax Bill.


2. Protect your cash balance

Consider delaying payments to your suppliers by a few days to keep your cash balance high. Whilst the supplier liability will be recorded on your Balance Sheet a higher cash balance is still favourable and helps improve some of the ratios used by Credit Agencies.


3. Employee Expenses

Ensure all your employee expenses are processed before year end to include the cost in the correct tax year, and again, reduce your Corporation Tax Liability.


4. Review your control accounts – an easy exercise to miss

Review your PAYE, Pension, Wages, VAT control accounts, make sure that these reflect the true position of liabilities. Also check your accruals, prepayments, deferred income etc. If your Balance Sheet is not correct, the likelihood is that your Profit & Loss Account will be incorrect too!


5. Scrutinize your balance sheet and P&L report for what you did well – and what you didn’t

Use your accounting software to generate Balance sheet and Profit & Loss reports. Then identify what your business did well, and where there’s room for improvement next year.


6. Use your cash reports to understand how much cash you have on hand

Businesses live or die by their cash flow – it’s one of the biggest issues for small companies, so use your accounting software to generate your cash flow statement. Xero apps add-ons such as Float can help you manage your cash flow forecast easily if you prefer to look forward rather than back.


7. Estimate your potential Corporation Tax Liability

Too many business owners fail to accurately estimate their tax payments, we recommend to keep this money safe and in a separate bank account. By starting now you should have time to put the right amount of money aside. The current corporation tax rate is 19% of your net profit (with effect 1st April 2017) so estimate your corporation tax liability so that there are no surprises! There will be adjustments that your accountant will make as part of the end of year process, adjusting for Capital Allowances and Research & Development Tax credits but better to be prepared.


8. Confirm when your Corporation Tax is due for payment

Make sure you know when the Corporation Tax is due, 9 months after your year end.


9. Think about whether you’ll need to request a tax payment extension

HMRC will help you here. Talk to them and check out their website for information about how to apply. Do this as early as you can, because there are penalties for late payment.


10. Review insurance policies, cover and rates

Talk to your insurance company to see if they have any recommendations and talk to other insurers too, to ensure you have the best deal. Double check that you have all statutory and recommended insurance cover, professional indemnity, public liability, employers liability, Directors and Officers cover etc.


11. Arrange a meeting with your bookkeeper, accountant and/or financial advisor (that could be us!)

Each of these will have work to do for your business at year end. Talk to them, and make lists of tasks that they need to carry out which will help them focus on your business at this busy time of year.


12. Review your client list, and make sure all contact information is up-to-date

You can kill two birds with one stone here. Go through your contacts database and make sure everybody’s details are correct. While you’re doing this, send them an email thanking them for their business this year, they’ll remember you.


13. Review your goals for the year – and make some new ones for next year

Did you achieve everything you intended to last year? If so, great. If not, try to find out why. Making goals for the coming year can help keep you motivated as your business grows. Review them regularly to stay on track. We can help create a Budget that can be imported into Xero so you can compare monthly progress next year.


And that’s your year end accounts prepared!

If this seems daunting or time consuming, please give us a call. We will be happy to help and can even take this burden off your hands. Simply contact us here or call 01392 495483.

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Don’t miss out on your Annual Investment Allowance!

Make the most of your Annual Investment Allowance

Since it was introduced in 2008, the Annual Investment Allowance (AIA) has changed four times and is set to do so again on 1st January 2016 when its current limit of £500,000 will fall to £200,000, meaning the benefits for SMEs will be significantly reduced. Therefore, businesses need to act fast in order to take full advantage of the current Annual Investment Allowance.

What is the Annual Investment Allowance?

The AIA is a type of capital allowance that offers 100% tax relief on eligible plant and machinery up to a set limit for the year of expenditure. In simple terms, it means that businesses can deduct the cost of qualifying expenses from their taxable profits in order to pay less tax. It was introduced to support SMEs by encouraging qualifying capital expenditure in order to increase growth and productivity.

How will the change affect my business?

If your business’s accounting period runs into 2016, your AIA will be calculated on a pro rata basis. For example, if your business’s financial year started 1st April 2015 and ends 31st March 2016, then the first nine months will be subject to the current £500,000 entitlement, making a maximum allowance of £375,000 for the period 1st April 2015 to 31st December 2015. The three month period between 1st January 2016 and 31st March 2016, when the allowance is reduced to £200,000, will be prorated to £50,000. This means that by the end of the financial year in 2016, businesses will have a maximum AIA of £425,000 for that period. However, do take into consideration that only £50,000 will be eligible for the first three months of 2016.

With this in mind, any SMEs that have been looking to invest in qualifying assets are encouraged to expedite any purchases with delivery and payment prior to 31st December 2015 in order to fully benefit from their 2015 AIA entitlement.

Need some advice?  We would be more than happy to chat through your options so give us a call on 01392 927902 or contact us here.



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HOW TO: Add a Bank Rule in Xero


As expert financiers, we like to help you out wherever we can. From sharing information about accounting best practice, or hints and hacks for clearer financial planning, to active in-house financial planning.

As life gets busier, and you extend your business to incorporate new clients from further afield, many of us are dealing with transactions from across several platforms: cash, bank transfer, PayPal and others, to name a few. As such entering transactions into Xero can mean facing hours of returning to cross reference different input.

Many clients deal with cash transactions or don’t enter all transactions in Xero before importing bank statements. This is where Xero’s bank rule feature comes into its own. It provides a speedier and simpler way to merge imported bank statements, saving time.

Implementing bank rules allows you to delimit the conditions for each rule so as to ensure a match with your imported statement. Once you have imported a bank statement and then go to reconcile your account, your implemented rules will have effect and start running.

Our expert financiers have started this Xero tips  and are here to guide you through this process to help make your accounting easier. With this guideline you can aggregate transactions and implement deductions as part of Xero’s performance.

  • Go to Manage Account on the dashboard and click the tab named Bank Rules
  • Click on create rule
  • Select the option Spend Money
  • In the 1st column you will see ‘payee’. Select this option.
  •  In the 2nd column select ‘contains’ and in the 3rd column type in the name of the place name you want to add as a condition to this rule. (e.g SWFD, Costa Coffee)
  • Be sure that you select ‘any’ as opposed to ‘all’ at the top of bank rule screen
  • In the description, enter client meeting and create a code for entertainment (deductible) and put 50% in the percent box
  • Add a new line and repeat adding client meeting but this time code to entertainment (non-deductible) and again enter 50% in the percent box
  • Don’t forget to save what you have done by clicking the save button at the bottom of the screen

Sophisticated and advanced use of Xero allows you to take hold of you accounting. You can continue adding to this bank rule as required. This means that whenever more of these transactions are imported, Xero will do the split and implement the code automatically for you. You’ll just have to hit the OK button!


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How will the April 2016 dividend tax changes affect your business?


Most business owners of wholly owned limited companies find the most tax efficient way to earn money from their business is to take a salary up to the tax-free personal allowance and then top this up with dividends. This is because currently, the tax paid on dividends is less than the tax that would be paid if the contractor took all their earnings as a salary.

However, during the July budget, it was announced that the current dividend tax system will be changed to what the government believes is a simpler method. Whilst this may make it easier to calculate tax on dividends, the new system will dramatically increase the amount of tax most limited companies pay.

Why the change?

The idea behind this change is to simplify the way dividends are currently taxed, but the government also wants to remove some of the tax benefits of incorporating compared to being employed. The government estimates that the extra tax being paid will also provide £2.54bn for the financial year 2016-17 alone, which will go towards the deficit in public finances.

All in all, the outcome of this change is that for some small business owners it will be more financially beneficial to revert to being self-employed in order to pay less tax on earnings, and for others a higher salary may make more sense.

How are dividends currently taxed?

In the current financial year, a contractor of a limited company can earn a total of £42,385 before paying any tax. This is made up of the £10,600 personal allowance and up to £31,785 in gross dividends.

Gross dividends are calculated by multiplying the net dividends amount by 10/9 (this is because all dividends are paid after the company has already paid corporation tax, so dividend payments are subject to a tax credit of 10% to avoid paying tax on them twice). The final gross dividends amount is then taxed at 10% basic rate, 32.5% higher rate and 37.5% additional rate.

However, when the tax credit is taken into account, dividends falling into the basic rate incur no further tax, 25% tax is paid on dividends in the higher tax bracket and 30.5% is paid on dividends falling into the addition rate.

How will this change in April 2016?

From April 2016, the new tax-free personal allowance will be £11,000 and once this has been taken into account, all individuals will be able to earn £5,000 in dividends without having to pay any tax, meaning you can have maximum earnings of up to £16,000 before any dividend tax is due to be paid. It should be noted that this £5,000 dividend limit will form part of the £32,000 basic rate band and will not be in addition to the basic rate band.

Any dividends exceeding the £5,000 threshold will then be subject to tax within three new dividend tax bands:

  • 7.5% (basic rate)
  • 32.5% (higher rate)
  • 38.1% (additional rate)

What can we do now?

If your Company has enough distributable profits, it may be more beneficial to take a higher dividend this year, and lower dividend next year. Be aware of the previously mentioned thresholds and if there is not the cash available, the Directors Loan Account can be used to offset the cash at a future date.

If you are in the position of outstanding Directors’ loans owing to you, it is likely to be more beneficial to take a dividend this year, with loan repayments deferred until next year.



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