T: 01949 876098 option 2 / 07780441873   E: sue@cactusbookkeeping.uk

Increase of National Minimum Wage & National Living Wage Rates

Increase of National Minimum Wage & National Living Wage Rates

National Minimum Wage & National Living Wage Rates – 1st April 2021

 The rates change on 1st April each year and the hourly rate for the minimum wage depends on your age and whether you are an apprentice.

You must be at least:

  • school leaving age to get the National Minimum Wage
  • aged 23 to get the National Living Wage – the minimum wage will still apply for workers aged 22 and under

The National Living Wage has been extended from those aged 25+ to employees aged 23+.

✻ Aged 23 and over will receive 2.2% rise to £8.91 per hour

✻ Those aged 21 to 22 will receive a 2% rise to £8.36 per hour

✻ Those aged 18 to 20 will receive a 1.7% rise to £6.56 per hour

✻ Under 18’s will receive a 1.5% increase to £4.62 per hour

✻ Apprentices will receive a 3.6% rise to £4.30 per hour**

 

** Apprentices are entitled to the apprentice rate if they are:

  • aged under 19
  • aged 19 or over and in the first year of their apprenticeship
  • Example – An apprentice aged 21 in the first year of their apprenticeship is entitled to a minimum hourly rate of £4.30.

 

Apprentices are entitled to the minimum wage for their age if they both:

  • are aged 19 or over
  • have completed the first year of their apprenticeship
  • Example – An apprentice aged 21 who has completed the first year of their apprenticeship is entitled to a minimum hourly rate of £8.36.

 

If you require any further assistance with regard to NMW and/or NLW please get in touch via https://www.cactusbookkeeping.uk/contact-us/

Accounting Jargon – What does it all Mean? Part Two

Accounting Jargon – What does it all Mean? Part Two

In the second part of the Accounting Jargon Blog we look at the Balance Sheet and Profit & Loss Statement

 

ASSETS
An asset is an item owned by the business for use within the business (e.g. machinery) or something which can easily be turned into cash (e.g. stock or accounts receivable).  Assets appear on the Balance Sheet.

Fixed Assets
These are assets owned by the business which will be held in the business or a long time, including property, machinery and other equipment.  Fixed Assets appear on the Balance Sheet.

Current Assets
These are assets of the business which will change in value or be used up within the space of a year.  These include, cash, accounts receivable and stock.

 

LIABILITIES
This is a debt, person or bill which you need to repay.  Liabilities appear on the Balance Sheet.

Long Term Liabilities
These are expected to be paid over a period longer than 12 months such as a bank loan or mortgage

Current Liabilities
These are liabilities which will change in value or be paid off within the next year, including supplier payments, wages, taxes and short-term debts such as overdrafts.

 

Equity
This is the value of the owners’ investment in the business or the difference between a businesses’ assets and liabilities.


 

Balance Sheet
This is a financial statement which shows what the business owes, what it owns and how it has been funded at a set point in time.  A Balance Sheet is called this because it’s driven by a formula which needs to balance:

Equity = Assets – Liabilities

 

Profit & Loss Report
This report shows you the business’s income, expenditure and profit.  It can run for any period to compare sales, costs and profits from month to month and year to year.


 

I hope this has helped to demystify some of the accounting jargon you will come across, however if you need further help and assistance please do not hesitate to contact me via https://www.cactusbookkeeping.uk/contact-us/

 

Accounting Jargon – What does it all Mean? Part Two

Accounting Jargon – What does it all Mean?

Starting your own business can be daunting enough, on top of this you need to get your head around a whole new language “Accounting Jargon”.  Assets, liabilities, accruals, overheads, costs of sales; the list goes on and on.  So where to start?

For me the first thing is to think about the ins and outs of your bank account. Money into the bank is a Debit and money out of the bank is a Credit.

This now leads us onto Customers and Suppliers.



Customers & Suppliers


Customers
– owe you money and pay this into your bank account – they are a Debtor

Reports to show what your customers owe you:

❊ Aged Debtors Report

❊ Aged Receivable Deport

❊ Accounts Receivable Report

 

Suppliers – you owe them money and pay this out of your bank account – they are a Creditor

Reports to show what you owe your suppliers:

❊ Aged Creditors Report

❊ Aged Payable Report

❊ Accounts Payable Report



Income & Profit


Sales – aka Revenue / Turnover
Sales income before expenses or taxes

Gross Profit = Sales – Cost of Sales
This is the profit made on your sales once you have deducted the costs directly involved in making the product or services available for sale.

Cost of Sale
This is the costs of expenditure directly linked to producing the goods or services that you sell.  It includes costs of the product(s) you sell, manufacturing costs and the costs of hiring people to deliver your services.  It does not include overheads.

Overheads
The costs of running the business which are not directly related to the product or service you sell.  Costs you need to pay to keep the business running, including the costs for rent, power, marketing, administrative costs and costs of management staff.

Net Profit = Sales – Costs of Sales – Overheads
This is the profit made after deducting all the expenses incurred.

Gross Profit Margin = Gross Profit / Sales x 100%
Gross Profit Margin is Gross Profit expressed as a percentage of sales.  You can monitor your gross profit margin against budget figures, previous periods or against the gross profit margin of other products or services you sell.

Net Profit Margin = Net Profit / Sales x 100%
This is net profit expressed as a percentage of sales.

 

I hope this has helped to demystify some of the accounting jargon you will come across.  Check back for Part 2 which will cover assets, liabilities, profit & loss and the balance sheet.

 

In the meantime if you require help and assistance please do not hesitate to contact me via https://www.cactusbookkeeping.uk/contact-us/

 

 

Paying your deferred VAT

Paying your deferred VAT

Businesses who deferred their VAT payment which was due to be paid between 20 March and 30 June 2020 now have 3 options for payment:

  1. You can pay the deferred amount in full by 31 March 2021
  2. You can opt-in to the VAT deferral payment scheme which launches early 2021
  3. You can contact HMRC for additional time to pay

If you choose Option 1 you need to make the payment by 31st March 2021, there is no need to contact HMRC.

If you choose Option 2 you can make between 2 and 11 monthly instalments interest free, with the final payment being made by 31 March 2022.

To use this scheme you must:

  • still have deferred VAT to pay
  • be up to date with your VAT returns
  • opt in before the end of March 2021
  • pay the first instalment when you opt in

This scheme will open early in 2021 and you must opt-in to it before the end of March 2021.

You will be able to apply for this scheme through your business Government Gateway tax account as your VAT agent will not be able to do it for you.

Get ready to opt in to the new payment scheme

Before opting in you must:

  • create your own Government Gateway account if you don’t already have one
  • submit any outstanding VAT returns from the last 4 years. You will not be able to join the scheme if you have not done so
  • correct errors on your VAT returns as soon as possible
  • make sure you know how much you owe, including the amount you originally deferred and how much you may have already paid

You should also:

  • pay what you can as soon as possible to allow us to show the correct deferred VAT balance
  • consider the number of equal instalments you’ll need, from 2 to 11 months

For further information click here to visit HMRC

Accountant v Bookkeeper

Accountant v Bookkeeper

In the accounting world Bookkeepers and Accountants are to some extent intertwined as bookkeeping is part of accounting.  Bookkeeping (keeping books) is the first step of the accounting process, an accountant will complete the process by analysing the information prepared by the bookkeeper.

What will a Bookkeeper do for my Business?

Bookkeepers play a vital role in the efficient running of a business, keeping an accurate and complete record of the financial transactions of the business and help maintain compliance.

By nature, most businesses generate a whole lot of paperwork, such as purchase invoices, receipts and expense claims.  A bookkeeper will transform that bundle of paperwork into something orderly and accurate that will reflect the current position of the business.  They will help keep the business running smoothly by maintaining a general ledger, paying supplier bills, credit control your customers, undertake bank reconciliation, record inventory and complete VAT returns and payroll.

Depending on the business requirements, bookkeeping can be undertaken more regularly on a weekly, fortnightly or monthly basis.  Completing the paperwork more regularly will allow the bookkeeper to provide more up to date information on the current position of the business.

What will an Accountant do for my Business?

Accountants look at the big picture, they will use the financial information prepared by the bookkeeper and provide insights and financial advice based on that information.

Accountants have an in-depth understanding of the taxation system and requirements.  They will perform audits, prepare tax returns, financial forecasting, and tax filing.

Depending on the business an accountant will generally work less frequently on the business accounts.  Accountants may only look at the business books once a year when completing the annual accounts or they may work on quarterly vat returns or when dealing with cash flow forecasting.

The following table provides a comparison of some of the services offered but is in no way a definitive list and bookkeeper/accountant services may vary.

Bookkeeper Accountant
Process invoices, receipts, payments Prepare adjusting entries
Produce sales invoices & credit control Prepare financial statements
Bank transactions & reconciliation Tax returns & filing
Maintain and balance ledgers Management reporting
VAT Returns Financial analysis and strategy
Payroll Tax advice and planning
Cash Flow & Reporting Auditing

Does a business need a bookkeeper and an accountant?

This will depend on the preference of the business owner and the size and complexity of the business itself.

A bookkeeper will keep a business well organised and help with the cash flow of the business by getting invoices out on time, tracking payment and paying bills and maintaining compliance.

An accountant will ensure that the business meets its tax obligations and assist the business with financial management to help drive it forward.

Both bookkeepers and accountants have their place in any business which is why so many businesses rely on both.