Guide to record keeping for new businesses

Guide to record keeping for new businesses

Jul 16, 2024 | All Categories, Bookkeeping

Guide to record keeping for new businesses

Desk with writing pad, pencil with the words record keeping

Guide to Record Keeping for New Businesses

Whether you have been planning this for a while or your hobby has become your business (remember, any income more than £1,000 per tax year must be declared and may be taxable), you’ve taken the leap, and your passion has become your sole focus in setting up your business.

But if there’s one thing you can’t afford to ignore, its good record keeping. It might sound boring, but trust me, it’s super important.

Why Record Keeping Matters

  • Financial Management
  • Legal Compliance
  • Tax Preparation
  • Performance Monitoring

Key Records to Maintain

Money Matters: Keep all your invoices, receipts, bank statements, payroll records, and tax documents.

Customer and Supplier Details: Maintain a database of your customers and suppliers, including their contact info and transaction history. This can help with marketing and managing relationships.

Legal Stuff: Keep copies of your business registration, licenses, permits, tax filings, and any contracts. These are crucial for compliance and if any legal issues pop up.

Employee Info: Store employment contracts, performance reviews, payroll details, and tax forms. This is important for legal reasons and managing your team.

How to Keep Track of it All

My advice, no matter the size of your business (this includes sole traders), is to make use of technology and apps to your advantage with cloud accounting software. Using software will enable you to keep most of your business paperwork in one place. For other documents such as leases, licenses, etc., sign up for cloud storage to keep them all together, password and encryption protected.

My Top Tips

  • Before considering software, speak to other business owners you know to see what they are using and the benefits it offers.
  • Contact a qualified bookkeeper, have a chat about your business, and ask for recommendations.
  • Don’t put it off – start as soon as you make your first purchase; it doesn’t take long to accrue a mountain of paperwork.
  • If this side of running your business is not for you, contact a qualified bookkeeper and have a chat about outsourcing.

So, take a deep breath, get organised, and you’ll thank yourself later!

 

 

Book a discovery call

ABOUT SUE

Sue Haynes is the founder of Cactus Bookkeeping and helps business owners
with all aspects of Bookkeeping to save them time so they can concentrate on running their
business. Sue is licensed, regulated and supported by the Institute of Certified Bookkeepers (ICB)

Book a discovery call

 

 

 

Why every business needs to obtain an invoice or receipt for their purchases

Why every business needs to obtain an invoice or receipt for their purchases

Jun 13, 2024 | All Categories, Bookkeeping

Why every business needs to obtain an invoice or receipt for their purchases

A pile of invoices

No matter what your business structure (yes, this includes sole traders), it’s essential to have a record of all your business purchases. You only have to ask my clients to know I chase them all the time to make sure we have a receipt for every one of their purchases.

I know it’s easy to forget to ask for a receipt when you are in a rush, but no receipt will have an impact on your business accounts, whether you are VAT registered or not. Here’s why:

Financial Management and Budgeting

Invoices and receipts provide a clear record of your expenditure and what specifically has been purchased, including the VAT element of the items. By having these documents, you can:

  • Track spending
  • Monitor cash flow
  • Analyse your expenditure to help you budget better

VAT Compliance and Deductions

Having an accurate record of all your expenditure is vital for tax compliance. If you are VAT registered, the invoice/receipt will identify the correct VAT amount where applicable, ensuring your VAT return is accurate (we don’t want to be over or under-claiming). Having detailed receipts and invoices will also ensure you and your business don’t miss any deductible expenses, helping to reduce your tax liability.

Efficiency

Keeping track of your purchases can help make your business more efficient:

  • Track your purchases, making it easier to manage your stock levels
  • Monitor suppliers based on their delivery times, quality, and pricing
  • Accurate records help with financial forecasting

In summary, those pieces of paper are vital to your business in so many ways, and it’s your responsibility to ensure you receive an invoice/receipt for each of your purchases.

If you are overrun with paperwork and need help to make sense of it all, book a discovery call to see how I can help.

 

Book a discovery call

ABOUT SUE

Sue Haynes is the founder of Cactus Bookkeeping and helps business owners
with all aspects of Bookkeeping to save them time so they can concentrate on running their
business. Sue is licensed, regulated and supported by the Institute of Certified Bookkeepers (ICB)

Book a discovery call

 

 

 

Minimum Wage, Statutory Pay and Deduction Thresholds 2024-25

Minimum Wage, Statutory Pay and Deduction Thresholds 2024-25

Mar 18, 2024 | National Minimum Wage, Payroll

Minimum Wage, Statutory Pay and Deduction Thresholds 2024-25

Picture of graph called payroll with a magnifying glass

Minimum wage rates change on 1st April each year so it’s vitally important you are aware of the new rates and ensure you have checked your payroll software is up to date to ensure wages are calculated using the correct rates.

The hourly rate for the minimum wage depends on age and whether you are an apprentice. You must be at least:

  • school leaving age to get the National Minimum Wage
  • From 1 April 2024, workers aged 21 and over will be entitled to the National Living Wage – the minimum wage apply for workers aged 20 and under

Minimum Wage

Rate from 1 April 2023 Rate from 1 April 2024 Increase
National Living Wage (NLW)
for workers 21 and over		 £10.42 £11.44 9.8%
18-20 year old rate (NMW) £7.49 £8.60 14.8%
16-17 year old rate (NMW) £5.28 £6.40 21.2%
Apprentice rate £5.28 £6.40 21.2%

 

 Personal Allowance & Income Tax

The amount of Income Tax you need to deduct from your employees’ wages depends on how much they earn and how much of their taxable income is above their personal allowance and which tax band it falls into.

  • Personal Allowance: 0% tax on earning up to £12,570.
  • The standard tax code is 1257L.
  • 20% tax is due on earnings between £12,571 and £50,270.
  • 40% tax is due on earnings between £50,271 and £125,140.
  • 45% tax is due on earnings more than £125,140.

Emergency tax codes from 6th April 2024 are as follows:

  • 1257L W1
  • 1257L M1
  • 1257L X

Statutory Pay Rates

From 6th April 2024 Statutory Sick Pay (SSP) is £116.75 per week, with the amount due based on the number of working days in the week.

From 7th April 2024 the following statutory payments increase to £184.01 per week or 90% of average weekly earnings (AWE), whichever is the lower:

  • Statutory Maternity/Adoption Pay – eligible employees will receive up to 39 weeks of SMP/SAP at 90% of their average weekly earnings before tax – for the first 6 weeks of their leave, followed by £184.03 or 90% of their average weekly earnings (whichever is lower) – for the remaining 33 weeks of their leave.
  • Statutory Paternity Pay
  • Statutory Shared Parental Pay
  • Statutory Adoption Pay
  • Statutory Bereavement Pay

For further information about payroll rates for 2024-2025 visit the government website

National Minimum Wage and National Living Wage rates – GOV.UK (www.gov.uk)

Running your own payroll can be tricky, especially as you have to be sure you’re paying both your employees and HMRC the correct amount. If you’re worried about running payroll, why not outsource? We can take the stress away of payment deadlines and you can be sure you’re paying both your employees and HMRC correctly.

 

 

Book a discovery call

ABOUT SUE

Sue Haynes is the founder of Cactus Bookkeeping and helps business owners
with all aspects of Bookkeeping to save them time so they can concentrate on running their
business. Sue is licensed, regulated and supported by the Institute of Certified Bookkeepers (ICB)

Book a discovery call

 

 

 

The benefits of outsourcing your payroll

The benefits of outsourcing your payroll

Jan 1, 2024 | Bookkeeping, Payroll

The benefits of outsourcing your payroll

payslips with coins and notes

Running your own payroll? How confident are you that you have a handle on everything?

Now don’t get me wrong there is some great payroll software out there, 𝘽𝙐𝙏 would you recognise if something didn’t quite look right and know how to check it? It only takes one small mistake to drastically alter the outcome of someone’s wages.

No matter what your payroll frequency, there is a lot you need to consider.

  • Checking for any tax code notifications.
  • Check your employees are being paid the correct amount, not only for the work they have done but also for their age.
  • Should any employees be in an auto enrolment pension scheme?
  • Do you have an apprentice, their pay can be quite confusing, because the minimum apprenticeship wage is linked to their age and how long they have been an apprentice.
  • Correctly calculating their starting / leaving pay.
  • Calculate and record holiday entitlement.
  • Understanding when to use a P45 or P46.
  • And that is before you factor in statutory pay and leave payments, which to be honest, can get complicated.

Having done payroll for several years I know it doesn’t take much for even the most straight forward payroll to get a little complicated, especially if we have to start considering SSP, SMP or pension schemes!!

Your software is only as good as the information entered into it. I’m sure no one wants to end up inadvertently paying their employees incorrectly. If you’ve been struggling and unsure of anything payroll related, have you ever thought of outsourcing? Yes, there is a cost to outsourcing but what about the benefits?

  • Time – have you ever worked out how much of your time is spent on payroll? Remember, your time is not free, could your time be better spent on your business, or would it offer you a little timeout?
  • Stress – I do payroll for a living and sometimes even I get stressed, what about you? Dealing with HMRC whether it be tax or payroll can be stressful, it doesn’t have to be.
  • Money – late payments, auto-enrolment failures, minimum wage non-compliance can all incur fines, but this can be avoided.

Outsourcing means you no longer have to worry about getting it right. A qualified payroll professional will ensure your payroll is processed correctly based on the information provided. They will take care of pay rate increases, pension opt in/opt out, statutory payments, holiday entitlement and act as your payroll agent with HMRC. This all helps to reduce the risk of errors and ensure compliance.

If this all sounds like a huge sigh of relief and you want to find out more, please get in touch.

 

 

Book a discovery call

ABOUT SUE

Sue Haynes is the founder of Cactus Bookkeeping and helps business owners
with all aspects of Bookkeeping to save them time so they can concentrate on running their
business. Sue is licensed, regulated and supported by the Institute of Certified Bookkeepers (ICB)

Book a discovery call

 

 

 

Holding a Staff Party – A guide to HMRC rules

Holding a Staff Party – A guide to HMRC rules

Nov 27, 2023 | Bookkeeping, VAT

Holding a Staff Party – A guide to HMRC rules

hand holding a selection of coins

Party season is here, dig out the party outfit and get those dancing shoes on.

It’s time to get our heads around HMRC rules, to avoid being hit with an unexpected tax bill, and ensure we stay compliant.

To qualify for tax exemption the event must meet specific conditions:

❄️ it should be an annual occurrence

❄️ be open to all employees

❄️ the cost should not exceed £150.00 per head (including VAT), this should cover the total costs of the event from start to finish, and include venue hire, food, drink,  entertainment and accommodation.

Note client entertainment is not generally an allowable expense.  If your party has clients and employees attending, only claim for the amount spent on your employees.

Do you host multiple events a year?

If you host multiple annual events, the total cost per head for all events in a given tax year must be combined.  If the combined cost exceeds the limit, even by 1 penny, the exemption will not apply, and the total amount becomes subject to tax.

Do you have separate locations and departments?

If your business has more than one location, an annual event that’s open to all your staff based at one location still counts as exempt. You can also put on separate parties for different departments if all your employees can attend one of them.

Record Keeping

Thorough record-keeping should be kept for HMRC compliance.  You should retain invoices, receipts, and a list of attendees for each even to support any claims for exemptions.

As your business plans for social functions and parties, it’s crucial to be mindful of HMRC rules to void unexpected tax liabilities.

 

Book a discovery call

ABOUT SUE

Sue Haynes is the founder of Cactus Bookkeeping and helps business owners
with all aspects of Bookkeeping to save them time so they can concentrate on running their
business. Sue is licensed, regulated and supported by the Institute of Certified Bookkeepers (ICB)

Book a discovery call