accountants are now seen as the most trusted source of business advice

for UK firms, we consider why you should have an accountant and how to choose one.

A qualified accountant is an experienced professional and will be able to act as your finance specialist allowing you to concentrate on spending your time running the business.  From a business perspective they can assist in making the most of the information you have whether interpreting existing information or planning where to go next.  They will also be able to make efficient use of your resources so that you do not end up with a bookkeeper doing lots of work to complete VAT Returns yet miss out on the advantages of producing meaningful management accounts for little extra effort.

Due to the number of businesses that accountants come across whether clients or trade contacts, they are also sources of information on company structuring, personnel matters and financial implications of contracts.  They may well also be able to help you find business services from recommended suppliers.

However the bread and butter of the accountants work is tied up in compliance services for businesses and individuals to comply with government tax rules and cover:

• Preparation of accounts
• Preparation of corporation tax or partnership tax returns
• Individuals tax returns
• Payroll services
• Bookkeeping and VAT services
• Dealing with HMRC investigations
• Company formation

Larger and more specialist firms may also be able to deal with

• Auditing
• Specialist tax planning
• Advising on tax treatment in specific areas (eg VAT and property)

How do you set about choosing an accountant?

This decision is a matter of your personal requirements, one of the best ways is by recommendation but you do need to make sure you are fit into the same category as the person who has recommended, the service may be great for them, but not so good for you.  You should always have a meeting or speak on the phone to see if you get on from a business footing, as mentioned earlier there must be a level of trust between adviser and client.  Other areas you can look at and consider are:

• How proactive are they?
• How do they communicate (face to face, telephone, email)?
• What do other clients say about them?
• What do the testimonials on their website  say?
• Do they have newsletters/blogs or information sheets to help out?

The choice is largely personal as I was reminded at a recent event , “people employ people” not businesses.  Whatever choice you make I hope it serves the purpose you want it for.

Alastair Wood – AW Accounting “the accountant who speaks your language”

1. Small claims can be made on line using HM Court Service website, moneyclaim.gov.uk.  There is useful guidance on the HMCS website.
2. There is an excellent flowchart on p11 of the HMCS Guide for debt recovery for Small Businesses
3. Once Judgement has been registered by the court the customer is obliged to pay you, however this is where so many businesses stall and where The Sheriffs Office can come in useful, the following is the process as shown on their website:

If you have a County Court Judgment or Order over £600 (including court costs) or a High Court Judgment or Order up to 6 years old then you have come to the right place. For a court fee of just £50, we will ‘transfer-up’ your judgment to the High Court for Enforcement free of charge.
Our Nationwide team of experienced High Court Enforcement Officers offer the highest collection rates in the country which are monitored by the Ministry of Justice. In 2008 we averaged 96p in £1 on enforceable debts.

Unlike others, we do not send letters warning of our intended visit. A warning often prompts the defendant to abscond or hide/sell any assets they may have.

Our first point of contact is a prompt visit by our High Court Enforcement Officers to the defendant’s premises to seize goods, chattels and other property. These can be removed and sold at auction if the defendant fails to pay the sums due. Our extensive powers include the ability to force entry to commercial premises (including shops, warehouses and barns) for the purposes of this seizure.

We are to collect the judgment amount, your court costs, your ‘transfer-up’ fee, interest at 8% and our fees, costs and charges from the defendant. We do not take a percentage of the money that you’re owed as many debt collectors do.

Unlike many of our competitors, all of our High Court Enforcement Officers carry portable Credit/Debit Card Machines allowing easy secure Chip and PIN payment by the defendant. At present, this accounts for 70% all of all payments collected.

We will keep you updated at every stage of the enforcement process, requesting your further instructions if necessary.

Thanks go to the Sheriffs Office for allowing us to use this information, and we hope that this will help you to collect outstanding debts but accept no responsibility if the action is unsuccessful.  Alastair Wood, AW Accounting  – Accountants who “speak your language”

1. Is the shareholding in the company arranged in the most tax efficient way? A gift between husband and wife is tax free, but should not be done regularly as it may be treated as a right to income
2. If available have the maximum dividends been declared to make full use of the shareholders personal allowance and basic rate tax band (and minimise and higher rate tax if applicable).  If not now is the time to look at it not on 31 March!
3. If no directors remuneration has been paid for a cash poor new business consider running the payroll as this will have 3 advantages:
   1. If paying above ~£475 per month the full years NI contribution will count
   2. Even if there is no cash available, this becomes due tax free to the director when there is cash
   3. This is a taxable expense and even if there is no corporation tax saving this year, a loss can be set against future years profits
   4. If the company did not trade immediately after incorporation, consider extending the year end at Companies House so you can easily compare the first year to subsequent months. This will also delay the date corporation tax is due.

Time is short, make the most of the tax opportunities you have.  Alastair Wood, AW Accounting  – Accountants who “speak your language”

Registering for the scheme

You have to decide which sector is closest to the business you are in, if you operate in more than one sector you must register in the one which is the largest part of your business.  One of the benefits if you register within a year of registering for VAT is that you qualify for a 1% discount in the rate for the first year in the flat rate scheme.  There is a registration form which you can fill in either when you first register for VAT or at a later date.  From the date you are registered you should start to use the flat rate scheme.

Changes and unusual circumstances

If your business type changes you will need to advise HMRC, if it is just a different part of your trade becoming greater you should change from the anniversary of registration, but if one ceases you should change the rate from the date that the trade ceased.  In any event you will have to inform HMRC.  If HMRC change the rate for your sector you should change the rate from the date they specify.

If you purchase an asset or a number of assets from the same supplier for more than £2000 you can claim the VAT on these as a separate item as these are not accounted for in the scheme.

Leaving the scheme

While you can opt in to the scheme when turnover is less than £150k you do not have to opt out until your turnover is over £225k

Areas to consider before registering

The benefits of the scheme are probably most relevant to small businesses who want simple bookkeeping, you do not have to record VAT on every sale or purchase, there are fewer rules to know and follow which means you will make fewer mistakes.  You will also know exactly what percentage of your turnover you will have to pay out.  You should not register if you do not fit the normal profile of a business in your sector as you may pay more VAT than necessary.  The best advice is to check how much VAT would have been due under the flat rate scheme and compare that to the calculated VAT using the normal method.  Remember you have a year from VAT registration to benefit from the 1% discount.

The details above are an overview only and may not include all of the issues you need to consider and you should seek professional advice or refer to HMRC website which is appropriate to your situation before taking any action.

Alastair Wood, AW Accounting  – Accountants who “speak your language”