Payroll for small business

Posted by admin on May 09, 2014 in Accountancy Tips, Tax

Payroll for small business is the focus. In the UK, Real time information (RTI) has changed payroll operation. Here are some of the features of RTI and payroll in the UK.

Payslips: These are printed to and give the employee an account of Gross pay, PAYE, and National insurance deductions, plus the employers national insurance contribution.
PAYE : Pay as you earn is tax deducted at source from employees salary

NIC Employee: National insurance contributions deducted from employees gross salary

NIC Employer: This is national insurance contributions paid by the employer on top of the employees gross salary. This extra cost is often classified as social security costs in the accounts.

Pension contributions: pensions are are a deductible expense for employees subject to the limitations set out in the relevant legislation.

RTI: payroll information is communicated to HMRC under the Real Time Information system. A filing must be made whenever employees are paid.

FPS: A Full payment submission is filed whenever a payment is made to the employees.

Year End FPS: After the last payment for a financial year is made, a year end FPS is filed,a final FPS is required even when no payments are made.

EPS: Once a month, an EPS is file where there is a need to inform HMRC about recoverable statutory payments such as SMP ,SSP, ASPP, OSPP, SAP.

Year end EPS: This is run when the timing of the final fps is uncertain.

NVR: The national insurance number verification request is sent to HMRC when you wish to verify that you have the right national insurance number(NINO) for an employee.

EYU: This is an earlier year update filing used to make corrections for filings from an earlier financial year.

P60 : The p60 is a certificate stating the employees Gross salary received, PAYE and NIC deducted, plus the NIC contribution paid by the employer on their income.

Their are a number of statutory payments, relevant when dealing with payroll for small business in the UK, these are:
SMP :Statutory maternity pay, this is payable to new mothers who take maternity leave.

SSP: Statutory sick pay is paid to employees who are unable to work due to illness.

OSPP: Ordinary Statutory paternity pay is paid to new fathers who take paternity leave to help with baby care.

ASPP: Additional Statutory paternity pay is paid is paid to fathers who take extended leave to look after newborn infants. The man wife should have come off maternity leave for a valid claim to be made

SAP: Statutory Adoption pay is paid to a employee taking time off to look after a newly adopted minor.

The statutory payments, SMP, SSP, OSPP, ASPP, SAP can be recovered against payments for Employers NIC contributions by the employer.

Payroll for small business in the UK can be challenging, should you require assistance with your payroll, we are here to help at north london #accountancy Ltd

Break even analysis for small businesses

Posted by admin on September 19, 2013 in Accountancy Tips

Break even analysis involves determining the number of sales your business must achieve to be profitable . Commercial businesses are run to make a profit. Therefore , it makes sense to check to see that your business is engaged in profitable activity.  It is easier to sell under priced goods or services because they are cheaper than properly priced goods. Yet, if your business continues to do so particularly if you are unaware of the accruing  losses , the impact on cash flow mind lead to business failure.

There are precursors  to a valid break even analysis. You should have  a well thought out , detailed and numerical business projection for the year ahead. Naturally, this would have been prepared using known product prices and business costs. The figures determined from this projection can now be utilised in the break even analysis.

At its most basic, with a single product/service business,  a break even analysis consists of dividing the total projected costs , by the price of the item sold.  This yields the number of items that must be sold at that price to cover the costs.

With your break even analysis done, you should know how to price your goods or services, and what level of sales you have to achieve by the year end. There are other aspects of break even analysis that will be beneficial to the small business in North London , the UK, or else where.

For most businesses, the process will clearly be more complicated than has been described in this short article, and here at North London Accountancy , We would be delighted to assist you with break even analysis for your business. To re cap, two of the benefits of Break even analysis are:

Determine correct pricing of goods and services

Determine required sales for a financial period at the determined product/services price.

 

Cash accounting for small businesses

Posted by admin on June 27, 2013 in Accountancy Tips

For small a businesses, cash accounting is a useful way of easing VAT issues Generally accepted accountancy practice is that accounts are prepared to the accruals concept, which requires that expenditure be charged to the financial period it was paid for. So for example , If on the last day of your current  financial year, ended say 31st July 2013, you paid £500 to cover Business rates for the next month, August 2013,  that is the first month of the next financial year,  that £500 would be charged in the year ended 31st July 2014.

However, under cash accounting, the output VAT on sales is reported on a VAT return only when you have been paid. Input VAT is similarly reported on your VAT return after you have paid for the item. Cash account is great for your cash flow where you give generous credit terms, suffer regular bad debts.

The financial accounts of the entity using cash accounting have to be prepared on the accrual basis. As a result, your accountant will need to make an adjustment to reconcile between the cash basis VAT and the accruals based financial statements.

Feel free to call us and have a chat about cash accounting for your business.

 

 

Book keeping for beginners

Posted by admin on June 26, 2013 in Accountancy Tips

Most business owners start out as beginners to book keeping. Being an entrepreneur is not the same as being a book keeper, they are fundamentally different aspects of running  a business. Never the less , it is very important that the business owner understands book keeping and has a decent understanding of what the accounts mean and the process off collating the business data , recording the business data, and  preserving  the data.  laws like the companies act and the several income tax acts impose a legal obligation on all business owners to maintain and retain  adequate business records, sufficient to readily answer questions on any of their transactions. Yes you’ve got to ask for and retain receipts, but its more than that.

You should learn the basics of double entry book keeping, so you should get to know your debits from your credits. This is important as it will give you tools to build an understanding of how simple and complex business transactions are recorded.  As a small business owner, you will often need to go to your records and answer queries from interested third parties such as banks, HMRC,  suppliers and  customers, and they will expect you to respond in an accurate and timely manner. So , it will be critical that you have recorded or had recorded,  the relevant transactions accurately, retained the said records, and are able to interpret what you are viewing , correctly.

Its beyond the scope of this short article to instruct on basic book keeping, however one can point out some straightforward routes. For starters, you could walk into a size able book shop, and ask for beginners level textbooks on book keeping , if you know a book shop in an academic or financial district, you might get book sellers with good knowledge of these text books to help you

Another path is to look up short courses, and register for an instructor led beginners book keeping course. Book keeping courses tend to be very practical and very often, your instructors will be practising professional book keepers, who will show you how to handle several real life situations.

Ultimately, your main focus must be on running your business, however it is imperative that you understand your financial records. You will probably get a book keeper to maintain your books as your, business progresses, but with a solid knowledge of what those records contain, you should be in a stronger business position.

Here at North London Accountancy , we do offer a book keeping service and welcome inquire about our services.

 

 

 

Regular book keeping

Posted by admin on June 23, 2013 in Accountancy Tips

Regular book keeping is important to the financial health of your business. Helps to highlight profit making activity, loses and VAT issues early.

For the small business owner, it can often be tempting to just get on with making money and running your business day to day.  However, its always going to be a good idea to keeping an eye on your figures and keep your business accounts up to date  at all times. In this brief piece we will briefly look at a few of the reasons why.

Business Profitability: You are trading , selling products and services, paying for supplies, giving and receiving credit terms, taking business load , long or short term, question is are you actually making a profit?  Regular book keeping is great way measuring this.

VAT  registered business: If you  are VAT registered , you do need properly written up records to fill out your VAT returns , probably on a quarterly basis. If your VAT returns are late, the penalties can be severe.

Businesses currently Below the VAT Threshold: For businesses doing well but apparently below the VAT threshold, are you aware that you need to check your last 12 months turnover against the existing threshold on a rolling basis.  That’s only possible if you keep regular accounts.

Capturing expenses: If you wait till the year end to do your accounts , it often turns out that you cannot recall everything that’s happened and may have lost receipts or never obtained them in the first case, so maintaining regular accounts , perhaps weekly or monthly would help you in this regard.

This accountancy practice in based in North Finchley, In North London would be able to offer our services to assist you in maintaining your accounts throughout the year and welcome inquiries from businesses in North London and the Greater London area.

June 2013

 

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