A survey by the business accounting firm Tallia reported that 90% of accountants said that their clients want to be able to manage accounting through the internet by 2008.

Online accounting has many advantages and these include the fact that accountants are able to view the cash books in real time and provide crucial advice to the business owners. Also it simplifies things for entrepreneurs as they donít have to spend so much of time saving and updating their accounting books.

Specialized accounting and cash flow solutions for small business and start-up business, like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer-, Professional-, Personal businesses, allow the employers and employees time to focus on core productive activities rather than spend it maintaining accounts and on financial management.

The Tallia research also indicated that a third of small businesses think that they invest too much of time on cash flow, credit control and other activities related to financial management.

Another crucial point that the study revealed was that online accounting would eliminate the export and import of data to the accountant, a process that many small businesses find baffling.

“The fact that data is offsite, safe and secure is one of the main benefits of managing your accounts online, but it also means that you can work from anywhere or at any time,” commented Michael Turner, general manager Tallia on the advantage of online accounting for small firms.

They must have been reading my blog or been on our website …. sorry could not stop myself! I wish more accountants would act on this, rather then be sitting on the proverbial fence.

Hat-tip to GrowingBusiness.co.uk

In one word cash-flow - not because of their balance sheet or P&L - no plain and simple they run out of money. With basic cash-flow planning you can see this coming a mile of, one example.

One of the most frustrating parts about being an entrepreneur is getting clients to pay up their bills. While the government passed the Late Payment of Commercial Debts (Interest) Act 1998 to protect the rights of businesses, not many businesses actually use it.

Small business, like home-, micro-, lifestyle-, mobile-, SME-, SMB-, SOHO-businesses are losing out due to the chaos created in their cash-flow but also on precious funds that they could have charged clients for late payment.

In a recent survey by Gravdon U.K. it was revealed that as few as 4% of businesses charge interest on late payments. 44% reported adding interest to outstanding invoices and 50% did not charge any interest.

There are several reasons why small businesses choose not to charge interest and these include adding more administrative work to follow through on and losing clients.

While this trend of late payments is not expected to change anytime soon, small business need to protect their cash-flow and there are several ways to do so. To ensure that the business owners always have access to crucial information, they ned to do cash-flow planning and some bookkeeping, in order to get cash-flow plan and actual comparison.

It is not unusual that personal business, like contractor, freelancer, free-agent, self-employed and virtual assistants is owed more money than the overdraft on their bank accounts. They are effectively financing their clients business and should charge interest on money owed in excess to what their bank charges the business.

You can always outsource your bookkeeping and credit control function, use a virtual assistant and WinWeb’s On-Demand Small Business Infrastructure approach to solve this problem - you want to stay in business (?) make sure your cash-flow is good.

Arctic Systems maybe another example of the aggressive nature of HMRC when pursuing taxpayers, however, Arctic Systems is certainly not the first case in history where the Revenue ‘HMRC’ has pursued a taxpayer for arranging their affairs in a more beneficial manner for taxation purposes.

It brings to mind a case many years before I was born that led to Lord Clyde making the following statement:

"No man in this country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or to his property as to enable the Inland Revenue to put the largest possible shovel into his stores.

The Inland Revenue is not slow - and quite rightly - to take every advantage which is open to it under the taxing statutes for the purpose of depleting the taxpayer’s pocket. And the taxpayer is, in like manner, entitled to be astute to prevent, so far as he honestly can, the depletion of his means by the Revenue".

Ayrshire Pullman Motor Services & Ritchie v CIR CS 1929 14 TC 754, Lord Clyde @ pp 764 or 765.

Tags: small business, limited company, SME, OMB, HMRC, Arctic Systems, Tax, Taxation, Dividends, Lord Clyde

Today the case of a small husband and wife owned company ‘Arctic Systems’ was finally over.

After many years battling against the HMRC attack Geoff and Diana Jones of Arctic Systems Ltd can finally move on, but at what cost?

For the last four years, not only accountants and tax advisors, but also many other small husband and wife owned limited company’s will have been watching this case with a vested interest in its outcome.

So what now I hear you ask, well what indeed, I guess we will have to wait and see what HMRC and/or the Chancellor do next in the next budget?

For the full judgment please click here.

Tags: small business, limited company, SME, OMB, HMRC, Arctic Systems

One more time for the slow to understand, I am not only talking about many accountants in practice here, McKinsey Quaterly (registration required) noted:

….., almost every software category has either started to migrate or will migrate to software as a service over the next 3 years. McKinsey says this migration is even more pronounced for small and medium sized firms than large corporations.

This will hopefully not come as surprise to you, if it does, then you are in trouble.

If you are an accountant, then this is even more worrying, because your clients are in trouble too - they will lose out on competitiveness, because some accountants could not be bothered - this in turn will increase the mortality rate of small business start-up.

If you are a business owner, make sure you have a good long look at the people who advice you - there are some really good advisors/accountants out there, you just need to look and ask questions! If they only want to do your accounts (past) and not help you with your cash-flow forecast (future), then it’s time to leave.

DO NOT become one of the over 50% of business failures in the first 12 month after start-up. It is easy to survive - just get some good solid advice and plan your future.

Tags: Accountants, Business Mentoring, Business Start Up, Contractors, CPAs, DIYPreneurs, Entrepreneur, Free Agents, Freelancers, Home Business, Institute of Business Advisors, Lifestyle Business, McKinsey, Micro Business, MumPreneurs, On-demand Small Business Infrastructure, Personal Business, SaaS, Selfemployed, smb, sme, SocialPreneurs, Software as a Service, SOHO, Very Small Business, Web 2.0, WinWeb

I’m on the phone on hold to Sage support at this very moment.

A disembodied voice tells me that my call will be answered in "9 to 10 minutes".  That’s got to be better than the "more than 15 minutes" I got when I phoned at 12.15 - lunch break time.

The question I need to ask has a "yes" or "no" answer…

If this client were using Winweb, I could have hopped on the chat support and have had an answer by now…

Sage, take note - a chat support system is good!

Tags: Accounting, Office - IT

A few weeks ago I had quite a heated debate with Richard Murphy on the issue of cash accounting for small businesses. As he opposed that idea, I - and others - asked him to put forward an alternative solution, as the one point we all agreed upon was that the tax regime for small businesses is in dire need of simplification.

Further to a posting by Mike Truman on the Taxation website

Richard has responded and his article can be found here

In summary, Mike and Richard suggest that micro businesses (with a turnover under the VAT registration limit and not registered for VAT) could have the option to work out their taxable profit by:

1) Adding up the sales for the year, figure x

2) Taking a fixed percentage of sales according to what trade sector the business operates in, figure y

3) x - y = taxable profit.

This to me has advantages over cash accounting. It is less open to manipulation and teeming and lading, would be simpler for HMRC to work with since they would set the trade sector percentages, and would be very easy to work out, with far fewer ifs and buts. Also there would be no transitional arrangements since a business could easily use the simple method one year, and switch to preparing full accounts for the next - similar to when a business has to stop using the VAT flat rate scheme.

This simple method wouldn't suit all micro businesses, but for those which don't want to grow and expand but just want to tick along quietly and earn enough to run the home, and/or one man bands selling their services (interior designer, party organiser, web site designer, plumber, taxi driver, etc), I can see serious advantages.

I would though, recommend a safeguard be put in place to ensure that businesses still keep records of sales invoices, purchase invoices, cash received and spent (as in the Winweb cashbook), so that they keep track of potentially late- or non-paying customers, and make sure they have enough cash to pay bills.

Views please?

M

Tags: Accountants/CPAs, Accounting, Business Infrastructure

After spending a couple of hours on online support on Saturday and Sunday, following our new Plug-in CashBook (find Demo here) release, you may be mistaken to believe that I was helping my customers to use the new plug-in. That of course is true in a fashion, but most of all my clients helped me to sort out the obvious marketing nightmare I had created.

In my last post about CashBook I said it needed AccountsOffice+ or OnlineOffice. You may know that AccountsOffice is free of charge, and as promised it will stay that way. Following the “online support” I received over the weekend here are the changes I have decided to implement:

• WinWeb CashBook will be a standalone product from tomorrow.
• Anyone can sign up for it from our website and use it.
• Some browser issues will also be resolved.
• WinWeb CashBook single user version will also be free.

Another great idea, I had from one of my “new” accountant partners, was to use WinWeb CashBook, even for those “plastic bag” accounting clients who do not want to get involved, on a in-house basis. What that means is the accountant or bookkeeper will use an admin person to enter the receipts into WinWeb CashBook and then the accountant / bookkeeper will process the entries. This will be a big time saving for the professional part of the work, allowing the accountant/bookkeeper to service more clients.

Every day when I do online support, I think I get more out of it then my clients, and that is not only because I “suck” at giving support! Thank you everyone!

Tags: AAT, ACCA, Accountants, Accounting, AIA, Bookkeeping, Business Development, Business Infrastructure, Business Mentoring, Business Start Up, Cash-Flow, CIMA, CIPFA, Client Relations, CPA, CPAs, Customer Service, Entrepreneur, FREE Business Tool, Great Business Idea, Home Business, Homesourcing, ICAEW, ICAI, ICAS, IFA, IT, Micro Business, On-demand, Outsourcing, SaaS, SBI, Selfemployed, Small Business, smb, sme, sme-blog, Software as a Service, SOHO, Teleworking, VAs, Very Small Business, Virtual Assitants, VirtualOffice, VSB, Web Technology, WebOffice, WinWeb, WinWeb AccountsOffice , WinWeb CashBook, WinWeb OnlineOffice, WOW

I am happy to report that WinWeb has launched WinWeb CashBook. It is the first module completely coded in AJAX, so it’s behavior is much more like a desktop application, and not like a web page. We will release more and more of our code in AJAX over the next month.

CashBook is a accountant partner only plugin for AccountsOffice+ and OnlineOffice ( it requires the FileStore functionality ). Accountants will set their clients up who have no understanding or interest in bookkeeping/accounting.

For Users:-

Using the Cashbook couldn’t be easier and you don’t need to know anything about accounting. .

Whatever method you use to record your income & expenses at the moment, instead simply enter the details on a form on the Payments & Receipts pages of ‘Cashbook’ to record any money paid into or out of your business. Enter the details on a form on the Purchases & Sales pages of ‘Cashbook’ to record any invoices to or from your business. You will then have a record of all your income & expenses shown with monthly totals.

If you make any mistakes, use the edit button to change entries or just overwrite with the next entry you want to make.

Use the balance outstanding column, on the Purchases & Sales pages, to check how much money you owe or chase any money owed to you.

Let your accountant post your entries for you & you will see reports of how your business is doing.

For Accountants:-

You will be able to set up your clients with AccountsOffice+ or OnlineOffice to give them access to ‘Cashbook’.

Using the Settings page, you will be able to set Standard or Cash Accounting or, if your client is not VAT registered, just switch off the VAT.

To post your client’s entries, using the ‘Post Payments’ & ‘Post Receipts’ pages, you only need to select the nominal account, VAT account & bank accounts.. Before posting, any mistakes can be changed by editing the entry on the Payments or Receipts pages.

With your accountant’s log in, you will be able to prepare VAT returns & reconcile bank / cash accounts & will be in control of the chart of accounts, which you can customise to suit your client’s business. Your client will be able to view the nominal ledger, trial balance, profit & loss & balance sheet reports but will be unable to change any of these.

Tags: sme, Software as a Service, SOHO, OnlineOffice, AccountsOffice, Outsourcing, Business Development, Micro Business, AccountsVision, Teleworking, Customer Service, WinWeb OnlineOffice, Business Infrastructure, Cash-Flow, SaaS, Accounting, Bookkeeping, E-Commerce, SBI, Business Start Up, Entrepreneur, United Kingdom, Selfemployed, VAs, Very Small Business, Home Business, Virtual Assitants, VirtualOffice, Office/IT, On-demand, VSB, Web Technology, WebOffice, Business Tool, Small Business, smb, WinWeb, WinWeb AccountsOffice+, WinWeb CashBook, WOW, sme-blog

I will start this, the eighth of our bite sized start up guides by saying VAT has to be one of the most complex areas of UK taxation and as such professional advice should be taken at all times, don’t try and ‘go it alone’.

There are two types of VAT registration - compulsory and voluntary.

Compulsory - once your turnover exceeds £61,000 (From 1 April 2006) you are required to register with HMR&C for the purposes of VAT. It should be noted that your turnover may exceed £61,000 within months or it may be over a rolling twelve month period. In these situations you need to inform HMR&C within 30 days at the end of the month in which the value of your turnover exceeds £61,000.

Another compulsory registration would be if you have bought a business which is a going concern that is already VAT registered.

Voluntary - in certain circumstances it is possible to register on a voluntary basis even though your turnover is less than £61,000. It should be pointed out that this is not suitable for everyone and professional advice should always be sought before registering on a voluntary basis.

Other voluntary registrations maybe if your turnover is zero-rated (no VAT is charged on sales) yet expenses you incur have VAT on them, again, take professional advice first.

How often do I have to do my VAT Return?

VAT Returns are generally completed every three months. However, you can now use the annual accounting scheme. With this scheme you pay monthly or quarterly installments towards an annual VAT bill and at the end of the year you submit a single annual return and any balance due. The annual accounting scheme is only available if your turnover is under £1,350,000.

How is my VAT accounted for?

The following methods are available to you and your business to account for VAT:

Invoice basis - under this method you declared VAT on sales and reclaim VAT on expenses based on the invoice dates, irrespective of when those invoices are paid.

Cash accounting - under this method you only pay the VAT over on your sales once you receive the money, and likewise with expenses, you can only reclaim the VAT once you have paid for items. This method has a limited, once your turnover exceeds £660,000.

Flat rate scheme - VAT is calculated as a flat percentage of your turnover. The percentages are decided according to the trade sector your business operates in.

Retail schemes - If you sell direct to the public you may not be able to issue a VAT invoice for each sale, in which case there are several retail schemes available that may help.

Can I do my VAT online?

You have the choice on how you return your VAT to HMR&C, you can either submit it on the traditional paper form or use the new online facility. The advantages with the online system is you are given longer to submit your return, an extra 7 days in fact, you also get those extra 7 days to pay your VAT.

There is more help available on VAT by visit the Value Added Tax section of the HMR&C website.

There is also a Frequently Asked Questions section.

Remember, the above is only a bite sized guide to give you a helping hand, take professional advice at all times.

Tags: Business Start Up, HMR&C, VAT, Value Added Tax, Entrepreneur, Self Employed, Small Business, SME, OMB, Bookkeeping