Getting on the wrong side of the tax system can create huge problems that are easy to avoid if you do everything right to start with. Check out our guide of what you need to do if you’re a private teacher.

• Keep a record of all your incomings – Private teachers/coaches tend to be paid cash in hand and this why HMRC is now targeting private teachers to make sure they are paying the right amount of tax.
• Keep your receipts for business purchases – As well as keeping a record of your incomings you need to keep a record of your business expenses. This includes all business purchases you make, anything from supplies to travel costs need to be recorded.
• Keep all documentation from HMRC – This is your own record of your communications with HMRC.

What to do if you receive a letter from HMRC stating they are carrying out inquiries into your tax affairs

Firstly, don’t panic, stay calm and give detailed information back to HMRC.

1. Contacting HMRC – When you first make contact with HMRC fully answer all their questions in as much detail as possible, referring to your own records. Contact information is available on their website (www.hmrc.gov.uk).
2. Co-operate – Remember that HMRC has a legal right to demand information from you and other people you have worked with e.g. your bank manager, your customers, and your suppliers. The more you co-operate with HMRC the easier and quicker any issues will be resolved.
3. Talk to a professional – Talking to a professional can sometimes prevent you from being the subject of an inquiry to start with. If you do become a target of an investigation, consider engaging a professional to help guide you.

Who is it available to?

For a body to be able to claim back gift aid, it must be a registered UK charity.

How to give with gift aid

Taxpayers who want to donate to charity and include gift aid, simply have to complete a gift aid declaration. The declaration form is simple to complete and can be used for every donation you make to the same charity (if you make regular donations).

To complete a gift aid declaration form you must provide the following information:

• Your full name (including middle names)
• Your home address
• Charity name, and maybe address and charity’s registration number
• Your donation amount
• The form should also clearly state that it is a gift aid donation.

Often, this form will be included as part of the standard online donation process, making it very simple to do.

Declaring gift aid to HMRC

Like everything to do with declaring to HMRC you need to keep a record of your donations. These may come in the form of receipts, copies of the payment slips or bank statements.

If you complete your own tax return, you can declare your gift aid payments on it by completing the gift aid donations section. If you don’t complete a tax return you can declare your payments on a P810 form, which you can pick up from your local tax office.

A great bookkeeper can be a real asset to your business, and in this guide we look at just some of the qualities that make for a great one, including attention to detail, accurately being able to estimate costs and value for money.

In the second of this two-part post, we look at five more vital assets of a great bookkeeper.

1. Experience in your industry: Different industries have different financial regulations, and whilst a more than capable bookkeeper will have good general experience, a great bookkeeper will possess experience relevant to your business.
2. Ability to estimate costs accurately: A great bookkeeper will have the ability to create projections for you, not just in the current financial year, but also into the future, thus allowing you to manage your finances a whole lot better.
3. In tune with industry developments: A great bookkeeper won’t just stick to what they were taught, they will adapt to new methods and techniques as well as keeping on top of any new rules and regulations that are implemented.
4. Good communication: Great bookkeepers will be clear and concise communicators, providing you with all the information that you need to know in jargon-free language you can understand.
5. IT skills: In the modern age of SAGE and online returns, it is vital for books to be kept online. A good bookkeeper should be competent in the use accountancy software and able to records and financial projections in spread sheet or database form as appropriate.

So there you have it! If you’re looking to hire a great bookkeeper, you should be looking for much more than simply their ability to add up; factors such as their organisational ability, estimation accuracy and their value for money should all be key considerations.

A great bookkeeper can be a real asset to your business, and in this guide we look at just some of the qualities that make for a great one, including attention to detail, accurately being able to estimate costs and value for money.

In this two-part post, we look at the ten vital assets of a great bookkeeper. Here are our first five:

1. Value for money: Most businesses hire a bookkeeper in an attempt to save both time and money, thus allowing them to concentrate on other areas of the business. A great bookkeeper will demonstrate immediate value for money in both areas.
2. Attention to detail: A great bookkeeper will pay a real attention to the smallest points, ensuring that your accounts are mistake free.
3. Knowledge: It is vital for a bookkeeper to know their job inside out. A great bookkeeper should be able to explain key accountancy terms (such as ‘profit’ and ‘loss’) to you without a second thought.
4. Working to deadlines: Great bookkeepers will work to deadlines for the likes of returns and PAYE with the minimum of fuss and professionalism, ensuring that all deadlines are comfortably met.
5. Ability to work independently: A great bookkeeper will be very comfortable working independently and prompting you for vital information or documents.

Join us for part two tomorrow!

In this guide, we cover the bookkeeping basics that every small business owner should know, from simple steps like keeping receipts together, to the more complex business of categorising your financial records.

The three files you must keep

As a minimum, you should keep a cash book, a sales invoice file and a purchase invoice file. Your cash book details payments in and out of your bank account, your sales invoice file details all the sales that you’ve made and whether they’ve been paid for or not, whilst your purchase invoice file details any purchases you’ve made, as well as when and how you paid for them.

If you use accounting software, you can use it to store all of these records, but if you don’t, a simple series of spreadsheets should suffice.

Check your bank statements

Spend time checking each and every bank statement you get to ensure that no mistakes have been made and that no fraud has taken place. It will also give you a complete breakdown of exactly what your income and expenditure is, and allow you to spot trends and ensure your cash book entries are accurate.

Get proof of purchase for everything

It’s best to get a receipt for everything that you buy for your business, no matter how large or small. It will make it much easier to look back through and update your records, and it will also mean that you have all the required proofs of purchase should the taxman decide to do an audit.

Separate your business and personal accounts

You should have separate bank accounts for personal and business use and should only use funds in your business account to fund purchases for your business.

Clear a regular slot in your calendar

When you’re busy with everything from meeting client deadlines to pitching new business, it can be easy to throw your receipts in a box, leave invoices on your ‘to do’ list and ultimately, lose track of your books altogether. Set aside a regular time each week – clearly marked out in your calendar as a recurring appointment – to keep on top of your accounts, and stick to it!

Remember it’s more than just ‘best practice’

Putting off going through your books and generally being disorganised is a big no-no. Not only will HMRC fine you if you are late in filing any financial documents, but you cannot run a business effectively if you don’t have a firm grasp of your finances.

If you’re struggling with your record keeping, give us a call on 01327 856076 and we’ll be happy to talk you through your options.

For small businesses, keeping track of cash flow can be a struggle. With limited staff, or none at all, keeping on top of accounting often falls by the wayside in busy periods.

There are some simple steps you can take to make sure your business finances start, and end, 2010 in order.

• Set up a filing system and start recording everything

Apart from the legal requirement, by keeping this information split between income and outgoings, you will have a better sense of cash flow, helping you to better manage your business.

By catagorising expenses into ‘rent’, utilities, or stationary, for example, you will get a clearer picture of where you might be over-spending.

• Check your records against your bank statements

Making sure you tick off everything on your statement before filing it away each month will help you keep check of missing receipts, and provide a constant monthly deadline for getting your records in check.

• Get everything on a computer

Keeping your records on a spreadsheet, or using bookkeeping software, will allow you to see transactions in an instant. Figures will be easy to find, should a mystery debit appear on your bank statement, and you can even produce projections, based on previous months.

• Remind yourself

Keep an up to date calendar, or set reminders on your computer – if you use Outlook, tasks, emails and dates can be set to ‘pop-up’ when their due. If you have an accountant, you will also need to enter the date they require your records by.

Leave yourself 30 days before each deadline, allowing plenty of time and avoiding a last minute rush.

If you really can’t commit to the above, it may be time to call in an experienced bookkeeper. Of course, there will be an expense associated with this, but since it could free up your time, and give you better information with which to make business decisions, it might just be worth the investment. I provide a free accountancy question and answer session every Tuesday on Twitter, join me @AccountsAssist.

Love it or loathe it, Twitter is becoming an irrepressible force that’s hard to ignore. While it started life as a place for celebrities to talk about themselves, increasingly, Twitter is becoming a useful marketing tool for businesses large and small, allowing for instant customer interaction and the potential for increased website traffic.

With current users at around the 5 million mark, Twitter presents an opportunity to reach a large audience, extremely quickly and with only 140 characters allowed, there’s no need for expensive copywriters or graphic designers to get your message out there. Effectively, everyone is on a level playing field, the trick is to generate interesting ‘tweets’ that attract followers – inviting your customer base to join is a great way to start.

Twitter is not a direct sales tool – droning on about how fantastic your products or services is not interesting to most people – but providing customer support and advice, maybe interspersed with humour and general interest is the right approach for Twitter.

Tony Hseih, CEO of Zappos.com said, “We’ve found that Twitter has been a great way for us to connect on a more personal level with our employees and customers. We use it to help build our brand, not drive direct sales. In the long term, Twitter helps drive repeat customers and word of mouth, but we’re not looking to it as a way of driving immediate sales.”

For me, Twitter is a perfect platform to deliver accountancy support, providing answers to individuals, which may be useful to many, which in turn generates interest in my services and hopefully customers. Follow me @AccountsAssist and join me next Tuesday – questions can be emailed/tweeted in advance.

If you have been touched by this tragedy, UNICEF http://www.unicef.org.uk/ is calling for businesses to make a contribution, which can be generated in a number of ways:

A corporate donation is a straightforward transaction of funds, which UNICEF will then publicise to key stakeholders. If you want to get your whole business involved, employee fundraising provides an opportunity for everyone to show their support. Face to face appeals, targeting potential donators through your database or website, or adding a minimal charge to bills, which goes straight to charity, are all ways in which you can engage your customers in the cause.

For companies and sole traders who wish to give to charity, tax relief is available:

If you’re self-employed or a partner in a business, you can take advantage of the tax relief available for individuals on gifts of money, claiming them on your Self Assessment tax return.

If you give money to a charity or Community Amateur Sports Club (CASC), you can use Gift Aid http://www.hmrc.gov.uk/charities/gift-aid.htm. This increases the value of your donation at no extra cost to you, by allowing the charity to reclaim basic rate tax on your gift. If you pay higher rate tax you can claim extra relief on your donations.

Gifts of money made to a charity by a company should be paid gross, before tax is deducted. These donations are deductible from the total profits of your business when calculating Corporation Tax.

Companies can claim for Corporation Tax Relief, as long as the donation is a payment of money that is not a distribution of profit, such as a dividend. Qualifying donations can come from the company or a ‘connected’ person, which includes relatives. For more information about qualifying criteria and the benefit value, visit: http://www.hmrc.gov.uk/businesses/giving/companies.htm.

When your company makes a qualifying donation to a charity the amount paid is treated as a ‘non-trade charge’ – this means your company can make a claim in its Company Tax Return to set the amount of the donation against its taxable profits.

Your company should keep normal accounting records to support entries on your Company Tax Return along with any other relevant documentation; for example correspondence with the charity in relation to the donation such as a ‘thank you’ letter.

You must keep your tax records for at least six years after the end of the accounting period to which they relate. If HM Revenue & Customs (HMRC) makes any enquiries about your Company Tax Return you will need to keep the records until the enquiries are completed.

Failure to get forms to Her Majesty’s Revenue & Customs (HMRC) by the fast-approaching deadline will incur an initial £100 late payment charge. If the form still hasn’t been returned by 31st July, there will be a further penalty of £100. If, despite those penalties, you still fail to return your tax forms the HMRC may apply a daily penalty of up to £60.

In certain cases HMRC will waive these penalties: If you have a “reasonable excuse” for missing the deadline, such as serious illness or a close family death for example.

To avoid unnecessary charges, businesses must act quickly to make sure their online tax returns are in on time.

For first-time self-assessment filer’s, or those new to using the online system, registration is required at HMRC’s self-assessment online service, at www.hmrc.gov.uk/sa. Registering is straightforward; simply click ‘Register for Self Assessment Online’. Once registered, an activation code will be issued in the post – this may take up to seven days, so businesses must register this week to ensure codes are received on time.

There are real benefits to filling your tax return online: Your tax is calculated automatically and is processed faster, so any money your owed is repaid more quickly. If you file online, you’ll get an immediate on-screen acknowledgement that the return’s been received – receipts are not provided for paper returns.

HMRC’s Sarah Walker said:

“The 31 January filing deadline is just around the corner, so if you haven’t yet sent in your 2008-09 tax return, you need to take action now. Don’t risk a penalty – make sure you file your return online and on time.”

And don’t forget, 31 January 2010 is also the deadline for paying any tax you owe for the 2008/09 tax-year.

Help is available from the HMRC website at www.hmrc.gov.uk/sa.

The leaflet has been sent to all 1.9m VAT-registered businesses to alert them to the fact that, from 1st April 2010, those with an annual turnover of £100,000 or more (excluding VAT) will have to file their VAT returns online and pay their VAT electronically.

Under the changes, businesses registering for VAT on or after 1st April 2010 will also have to file their return online and pay electronically, whatever their turnover.

To file a VAT return online, businesses new to HMRC’s online services need to register for the VAT Online service. Once there, just click “Register” under the “New user” section and then follow the instructions. Current HMRC online service users can add VAT Online to their portfolio in the ‘Services you can add’ section of ‘Your HMRC services’.

HMRC’s Stephen Banyard said:

“Filing your VAT return online has a number of benefits: it’s secure, convenient, does arithmetical checks and calculations for you, and provides you with an immediate online acknowledgement that your online return has been safely received by us.

“So, if your turnover is £100,000 or more, and you’re not already filing your VAT return online, sign-up now for VAT online services – that way, you’ll avoid a last-minute rush, and be able to enjoy the benefits of online filing sooner rather than later.”

HMRC will also be sending formal letters, in February 2010, to all existing businesses affected by the new online filing and electronic payment requirements, confirming that in future they must file online and pay electronically. And, from 1st April 2010, a letter explaining the requirement to file online will be included in all registration packs issued to newly registering VAT businesses. Both letters will be accompanied by a handy guide on registering for VAT Online.