All posts by mikewhittam

Making Tax Digital in Haywards Heath

If you would like more information on Making Tax Digital for business (MTD) we have a page dedicated to this area for you to read.

You can find more information here:

Feel free to get in touch with any questions, such as help with the correct software set up for your business or whether MTD will apply to you.

Ditchling Beacon v Business Planning

The Ditchling Beacon, if you are not aware, is the “hill of doom” for cyclists and one of the biggest challenges for those on the London to Brighton charity bike ride. After passing through Haywards Heath, the last major town before the climb and approximately 50 miles (80 kms) from London there lies one of the last the downhill decents through the beautiful and ancient village of Ditchling. Now The Beacon introduces itself to you as the last defining obstacle before the welcome cruise down into Brighton and a well deserved drink.

Living in Sussex, I was cycling up The Beacon the other day, as I have many times with friends and with the hundreds taking part in the London to Brighton bike ride and a thought occurred…

The Beacon is very much a metaphor for starting and running a business. You have got to get from the bottom to the top, in one piece and then you need to keep fit and keep peddling to receive those deserved rewards.

Ditchling Beacon is the Business

Some cyclists prepare, train and plan their ascent to the finest detail and “just know” they will make it. Other cyclists will happily jump on a bike after not riding one for many years, just out of curiosity and with a stubborn, come-what-may attitude that says; “I will make it to the top somehow, even if I have to walk up!” How many will make it to the top without preparation?

A good level of fitness, along with the right equipment and a desire to keep going will get most cyclists to the glorious summit where they will be greeted by outstanding views of the South Downs along with a great sense of satisfaction and achievement.

A detailed business plan, prepared in advance, is your fitness and equipment check for your assault on entrepreneurism. This is the very essence of what will give you the “I know I will succeed” feeling and is the meticulous planning needed to get to the top.

At the beginning, at the very bottom, you know there is a challenge ahead and you are curious as to how you will negotiate the twists and turns. You peddle onto the first part of the climb as the trees crowd in to form a tunnel and dim the light. Now you are committed and it is time to get your head down, choose a gear and a consistent rhythm. This is where all the planning, along with your determination to succeed begins.

The Beacon has several flat levels (some less flat than others!) after every sharp climbing interval. Many years ago, horses would rest and catch a breath on these flat spots and these become your new best friend as you experience a few easier rotations of the wheels before a deep breath is required and you are peddling hard again.

This is true in business where we have been successful on part of our journey and have a short time to take a breather and reflect, knowing there’s more to be achieved. Without the “just knowing I will succeed” and the planning on how to get there, these resting points may not be the re-energising resurgence you need, but where the negative thoughts creep in as you face yet another unexpected climb. Do you turn back and throw in the towel or are you in for a penny, in for a pound?

So, you are half way up, or are you? The bends and inclines, the resting points and trees all start to look the same and you are hot and exhausted. Is there one more bend until the summit, three, or five?

In business wouldn’t it be great to know exactly where you are at every turn? Maybe you have incorporated external support into your plan to help you with marketing, advice and much more. Effectively cheering you on and keeping you motivated whilst making the end goal so much simpler to achieve.

The tunnel of trees open up from time to time to play with your mind and trick you into thinking you’ve made it, only to be faced with yet another sharp incline. However, you’ve been peddling for over ten minutes now and you are nearly there, legs burning, heart pumping and through gritted teeth and sticking to your plan the first part of your journey nears an end. The sky eventually opens up for real and your wheels start to turn more freely and you stop to take in the views as your breathing returns to normal. Mr Satisfaction pats you on the back. Your preparation and meticulous planning has guided you to the top.

Now, you have the ultimate choice…how long do you sit back and enjoy coasting along on the flat? How do you and your business aim to keep fit and keep peddling for those next stretch-goals to growth and success?

Enjoy your business.

Mike

Mike is an Accountant to owner managed businesses and is based in West Sussex. www.mcoaccountancy.co.uk

What is Cloud Accounting?

Cloud accounting works seamlessly across all devices and is used by micro businesses, right up to large corporations and is becoming more and more popular.

You most probably already use ‘the cloud’ if you have an email account whereby we can log in anywhere in the world, on any device and carry on as if we were at our own desk? This, in essence is how cloud accounting and bookkeeping works – your information is stored securely so you can access it anywhere, with the massive benefit of everything being backed up.

There are many software companies offering cloud bookkeeping solutions and some will fit your business better than others, so it is important to evaluate your needs. For example, will you need inventory control as part of the package? A good accountant with cloud software experience will be able to show you various options and help you decide which one is best for your circumstances.

In today’s fast moving world, where a business can be started easily at home and run on the go, or even after a hard days work at the ‘normal’ job, cloud solutions are a massive time saver. Not all entrepreneurs operate from 9am to 5pm…some could be in London during the day and running their business in Sussex by the evening. With the cloud, you can keep a track on how your business is performing continuously.

Some of the benefits of a cloud accounting solution include a big reduction in manual input, easy tracking of expenses; thus avoiding that heap of receipts at the end of the year, a snap shot of who owes you what, as well as an up to date profit and loss. Not to mention more collaboration between you and your accountant to make your business as successful as possible.

Some of the software companies you may like to look up are: Quickbooks Online, Clearbooks and Xero.

If you need any guidance or training on your existing software, feel free to get in touch.

 

Residential Landlord – 2017 Tax Changes

In July 2015 The Chancellor announced changes to the way mortgage interest can be off-set against against buy-to-let profits from April 2017.

In essence, the measure will gradually restrict relief, over a three year period, for finance costs on residential properties. By 2020-21 the restriction will be set at the basic rate of income tax, being 20%.

How It Works Now

You let out a property collecting £10,000 per annum in rent. Your mortgage interest cost is £5,000 per annum which you deduct from your rental income to arrive at your profit for the year, being £5,000.

On this £5,000 profit a basic rate tax payer will pay £1,000 tax, a higher rate tax payer £2,000 and an additional rate tax payer £2,250.

How Will It Work in 2020-21

Using the example above you will now owe tax on the entire £10,000 rental income and receive a 20% tax credit for the £5,000 in interest = £1,000.

Therefore, a basic rate tax payer will still pay £1,000 tax (£2,000 less 20% credit of £1000), a higher rate tax payer £3,000 (£4,000 less £1,000) and an additional rate tax payer £3,500 (£4,500 less £1,000).

There are some knock-on effects to consider, in that the new profit calculation could push basic rate tax payers into the higher rate tax bracket. Higher rate tax payers, are also at risk of not making any money at all.

If you would like us to calculate your future position based on you current buy-to-let position, feel free to get in touch.

 

 

Starting Up – What’s It Like?

Many people (quite rightly) ask me for advice when thinking about starting up in business. Most have a fantastic idea, but that leap of faith can be daunting, and thinking about taking those next steps can put most people off.

So, don’t let your mind play tricks on you and maybe hold you back, because the good news is, it is now easier than ever to start a business especially in terms of cost. With the click of a mouse, you can have access to expert website designers, cloud telephone systems, business cards and networking. We are lucky enough to live in a vibrant and economically successful part of the UK and there is a host of experienced business people  on your doorstep who will be willing to give advice and help  you probably more than you may expect.

Take The Haywards Heath & District Business Association (HHDBA) for example. A fantastic, niche and friendly local networking association that put on some great events. Attended by local business men and women with the aim of helping others grow their business, you never know who you may bump into! www.hhdba.com

So, what’s it like…exciting, hard work, surprising, rewarding, and more. However, plan carefully, talk to other local business people and as you will no doubt hear very often, the more detailed your business plan is, the better chance your have of success.

All the best,

Mike

Contact me on t: 01444 801480 or mike@mcoaccountancy.co.uk

Nice & Easy Tax Return’s

“Nice!” yes, Tax Return’s  (self-assesments) can be ‘nice and easy’.

Too many of us fall into the ‘leaving it until the last minute’ trap and end up dashing around looking for receipts, building society statements, dividend receipts, expenses, donations to charity and more. If you are self-employed and also need to submit your income & expenditure figures you could be in for a bit of a panic.

HMRC’s deadline for online submission is 31st January and if it is not in you get a nasty fine, starting at £100 You also need to pay any tax due by this annual cut-off. All this can be easily avoided.

So, ‘nice and easy’ happens when you change a habit of a lifetime. How about putting aside a folder that collects all the bits of information your bookkeeper or accountant will need during the year. Set yourself a reminder to call your accountant or bookkeeper sometime in May/June of every year when you should have received everything you need for the year to 5th April and hand it over.

A decent certified bookkeeper who is able to complete a self-assessment can put all of this together for you and even your accounts and then file your Tax Return early – wow!

The benefit of filing a Tax Return early is that you’ll know exactly how much tax you’ll need to pay with plenty of notice and New Year’s will be clear of all that dashing around.

Find a good qualified bookkeeper, a large folder, change a habit and set an alarm – easy.

If you need any advice regarding your business, accounts and Tax Returns, feel free to get in touch, we’ll be happy to help.