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News,May 2018

xero small business

Why Should You Use Xero for Your Small Business?

14/12/2022Accounting , accounting software

If you are carrying out your small business in the UK, it is imperative to realise that one of the crucial things is to learn and manage your finances well. This will be a great help for your business to make a name in the market and grow towards the road to success. It is more important for new start-ups to focus on money management to be prepared for any financial ups and down to get the business survival in unfavorable circumstances. To turn your dream into reality, the important role will be smart accounting software to manage money more effectively. Here comes the need for the use of Xero small business. It is known to be the best acting solution of this era. If you are already convinced with the smart use of Xero and looking for the key factors that can help you gather information about the basics like, what is Xero accounting software, how can you use it for your small business, and what are the prominent uses which can be beneficial for your small business, then you are on the right page. As this guide has covered it all for you. Let’s delve into the discussion to know further. Reach out to our smart and clever-minded guys to get your Xero small business queries answered quickly. We will help to decide how to deal with your tax implications. What is Xero Accounting Software? Xero is referred to be an accounting software that is designed especially for small businesses and the relevant needs to grow them. Xero has launched in the year 2006. With the help of Xero, it is possible to have an instant look to check the financial position of the business. It allows business owners to have a smart way to manage the procedures that come under the accounting process entirely. This includes the benefits of accepting the basic bookkeeping methods of accepting online payments, automating the accounting system, the online submission of VAT returns, and paying the bills. In simple words, we can say that it will allow you to run a healthy business as well as manage your finances in no time. What are the Uses of Xero Accounting Software? As mentioned earlier that Xero is now known to be an accounting software solution that fastest, most popular, and cloud-based as well in the market. The use is easy and the factor of versatility is the prominent reason for its popularity. It is also suitable for several types of sectors and businesses because of the special integration and other unique features. It is important to know that recent research says that 95% of people are of the view that it s very effective, easy to use, and a positive software to manage business finances. Xero has won multiple recent awards in fintech and cloud accounting.. The good news is that it can also be tailored to meet your unique business needs. What are the Prominent Benefits of Using Xero Accounting Software? Around 3.5 million people have subscribed the use of Xero. Because of owning powerful features, accountants, bookkeepers, and small business owners around the world are getting inclined towards the use of Xero. In the UK, Xero is known to be the most famous accounting software in the market. It is also rated highly by users on different platforms. The online platform of accounting that is associated with Xero provides the opportunity of a complete business foundation and it is a feature that is appreciated in the business world. Need accounting services in Croydon? Get in touch with CruseBurke today and let’s get your business on track with Xero. 1- Easy Access at any Time and Anywhere If you are looking for online accounting software that is accessible easily at any hour even if you are outstation or on a business trip. You only need an internet connection and your mobile phone to have a look at your financial details. However, in the case of traditional accounting software, it has to be installed on your computer or laptop. This makes the use limited for the business owners and accountants as the access is not handy in case of business trips. The option of a Xero mobile app is launched as well which makes the use easier. 2- You will be Paid Faster than Ever In the UK, one of the biggest problems in the business world is late payments. The late payments and percentage of relevant invoices are close to 25%. This accounting software will allow you to avoid the problems of your cash flow management. Managing the accounts receivable is the best strategy to pursue your dreams of money management and be prepared for future endeavors in the business. 3- Save Your Time to Invest Better in Your Business Growth Because Xero is a cloud-based software and this allows 100% storage of all the documents online and this will avoid all the energy and time to be spent on the paperwork. You will not be bothered to spend hours sorting receipts, invoices, bank statements, and bills. The Bottom Line Now that you have gathered a fair amount of information about the use of Xero small business, we can bring the discussion towards wrapping up. With Xero, business owners and accountants will be in a position to spend more time on business growth ideas and relevant matters. Because the management of money and financial position will be on a good level. We hope these few minutes of reading will help you to develop a better understanding about what are the benefits of using Xero for your small business accounting needs. Our team of professional members loves to hear out your business problems and find out the possible and suitable solutions quickly for small businesses accounting problems. Call us or email us today.  Disclaimer: The general information provided in this blog about the use of Xero for small businesses includes text and graphics. It does not intend to disregard any of the professional …

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tax treatment of dividends

Tax Consequences of ‘Illegal’ Dividends

04/10/2022Accounting , Bookkeeping , Dividend Allowance

When we are associated with the business world, we all know that the undistributed profits of a business can help to declare dividends. It is required to follow the accurate procedures well in order to make all the relevant payments legal. If there is a scenario where a director tends to sanction illegal dividends, the concerned individual and the director both will be associated with a significant tax. This will be applicable if the director was not aware of the non-validity in this process. Tax treatment of dividends is important to understand here, this will allow you to know that the credits in a company’s account do not specify that the earned profits are enough for the business. Moreover, when it comes to the declaration of dividends for a company, the calculations must belong to retained profits.   Reach out to one of our professionals to get to know what is the best way to handle tax treatment of dividends for your business in the UK.    Tax Treatment of Dividends vs Salary People often wonder about the directors and their salaries. The director of a company that is carrying out a business owned by another individual, the role of the director becomes a shareholder as well. There is always a beneficial factor involved when there is a split observed in the salary and dividends and the benefits are mostly related to the tax affairs. Such an arrangement achieves the following beneficial factors: There is no factor of attraction involved in the dividends for the national insurance contributions. The tax charges will be low because the rate of tax is lower on dividends as compared to the PAYE income. There is a separate allowance for dividends that is tax-free. Moreover, these benefits allow you to become more and more tax efficient. This is why the directors tend to take a tax-free amount of the salary and the rest of it goes to them in form of dividends.   When is the Right Time to Pay the Dividends? By now you must be wondering about the dividend payments and when is the most suitable time to pay. See the following listed factors to define when is the right time to pay the dividends. There should not be any duplication in the payment. This means that you have not paid any dividends already in any form. This is also applicable when your company profits exceed the limit of business losses in the same period.   What are the Consequences of Illegal Dividends? There are common problems that come across the way of directors that result in the form of illegal dividends. They include the followings: When you do not pay the same amount of money to all the shareholders who belong to the same class. When you fail to make a declaration of the dividends through accurate paperwork. When you fail to ensure that adequate reserves are there to support the payments of dividends. When you are not able to assess the solvency of the company. If your accounts are not prepared enough to play a supporting role for interim dividends. If you are not aware or self-assured about the declaration of your dividends, it is wise to reach out to an expert for help and suggestions. This will allow you to realise whether you can pay the dividend and how will it help you with the relevant paperwork. If you are not well aware of the dividend process, you will fall into illegal dividends and lack of knowledge will not be a justified reason for that.   The Bottom Line Now that you have gathered a fair amount of information about the tax treatment of dividends for your business, we can say that illegal dividends can make you suffer serious consequences, so it is better to realise how imperative it is to be well aware of the dividend process. We hope these few minutes of reading will help you to develop a better understanding of the tax treatment of dividends and you will be able to handle the dividend process efficiently.   Get in touch with our young, clever and tech-driven professionals if you want to choose the best guide for the tax treatment of dividends for your business in the UK  for your business.    Disclaimer: The information about the tax treatment of dividends for your business in the  UK provided in this blog includes text and graphics of general nature. It does not intend to disregard any of the professional advice.

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accrual accounting

Cash Basis Accounting vs. Accrual Accounting

03/10/2022Accounting , Accounting Issues

You must have heard a lot from people talking about accruals accounting and cash basis accounting, however, what is it exactly might always confuse your mind. It is mainly about the timing that is connected with the major differences between cash basis accounting and accrual accounting. It matters a lot what you aim to make a record of your business expenses and revenue. Some people record the details just at the time when they receive any money or make a payment to someone, this practice belongs to cash basis accounting. On the other hand, some businesses follow the practice of maintaining the record details at the time of receiving the business bills or when they raise an invoice, this practice belongs to accrual basis accounting. Most of the people who are associated with accounting are of the view that accrual accounting is known to be the most powerful tool. This further helps a lot to manage the business activities, however, we can not deny the benefits and uses of cash basis accounting here. This guide is based on the frequently asked questions about which is the most suitable accounting for the type of business they carry out. For a fair decision, we will begin delving in with a basic understanding of what the cash basis of accounting and accrual accounting is. Along with the basics, we will bring the downside and beneficial factors into the limelight as well.   Reach out to one of our professionals to get to know what is the best way to handle the accruals accounting for your business in the UK. We will love to offer instant help!   What is Cash Basis Accounting? It is all a matter of money and time as there are several businesses that only use cash basis accounting when the money goes from one hand to another. This means that such businesses use this type of accounting to recognise business expenses and income only. The invoices sent and raised are not included as part of income in this case. On the other hand, the business expenses are not considered associated with the bills only. People often confuse the name cash basis with the received payments, however, that is not the case at all. This is because of the factor that you can do cash basis accounting even when you are making the payments electronically. This type of accounting process is famous among business that has no inventory or by sole traders.   1- How Good is Cash Basis Accounting? Some of the popular benefits of cash basis accounting include the following: It helps to identify the money in hand through the simple process. You will be charged tax on the amount of money you have received not in the issued invoices.   2- What is the Downside of Cash Basis Accounting? The downside of cash basis accounting includes the following factors normally: Cash basis accounting is not always accurate. It sometimes shows the profits before you have paid your business bills. Because of the day-to-day financial details, it is not much help when it comes to making important management decisions.   What is Accrual Accounting? In the case of accrual accounting, the practice of recognising the income is done when an invoice is raised for the consumers. In the case of the business bills, this will be dealt with as a business expense even if the owner does not pay the bills for a period of a month.   1- How Good is Accrual Accounting? Just like cash basis accounting, there are certain beneficial factors associated with accrual accounting. These include the following: It is an easy and simple process to carry out in the long run in terms of finance. This will allow you to take managerial decisions with a clear vision. The picture that you will view about your financial position and business performance will tend to be more accurate.   2- What is the Downside of Accrual Accounting? The downside of accrual accounting is associated with the following listed factors: The workload increase with the use of this type because you will have to monitor your invoices other than the bank accounts. You will be bound to pay the tax on your income regardless of whether your consumers have paid or not. The tax can be claimed back in case the customer reneges.   Cash Basis Accounting vs. Accrual Accounting In the case of accrual accounting, you will be able to get an accurate indication of your performance of the business and financial position. This is because it is an accurate view of the business expenses as well as the income. Over a period of a month, the view will be easily accessible with the help of accrual accounting. On the other hand, the business that uses cash basis accounting for the purpose of tax will help them to maintain tabs on their cash flow. Cash accounting can not be used on its own. The case of accrual accounting demands more work, however, the results you want to achieve are more accurate.   The Bottom Line Now that you have gathered a fair amount of information about the accrual accounting for your business, we can bring the discussion towards wrapping up. We can say that there are factors related to the downside of accounting and beneficial for both types. The best is to identify your business needs and then opt for the most suitable option to view your business financial position and other records. This will allow you to gain confidence and make the right business choices. We hope these few minutes of reading will help you to make the right accounting decision for your business in the future.   Get in touch with our young, clever and tech-driven professionals if you want to choose the best guide for accruals accounting for your business in the UK  for your business.    Disclaimer: The information about the accruals accounting for your business provided in this blog includes …

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CPA vs. Public Accountant

CPA vs. Public Accountant: Is There a Difference?

21/09/2022Accountants , Accounting , Accounting Issues

To make your business a successful journey, the role of accountants is important. As well as in the smooth transaction of business activities will be done with their help. Public accountants and CPAs are your helping hands to carry out your business in the industry. However, people frequently enquire about who is better and what is the answer to CPA vs. Public Accountant for successful business ventures. The job role of the CPAs and public accountants is similar in many ways, yet they stand out with a few differences that make people wonder whether choosing a public accountant to do the job or a CPA will be a fine choice. All the CPAs can do the role of job of public accountants, however, the public accountants can not perform all that a certified public accountant can. This tells us that there are several key factors which make them both different from each other. Considering the frequently asked questions, this guide will cover the prominent factors of differences between CPA vs. Public accountants.   Talk to our best accountants and bookkeepers in the UK at CruseBurke. You will get ensured instant help whether you are running a small business or large.   Public Accountants – What is Their Role? The basic job description of a public accountant is to interpret and analyse the financial details of a business. With the help of this data financial reports are prepared. Some more responsibilities of an accountant’s services for their clients or employers include the following: Being a helping hand to small business owners and taking the business journey towards success. Ensuring the best financial practices and internal control. Working on financial disclosure, schedules, and statements. Making a record of financial transactions of the business. Ensure to submit accurate tax returns with the relevant financial details.   What Does a CPA Do? CPA stands for certified public accountant. Their primary job is to analyse the financial data of a business and report it. A further breakdown of their duties is listed below: Making accounting procedures and policies for companies. This involves the process of bookkeeping, reporting, and monitoring. They take part in the activities like creating the budget. To make the reporting accurate, they are involved in internal audits. Making financial statements and then presenting them to the board of directors. Accounts payable and account receivable are also managed by CPAs. Being updated about the final requirements as they are being implemented in the company.   CPA vs. Public Accountant – Which is the Best Option? Smooth transaction of the organisational affairs is the main job of accountants in general. The financial reports prepared by the accountants mostly viewed the financial position of the company. Public accountants easily handled all of these accounting affairs. However, a certified public accountant is all about an individual who is rich in experience and has a certified degree, that is what makes him stand out. The major differences to see who is better for your business between a CPA vs. Public Accountant is explained below.   1- The Role of the Job The job and duties of the CPAs are under constant observation of boards of accountancy. It is important to know that when a CPA is working in the role of a consultant can not do the audits at the same time. CPAs are associated with the governing body because they are certified degree holders. The case of public accountants is different. CPAs even prepared the principles of public accountants.   2- Training, Licensure, and Education Owning a licence by the CPAs is also something that makes them stand out and different from public accountants. Public accountants own a basic degree in accounting. The professional requirement of having a certified degree and a licence is the professional demand to become a CPA. However, public accountants can do the job after having a basic degree in accounting.   3- Code of Ethics Normally, there is no code of ethics that a public accountant has to follow in the UK because they are not associated with any governing body. However, the CPAs are considered to be associated with the Certified Public accountant institute. CPAs are bound to follow the strict code of ethics and other professional standards, unlike the case of public accountants.   4- Required Skills for the Job Role To make the journey of business successful, it is important to have an accountant who carries a variety of accounting skills. Business advice, financial analysis, preparing financial reports, and handling the management of financial details of a business are some of the basic requirements that are observed in an accountant. The CPAs are known to be highly maintained professionals who are experienced and knowledgeable to do the job well. The job role is the same in the case of public accountants as well. However, the specifications of accounting services may vary in their case.   The Bottom Line Now that you have gathered a fair amount of information about CPA vs. Public Accountant, we can bring the discussion towards wrapping up. We can say that the basic job role of the CPAs and public accountants appear to be similar. However, the prominent difference is being associated with the governing body and the certified degree holder is something that makes CPAs stand out and handle the financial duties of a business well. By now you must be able to choose the best option for suitably of your business needs. We hope these few minutes of reading have helped you to be aware of the job role of public accountants and CPAs to make the best choice for your business.   Are you seeking professional help to know who is good between CPA vs. Public Accountant for a small business? Why not get help from the experts at the CruseBurke? Talk to us now!   Disclaimer: All the information provided in this article on CPA vs. Public Accountant including all the texts and graphics, in general. It does not …

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are bank charges VATable

Are Bank Charges VATable in the UK?

23/08/2022Accounting , VAT

The majority of people ask the question “Are Bank Charges VATable in the UK?” This question is frequently asked by people who file their tax returns to the HMRC. The bank charges are the expenses of the taxpayer and you might want to get relief and claim a refund on these bank charges. So, we are going to discuss if you need to pay VAT on your bank charges and if can you claim VAT from the HMRC. So, let’s start! Seek no further help after contacting CruseBurke’s team of experts and advisors and managing your business, finances and taxes with peace of mind and within your budget. What are Bank Charges? Typically, every business charges the customer for selling their goods and services. Similarly, banks charge for the provision of their financial services to their clients. This fee covers the minimal amount for the transfer of funds, providing loans and paying an interest rate on the savings. Are Bank Charges VATable? The simple answer is No. The bank charges are not VATable in the UK. So, HMRC will not remind you for paying VAT when filing tax returns. So, you cannot claim a refund from HMRC because bank charges are exempt from VAT. This is because they are not delivering any goods to the customers. Instead, they are charging a minimal fee for providing financial services in different domains for your wealth management, funds transfer and providing loans and mortgages. Which Bank Services are VATable? The simple transfer of funds is exempt from VAT in the UK, However, there are some services where you have to pay VAT and so, you can claim a VAT refund from HMRC. The bank charges you for the investment, finance and taxation advice The bank is managing your portfolio The bank is providing you with depository and trustee services You are being charged for the service companies’ activities, for example, administration, payment of salaries and wages You are getting bookkeeping services You are getting debt collection and credit control services You are getting equipment leasing services You are getting professional merger and take-over advice You are getting registrar services from the bank You are using the executor and trustee services and the administration of estates You have paid for the safe custody and safe transportation services You pay for the management consultancy services The Bottom Line The bottom line is that you don’t need to pay VAT on the bank charges you have occurred. So, you cannot claim a VAT refund from the HMRC. Similarly, you cannot get VAT relief from the HMRC when you don’t pay any VAT on the banking services. However, the banking services related to the packaging, collecting and delivery are VATable and you have to pay a VAT when you enjoy these banking services. You need to maintain a proper record of these services and calculate the accurate VAT for avoiding any inconvenience and penalty later when you file your tax returns. Are you stressed about VATable bank charges? Feel free to contact our team of tax advisors and accountants to help you find accurate VATable charges on your bank charges. Disclaimer: All the information provided in this article on Are Bank Charges VATable, including all the texts and graphics, is general in nature. It does not intend to disregard any of the professional advice.

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Sage Vs Quickbooks

Sage Vs Quickbooks – Which is Better Accounting Software?

27/07/2022Accounting , accounting software , Bookkeeping

Every business owner wants to stay in control of their finances and make decisions that lead to long-term success. One of the most important choices is selecting the right accounting software to manage your income, expenses, payroll, and tax compliance. With so many options available, choosing between Sage and QuickBooks can be a challenge. Both are highly rated, but they serve different types of businesses and offer distinct features. If you’re unsure which is right for your business in 2025, this updated guide will help you compare Sage vs QuickBooks and choose the most suitable option based on your needs, budget, and growth goals. Reach out to one of our professionals for personalised guidance on selecting the right accounting software. Call us or drop us a message — we’re happy to help! Sage – Overview Sage is a well-established accounting solution, popular in the UK for its reliability and industry-specific features. There are two main versions: Sage Business Cloud Accounting – Designed for small to medium businesses Sage 50cloud – A desktop-based software with advanced tools Key features of Sage (2025): Advanced inventory management Payroll integration (paid add-on) Cash flow tracking Project/job costing Banking and reconciliation support VAT submissions compliant with Making Tax Digital (MTD) Sage is especially popular in industries like construction, retail, and manufacturing due to its detailed reporting and compliance capabilities. QuickBooks – Overview QuickBooks Online is a cloud-based accounting solution developed by Intuit. Known for its intuitive interface and automation, it’s widely used by freelancers, sole traders, and small to medium-sized businesses. Key features of QuickBooks (2025): Cloud-based access from any device Real-time collaboration and multi-user access Automated data entry and bank reconciliation Invoicing and expense tracking Built-in mileage tracking Customised financial reporting Optional payroll integration (paid module) QuickBooks is ideal for businesses that want simplicity, remote access, and strong automation. Sage vs QuickBooks – Feature Comparison Let’s look at how Sage and QuickBooks compare in key areas: 1. Integration and Apps QuickBooks offers hundreds of third-party integrations, including tools for e-commerce, inventory, CRM, time tracking, and more. Sage has expanded its integration options but still offers fewer app connections compared to QuickBooks, especially in the cloud version. 2. Payroll Both Sage and QuickBooks offer paid payroll modules. QuickBooks Payroll is available as an add-on, offering auto-enrolment pensions, RTI submissions, and direct deposit. Sage Payroll is also robust, with features tailored for UK regulations, but generally better suited for businesses with in-house payroll expertise. 3. Inventory Management Sage offers advanced inventory tracking, including product categories, cost of sales tracking, and reorder levels. QuickBooks offers inventory tracking in Plus and Advanced plans, suitable for basic to moderate inventory needs. 4. Financial Reporting QuickBooks makes it easy to generate reports like profit & loss, balance sheets, cash flow, and comparisons between periods. Sage also offers strong reporting but is less intuitive and may require training to get the most out of it. 5. Ease of Setup and Use QuickBooks is known for its easy setup, even for beginners. Data can be imported from spreadsheets and other software quickly. Sage, especially Sage 50cloud, may require some technical knowledge or training, particularly during setup. Which One Should You Choose in 2025? Feature Best Choice Ease of Use QuickBooks Mobile Access QuickBooks Payroll (UK Compliance) Both (tie) Advanced Inventory Sage Customisation QuickBooks Integration with Third-Party Apps QuickBooks Industry-Specific Features Sage If you’re a small business, freelancer, or startup looking for simplicity, automation, and cost-effectiveness, QuickBooks is a strong choice. If you’re a growing or established business in sectors like construction, manufacturing, or retail, and need detailed inventory and project-based costing, Sage may be a better fit. The Bottom Line Both Sage and QuickBooks are powerful accounting platforms with their own strengths. Your choice depends on the size of your business, your accounting knowledge, and the level of features you need. QuickBooks leads in usability, cloud access, and flexibility. Sage stands out for depth in inventory management, job costing, and industry compliance. Speak to our tech-savvy and friendly accountants to help you choose the best accounting software for your business needs. We offer tailored advice and set-up support for both QuickBooks and Sage. Disclaimer: This article offers general information about Sage and QuickBooks features as of 2025. For tailored advice, consult a qualified accounting professional.

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cash basis vat

What are the Benefits of Calculating VAT on a Cash Basis?

19/07/2022Accounting

Any business in the United Kingdom has to pay VAT to the HMRC after they have reached a threshold of earning £85000. However, the Cash Basis VAT is somehow different from the accrual accounting system. Every business, smaller or established, works on these two accounting systems. Nevertheless, a smaller business has to say goodbye to the cash accounting system after a certain limit. Then they have to move towards the system of accrual accounting. With it, many perks of using cash basis VAT are also eliminated. In this blog, we will walk you through the cash basis VAT and its advantages and numerous disadvantages. Moreover, we will discuss when you can use cash basis VAT and accrual for your smaller business. So, let’s discuss this informative and exciting discussion!   Hire the best accountants and bookkeepers in the UK at CruseBurke where you can get instant help for your business and finances in under two minutes.    What is Cash Basis VAT? As described above, two types of accounting systems are used to manage cash, invoices and other finances. Cash Accounting System Accrual Accounting System A cash accounting system is beneficial for smaller and fledgling business which needs a lot of cash to carry out their purchases and business activities. On the other hand, it helps establishes the reputability and credibility of a starter company. In this system, the cash is received when the business receives payment from the client and makes a payment to its supplier. So, it becomes easier for the financial manager or accountant to keep track of the VAT returns on all sales. If you have registered your company voluntarily, you can enjoy many advantages of being a VAT-registered business. After registering for VAT, you can manage your accounting systems for the VAT payment based on two accounting systems. Here, we will discuss only the cash accounting system for the VAT. Vat calculation becomes simpler and more convenient for smaller businesses and they can make payments accurately during a fiscal year.   Benefits of Cash Basis VAT Following are the benefits of Vat based on cash accounting systems: Simple and Accurate Calculation: When you pay your VAT while maintaining your finances through a cash accounting system, you can calculate and manage your VAT conveniently and seamlessly. Smooth Cash Flow: When you pay in cash as soon as you purchase something and sell your products or services, you have a lot of cash and no due invoices. So, you can manage your cash flow smoothly. Help the Startup Companies: The startup companies are best managed when they work on a cash-based accounting system. Because it provides them with a lot of cash and they can carry out their business activities smoothly. Moreover, if they have higher prospects of growth in the future, the cash accounting system can help them in many ways. Debt Relief: If you do have not any payments for your business because of due invoices, you do not need to pay VAT to the HMRC.   Disadvantages However, there are some disadvantages as well. For example, if you have not paid your supplier, you cannot reclaim your VAT. Similarly, the investment becomes difficult and you cannot make this investment unless you reclaim VAT on your purchase before the customer is charged for the VAT on a back date.   When Cash Accounting For VAT is the Best? A new or smaller business can use cash base VAT unless he is sure that his taxable sales would not cross the threshold of £1.35 million. Applicable from 1st April 2007, the cash-based accounting system is useful before the threshold of 1.35 million. Moreover, the VAT returns are up-to-date and accurate. Moreover, the business has agreed to pay all the VAT returns completely or in instalments. Similarly, the business has not committed any offence for VAT returns. Once the limit of £1.35 million and your taxable sales are more than this threshold, you are legally required to adopt the accrual accounting system and you no longer can use cash basis VAT. You have to maintain all your payments and receipts in invoices and keep the VAT returns in the accrual accounting system. On the other hand, any offence committed will lead your business towards the invoice-based accounting system and you can carry your purchases in accruals rather than in cash.   Final Thoughts Finally, we can say that cash basis VAT is simpler to use and adapt as you don’t need to track your invoices due to your supplier or from your customers. Instead, you can maintain a record of your activities as and when you receive or make a payment. The quick payments and receipts make the bookkeeping easier to manage and you can reclaim your VAT straightforward. Moreover, it helps small businesses get enough cash for their businesses to manage their finances. It also helps startups get out of debt when they have enough cash to manage their business. However, you cannot run and grow your business forever. Once your taxable sales are more than £1.35 million during a year, you automatically move towards the accrual accounting system.   Looking for qualified accountants to calculate VAT on your business that is based on cash? Why not get help from the experienced accountants at the CruseBurke. Talk to us now!   Disclaimer: All the information provided in this article on What are the Benefits of Calculating VAT on Cash Basis, including all the texts and graphics, is general in nature. It does not intend to disregard any of the professional advice.

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what is an abridged account

Everything You Need To Know About Abridged Accounts!

05/07/2022Accounting , Accounting Issues

Are you associated with a general partnership, a limited company or operating your business as a sole trader? Regardless of the type of your business structure to carry out, you will be asked to submit the required documentation to the companies house as well as HMRC. The details of documentation may require tax information or general business details. For the completion of this process, you need to know the updated information about abbreviated accounts and what is an abridged account? By the end of a financial year, your company is required to share statutory accounts with the shareholders as well as with HMRC. This will get you ensured that the amount of tax you are paying is accurate. This will further help to realise the financial health of your business. In the case of large businesses, the purpose of sharing their details with companies house is to make their financial health public. On the other hand, the smaller businesses, enjoy the easy go in this matter. This is because they were previously allowed to submit abbreviated accounts with few details in comparison to the large business. However, later there have been a few changes observed in the UK law that removed the eligibility of submitting the abbreviation accounts. Moreover, with the new changes in law, people are still confused about the regulations to be followed regarding abbreviations and abridged accounts. Further in the discussion, you will explore the facts about abbreviated and abridged accounts as well as the eligibility criteria to qualify for abridged accounts.   Reach out to our young, clever and tech-driven team members to learn the eligibility criteria for abridged accounts. Call us on 02086868876 or email us today.   What are Abbreviated Accounts In simple words, the use of abbreviated accounts is used to allow individuals who carry out small business to give a few details like the basic balance sheet to the companies house. Which is considered a simple snapshot of the liabilities and assets of the business. A little detail of the business net value was added as well. Later in 2016, small businesses are not allowed anymore to use abbreviated accounts. Are you wondering about the alternative method to what you use instead of the abbreviated accounts in case you are running a small business?  The way forward was guided by the micro-entity accounts or abridged accounts. Let’s explore further what is an abridged account?   What Is Abridged Account? Abridged accounts refer to the information that is a bit more detailed than the information provided in abbreviated accounts. However, it is still not enough if we compare it with the full year-end accounts. This is because the year-end full account requires a profit and loss account as well as a full balance sheet. It further includes the director’s report and relevant account notes. With the details provided in the abridged accounts, you can not expose your business’s net profit. Furthermore, the breakdown of your debtors and creditors, or your fixed accounts is not required to be added to the balance sheet. According to the updated company law in the UK, you will decide whether you will abridge accounts in the process of preparation or not. A list of criteria to be eligible and qualify is to be considered as well.   Eligibility Criteria to Qualify For Abridged Account or Micro-Entity Account In case you aim to file a micro-entity account or the abridged account with companies house and HMRC, you need to consider the eligibility criteria to ensure that you qualify successfully. In the case of abridged accounts, the criteria you need to meet involve the following factors: You are not allowed to have more employees than 50 in your company. The balance sheet must not cross the figure of £5.1 million. The turnover of your business should not be more than £10.2 million. On the other hand, if you aim to qualify for a micro-entity account, the following factors are involved to meet the criteria: You are not allowed to hire more than ten employees. The limit is £316,000 which should not be crossed in the balance sheet. The turnover of your business should not go above £632,0000. The question that arises here is how can you file the accounts? In case you are filing a micro-entity account, you are simply required to sign up for a web filing service. Once you successfully log in, you need to choose the account type and further you will be taken through to complete the process. In the case of filing an abridged account, you have multiple options from which you can choose. The first is the same as above to log in to the web filing service and choose the right account type. The other option is that you can join the filing service of companies house HMRC. Furthermore, a government gateway account is needed to complete the process. The file can be sent to HMRC. The last option is that you can avail the opportunity of third-party software. Filing regularly will be a lot more beneficial.   The Bottom Line Now that you have gathered a fair amount of information about ‘what is an abridged account’, we can bring the discussion toward wrapping up. To sum up we can say that abridged accounts can be an easy process to go through if you follow the relevant criteria instructions religiously and provide the required details promptly. Otherwise, you will find it complicated which might lead to the need for a professional to ensure the seamless working of the process. We hope these few minutes of reading have helped to develop a better understanding and to make you capable of filing the account in the right way.   Get in touch with one of our experts if you are stuck with your micro-entity accounts. We will offer to provide instant help.    Disclaimer: The information about ‘what is an abridged account’ is provided in this blog including text and graphics in general. It does not …

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