Finance Archives - Page 6 of 9

News,May 2018

How Much Does Public Liability Insurance Cost?

George05/12/2022Finance , Insurance

There are several businesses that consider public liability insurance cost as an important factor. However, they often enquire about the amount of cost this possibly can cover for them. For this understanding, we will have to explore that what are the affecting factors that have involvement with public liability insurance cost. When you aim to focus on your business insurance, one of the popular options you will find in the UK is public liability insurance. Now how much cost it will cover can vary according to the difference of your circumstances. This comprehensive guide will help you to know what is public liability insurance, how much cost is it able to cover for you, what are factors involved that can affect this business insurance, and how much you should expect to get in the insurance cost. Reach out to our smart and clever-minded guys to get an understanding of the tax set of rules in the UK queries answered quickly. We will help to understand your queries instantly. What is Referred to as Public Liability Insurance Cost? Public liability insurance referred to a popular type of business insurance. The main purpose of this insurance is to cover the kind of claims that are against you if there is an incident in which an individual from the public is injured, dies, or gets sick because of the kind of services you are providing. Also if you become the reason for causing damage to their property loss or any other unpleasant incident, this will be covered by public liability insurance as well. In such scenarios, your business will have to cover the cost mentioned in the claim by a public member who has struggled with damage or illness because of your work. This involves the medical costs as well as the legal fees. This business insurance is a popular way that can help you to cover the cost. Getting this public insurance is not mandatory for any individual, however, this will help you in some bad circumstances which are possible because you are in public contact because of your work. How Much Does Public Liability Insurance Cost? Every business has a different situation and needs also vary according to that. The price that you should expect this business insurance will cover for you will also vary because of the unique needs of your business. We can take the example of your business that might come under the category of high risk of public contact, the cost covered by the insurance will be different than the one that comes under the category of low-risk environment. Moreover, the cost of public insurance liability every month is only a few pounds in the case of some business that is under the low-risk category, however, for other business, the cost will be higher according to their different needs. Moreover, you will have to consider getting a kind of quote that is suitable to your unique needs and circumstances. What Factors Can Affect this Cost? There are factors that can affect the cost covered by the insurance for your business. The factors involved in affecting the cost are outlined below: The location of your business will matter to cover the cost. Whether you have a past record of claiming the public liability insurance cost or not. Whether you employ any people or if yes then what is the number of your employees? What is the level of cover that you aim to choose? What is the turnover annually? What is the business size that you are carrying out? What is the type of your business? How Much I Will Get in Public Liability Insurance Costs? The specifications of your business needs will let you understand how much you will get in public liability insurance. The policy and the quite will also be tailored as to what you will require for your business. It is better that you get in touch with your insurer who will allow you to organise an accurate cost amount that is suitable to cover your business needs. £1 million to £5 million is considered to be the common range of the claim that you can make. It also depends on the provider and what amount they will offer and in some cases, the provider can offer you more than the usual limit of the claim. The Bottom Line Now that you have gathered a fair amount of information about public liability insurance costs, we can bring the discussion towards wrapping up. The public liability insurance cost is a discussion of the subject of different business needs. Then there are multiple factors that can affect the amount of claim you can cover. So it is advisable for you to get in touch with your insurer to get a clear picture of what can be covered according to your business needs. We hope these few minutes of reading will help you to develop a better understanding of tax and related public liability insurance costs. As well as how to deal with them professionally in the future. If you seek professional help, learn more about public liability insurance costs. Why wander somewhere else when you have our young and clever team of professionals at CruseBurke? Disclaimer: The information provided in this blog is about public liability insurance costs, including the text and graphics, in general. It does not intend to disregard any of the professional advice.

A Simple Guide to the Mini-Budget 2022 (The Growth Plan)

George06/10/2022Finance

The Headline Message From The Chancellor The Growth Plan 2022 makes growth the government’s central economic mission, setting a target of reaching a 2.5% trend rate. Sustainable growth will lead to higher wages, greater opportunities and provide sustainable funding for public services. The United Kingdom currently faces a period of high inflation. The government has already taken significant steps to address high energy bills, the biggest challenge, by announcing the Energy Price Guarantee. To drive higher growth, the government will help expand the supply side of the economy. The Growth Plan sets out action to unlock private investment across the whole of the UK, cut red tape to make it quicker to deliver the UK’s critical infrastructure, make work pay, and support people to get onto the property ladder. Taken together, reforming the supply side of the economy, cutting and simplifying tax, and maintaining fiscal discipline will drive efficiency, enhance UK competitiveness, and help to boost growth sustainably in the long term. Some of the measures announced by the Chancellor were as follows. Rates and Allowances 2022/23 2021/22 Income tax rates – England and Wales (non-dividend income) 0% lower rate tax – savings rate only Up to £5,000 Up to £5,000 20% basic rate tax £12,571 to £50,270 £12,571 to £50,270 40% higher rate tax £50,271 to £150,000 £50,271 to £150,000 45% additional rate tax Above £150,000 Above £150,000 Scottish income tax rates (non-dividend income) 19% starting rate tax £12,571 to £14,732 £12,571 to £14,667 20% basic rate tax £14,733 to £25,688 £14,668 to £25,296 21% intermediate rate tax £25,688 to £43,662 £25,297 to £43,662 41% higher rate tax £43,663 to £150,000 £43,663 to £150,000 46% top rate Above £150,000 Above £150,000 Personal allowance Personal allowance £12,570 £12,570 The government will reduce the basic rate of income tax to 19% for England and Wales from April 2023. Also, the additional rate of income tax of 45% is abolished from April 2023, meaning the highest rate of income tax for individuals will be 40%. The announcements to income tax do not automatically affect rates in Scotland. The Scottish Government, which has responsibility for setting bands and rates of income tax in Scotland, will set out its plans for income tax (and other devolved taxes, including the property tax Land & Buildings Transactions Tax) in its draft budget, expected to be published in early December and finalised in February. Income Tax The basic rate of income tax will be cut to 19% from April 2023, 12 months earlier than planned. This will apply to non-savings, non-dividend income for taxpayers in England, Wales and Northern Ireland, the savings basic rate which applies to savings income for taxpayers across the UK and the default basic rate which applies to non-savings and non-dividend income of any taxpayer that is not subject to either the main rates or the Scottish rates of income tax. A four-year transition period for Gift Aid relief will apply, to maintain the income tax basic rate relief at 20% until April 2027. There will also be one-year transitional period for Relief at Source (RAS) pension schemes to permit them to continue to claim tax relief at 20%. The additional rate of income tax will also be removed from April 2023. This will apply to the additional rate of non-savings, non-dividend income for taxpayers in England, Wales and Northern Ireland. The additional rate for savings, dividends and the default rates will also be removed from April 2023, and this change will apply UK-wide. As the additional rate of income tax will be removed current additional rate taxpayers will also benefit from the Personal Savings Allowance of £500 for higher rate taxpayers. National Insurance As previously announced, from April 2022 the rate of National Insurance contributions across all classes (except Class 2 and 3) was increased by 1.25%. The increase in National Insurance contributions for the period 6 April 2022 to 5 November 2022 will apply to: Class 1 (paid by employees) Class 4 (paid by self-employed) Secondary Class 1, 1A and 1B (paid by employers). Employers will only pay on earnings above the secondary threshold. However, as announced on 23 September 2022, these rates are reverted to historical rates with effect from 6 November 2022. Furthermore, the new Health and Social Care Levy, which was due to take effect from 6 April 2023 is now scrapped. There are no changes to the Primary Threshold and Lower Profits Limit which were increased from £9,880 to £12,570 in April 2022. These are aligned with the personal allowance threshold. NI Category 2022-23 2021-22 Employee’s primary class 1 rate between primary threshold and upper earnings limit (up to 5 November 2022) From 6 November 2022 13.25% 12% 12% Employee’s primary class 1 rate above upper earnings limit From 6 November 2022 3.25% 2% 2% Employer’s secondary class 1 rate above secondary threshold From 6 November 2022 15.05% 13.80% 13.80% Class 4 rate between lower profits limit and upper profits limit From 6 November 2022 10.25% 9% 9% Class 4 rate above upper profits limit From 6 November 2022 3.25% 2% 2% National insurance 2022/23 2021/22 Lower earnings limit, primary class 1 (per week) £123 £120 Upper earnings limit, primary class 1 (per week) £967 £967 Apprentice upper secondary threshold (AUST) for under 21s/25s £967 £967 Primary threshold (per week) £190 up to 5 July 2022; £242 from 6 July 2022 onwards (see below) £184 Secondary threshold (per week) £175 £170 Class 2 small profits threshold (per year) £6,725 £6,515 Class 4 lower profits limit £11,908 £9,568 Class 4 upper profits limit £50,270 £50,270 The annual National Insurance Primary Threshold and Lower Profits Limit, for employees and the self-employed respectively, was increased from £9,880 to £12,570 from July 2022. From April 2022, self-employed individuals with profits between the Small Profits Threshold and Lower Profits Limit will not pay Class 2 NICs. Over the year as a whole for 2022-23, the Lower Profits Limit, the threshold below which self-employed people do not pay National Insurance, is equivalent …

Can a Sole Trader Have Multiple Businesses

Can a Sole Trader Have More Than One Businesses?

George13/09/2022Finance , Sole Trader

Yes, a sole trader can run multiple businesses at the same time. About 3.1 million sole traders do it in the UK, but 20% of sole traders fail within their first year, and 60% don’t make it past five years, according to the Institute for Fiscal Studies, whose findings were based on HMRC tax records reported by BBC News. While it’s completely legal, running multiple businesses as a sole trader comes with responsibilities. For success, you’ll need to know how taxes work, what (and if) you need to register, how to stay on top of admin, accurate record keeping and whether there comes a point where a different business structure (like a limited company) might make more sense. Let CruseBurke expert accountants simplify the process and help you make the best decision for your business. What Is a Sole Trader? A sole trader is a self-employed person and runs one or more businesses on their own. There’s no legal difference between the person and the business. You keep the profits, but you are also personally responsible for debts and obligations. If something goes wrong, your personal assets may be at risk. As a sole trader, you’ll need to register with HM Revenue & Customs (HMRC) for Self Assessment (HMRC’s system for collecting Income Tax from self-employed individuals) once your self-employed income goes over £1,000 in a tax year. Is It Legal to have more than one Business as a Sole Trader? Yes, it is legal. You can run more than one business at a time as a sole trader. HMRC recognises that many people do this. The businesses may be different kinds (say baking cakes in one, doing graphic design in another), or related. You don’t need separate legal entities for each. But there are implications, especially around tax, VAT, and paperwork. Do You Need to Register Each Business Separately? No, you don’t have to register each business separately with HMRC if you are already a sole trader. You’ll have one Unique Tax Reference (UTR). All your businesses are under that UTR. You report them separately in the same Self Assessment tax return, each business having its own “trade” section. How to Register a Second Business as a Sole Trader You don’t really “register” a second sole trader business as such. If you are already working as a sole trader, you inform HMRC of what you’re doing when you submit your Self Assessment. If the new trade is very different, you keep records separately. You may need to update your business name or trading style, but you will still use the same UTR. How Tax and NI Work for Multiple Sole Trader Businesses? Suppose you run more than one business as a sole trader. In that case, all profits from all businesses are added together for Income Tax and National Insurance. You fill in one Self Assessment tax return and declare each business’s income & expenses separately, but the total taxable profit determines your tax band. You don’t pay separately for each business. You may also pay National Insurance Contributions (NICs). Since April 2024, Class 2 NICs are no longer compulsory, but you can choose to pay them voluntarily to protect your entitlement to certain benefits like the State Pension. Class 4 is based on profit levels. Rates change over time. How Much Tax Do You Pay Running Your Own Business? For 2024/25: First £12,570 of profit is tax‑free (Personal Allowance). You only get one Personal Allowance. That’s the income you can make without paying Income Tax. Profits above that are taxed. Any profits between £12,571 and £50,270 are taxed at the 20% basic rate. Between £50,271 and £125,140 taxed at 40%. Above £125,140 taxed at 45%. Class 2 NICs are no longer compulsory from the 2024/25 tax year. If your profits are above the Small Profits Threshold (£6,725), you will automatically receive a qualifying year for State Pension purposes. If your profits are below this threshold, you can choose to pay Class 2 NICs voluntarily to build entitlement to the State Pension and certain other benefits. Class 4 NICs based on your profit levels. For the tax year 25/26, — 6% on profits between £12,570 and £50,270, and 2% on profits over £50,270. How Does Tax Work If You are Employed and Self‑Employed? If you have both employment income (PAYE) and self‑employed income, both are added together to calculate your total income. You get the same Personal Allowance to use across your total income. You pay tax on your combined income (profit). HMRC will deduct some of your income via PAYE for your employment. Then your self-employed profits are added and taxed via Self Assessment. NICs are separate: employee NICs for your PAYE job; self‑employed contributions (Class 2(voluntary) and 4) on profits. VAT for Sole Traders with Multiple Businesses VAT rules mean you must look at the total turnover of all your businesses combined (for VAT purposes). If that total goes over the VAT registration threshold, you must register. As of April 2024, that threshold was raised from £85,000 to £90,000. Even if one business is small and another is large, they together can push you over the limit. If that happens, you must register, charge VAT, and file VAT returns. Can I have Two Businesses to Avoid VAT? No, you cannot legally run two businesses as a sole trader to avoid VAT registration if their combined taxable turnover exceeds the VAT threshold, which is £90,000 (as of 2024/25 in the UK). HMRC treats all your sole trader income as one when it comes to VAT. So if you operate two different sole trader businesses under your name, their sales must be added together. Suppose the total turnover for VAT‑eligible goods or services goes over the threshold in any rolling 12‑month period. In that case, you must register for VAT, even if no single business crosses it on its own. What if I Split the Businesses Under Different Names? Trying to artificially split one business into two or …

Reporting Expenses and Benefits for 2021/22

George02/09/2022Business , Business Growth Ideas , Finance

Do you know the employers who have showered their employees with the taxable HMRC expenses and benefits in the tax year 2021-22? There is a requirement for them to get in touch with HMRC and inform them. This will not be required to inform HMRC if the employees are enrolled with the agreement of the PAYE system. To do the process of reporting this information to HMRC, you have to use P11D. A P11D form. One form will be used for the cause of notifying HMRC about the information of each employee. This is a way of declaring to HMRC that all the required steps are considered and followed seriously. This will allow HMRC to do the taxable processing accordingly. There will not be any wrong codes sent to the employees. This depends on the accuracy of the information that you as an employer will send to HMRC. This will keep you protected from any unfavourable circumstances in the future. Further in this guide, we will help you to develop an understanding of paper returns, commercial software, HMRC for online PAYE, and the options for filing. You can seek help from the expert and experienced chartered accountants at CruseBurke and manage your HMRC expenses and benefits reports accurately. HMRC Expenses and Benefits – Filing Returns 2021-22 For the filing returns, understanding the features listed and explained below will turn out to be beneficial for employers where there are handling a large number of employees or not. Paper Returns Most people think that it is mandatory thing for the P11Ds and the P11D(b) to file online. However, that is not the case at all. In the case of such employers who only have a few returns to file, this is dealt with as an option also. Sometimes employers are not liable to file any returns in a particular tax year, however, they have received the notification in form of P11D(b). All they need to do is to do a nil declaration. An online platform can be used for this purpose. This is an important action to do. In case you fail to do so, you will be charged hefty fines. Commercial Software Package There is an option for the employers to apply online filing and the use of the expenses and benefits software package will be helpful here. In the case the submission of filing is more than the figure 500, the commercial software package is an easy and professional way to file online. In this case, you can look for assistance to get support and your software provider can be of the best use in this regard. HMRC’s PAYE Online The PAYE online service of HMRC is quite beneficial for employers to handle several tasks of the business. These tasks can include the following: Appealing a penalty Checking the payment history Payment of the bills To check what they exactly owe to HMRC Furthermore, if you want to file for the expenses and benefits return, you can use this here as well. There is a limit of 500 employees in this case if you want to file the returns. More employees than that can not be catered to here. A commercial software package is recommended in that case. This will be helpful to complete such a big task. Options for Filing If you need to file P11Ds and P11D(b) returns as an employer, you can either do it in paper format or electronic filing is your other option for that. However, HMRC gives more encouragement to the electronic filing option. This has been a preferred option for employers as well. The other possible choices for this cause are HMRC’s PAYE online service or filing with the use of a commercial software package. The Bottom Line Now that you have gathered a fair amount of information about HMRC expenses and benefits, we can bring the discussion toward wrapping up finally. We can say that there are a lot of ways for employers to deal with the filing of HMRC expenses and benefits. The best and most recommendable option is to understand each one of them and get the process accurate and successful to avoid any unfavourable circumstances in the future. Are you wondering about the HMRC expenses and benefits? Feel free to ask us any questions and get consultation services at CruseBurke by calling us at 02086868876. Disclaimer: All the information provided in this article on HMRC expenses and benefits including texts and graphics in general. It does not intend to disregard any of the professional advice.

How to Claim PIP Successfully?

George22/07/2022Dividend Allowance , Finance , Insurance , Tax Saving Tips

Are you an individual who is looking for income support because of an illness, mental health condition, or disability? You can be the one who can get help from Personal Independence Payment (PIP) can able to know how to claim PIP successfully. If other support schemes have denied your support in these challenging times, you can try to claim Personal Independence Payment. There is confusion among people that to be eligible for Personal Independence Payment, you need to pay the national insurance. This is not at all the case. Moreover, to claim Personal Independence Payment, you don’t even have to be a working individual or save any kind of money. However, in the case of terminal illness, the rules are a bit different to be eligible. In this guide, you will be able to gather information about the eligibility criteria to claim PIP, and what is the process of claiming Personal Independence Payment. Reach out to our young, clever and tech-driven team members to learn the eligibility criteria for Personal Independence Payment. How to Claim PIP Successfully? If you have decided to claim PIP successfully, it is vital to have an understanding of the process to make it a successful journey. Generally, the proclaiming aim about PIP is considered in three steps. These basic steps are listed and explained in the following: The first thing to do is to get in touch with the department of work and pension. You will be required to fill out the form named PIP1. This part can be done over a phone call as well. Next, you have to explain how your disability has affected you and your income. You can choose the online forum or email to do so. If you want to do it on paper and post it, that is a possible option as well. You will be required a medical assessment. Moreover, consider that it can be a process of 6 months from the moment you initiate it till you receive your first Personal Independence Payment. If the DWP find you the neediest, you can even get their first payment from the day you started the claim process. There is no such possibility of getting the amount before the date you made the claim. Get in Touch with DWP (Department of Work and Pension) It is advisable to be in touch with the department of work and pension over a phone call. This is a swift process rather than writing an email and waiting for a response. If the DWP find you eligible, there are chances that you get the payment right from the date of a phone call. Before you plan to make a phone call and get in touch with them, have the following information available to you: Dates and details in case you have stayed somewhere abroad for more than a month during the past three years. Immigration status or the details of your nationality If you have stayed in residential care or at a hospital, have the details with you. If there is a health professional who is dealing with your health matter, have his contact details. Account details of your bank or the building account details National insurance number your basic details that include your address, phone number, and name. The process over a phone call takes about 20 minutes. If you are comfortable someone can talk on your behalf. However, you should be around them to grant the permission and required information. The department of work and pension can even ask you if you need the forms through posting or online medium. Moreover, they will investigate your mental health and other medical conditions just to be sure that whether you need any additional support with the PIP or not? Eligibility Criteria to Claim PIP The main point to be eligible as per the PIP criteria is to have a medical condition that is a hurdle in your day-to-day tasks. This could be a physical condition as well as a mental condition. The major and prominent points to meet the required standard of the eligibility criteria of PIP include the following listed points: This condition must be with you for three months and will be there for the least nine more months. You are required to be a resident of Scotland, Wales, or England. Your age should be 16 or more to be eligible for Personal Independence Payment. In case you have reached the age of state pension, there are a few exceptions in the set of rules. The Bottom Line Now that you have gathered a fair amount of information about how to claim PIP successfully, we can sum up by saying that the process of making a claim is not very complex and you can easily handle it seamlessly on your own. However, you must consider the required standard to be eligible to get the money from PIP. Your queries will be answered when you will get in touch with the department of work and pension as well. The easy and swift way is to communicate over a phone call and they will even offer to fill the forms if you are ok with providing the necessary information. This possibly will take around 20 minutes and you will be done with the process. It has been observed that the deserving individuals start to get the money right after initiating the process of claim if they meet the required criteria. We hope these few minutes of reading will be helpful for you to check if you qualify according to the required eligibility criteria as well as how to initiate the process of claiming PIP. Get in touch with one of our experts if you are stuck with your Independence Payment We will offer to provide instant help. Disclaimer: The information about how to claim PIP successfully provided in this blog includes text and graphics in general. This does not intend to disregard any of the professional advice.

What is Debit and Credit and It’s Difference?

George27/06/2022Accounting , Bookkeeping , Finance

Many people beginning their finance education get confused about the difference between debits and credits. Even laymen become perplexed over the question of what is debit and credit most of the time. On the other hand, this confusion might cost you many pounds if used incorrectly and entered the values in the wrong accounts. So, financial managers, accountants and bookkeepers take special care to produce and maintain accurate financial records. If you are also one of those people mixing up these two terms, then this guide is right for you. In this article, we will inform you about the debits and credits separately and then highlight the difference between these two terms. Moreover, we will discuss the use if debits and credits in bookkeeping and accounts records and how to use them. So, let’s start with our basic understanding of debits and credits. Let’s seek help from the expert and experienced chartered accountants at CruseBurke and manage your bookkeeping and balance sheets accurately. Contact us now! Double Accounting Procedure in Accounting Mostly, the confusion between debit and credit arises due to the double-entry procedure in the bookkeeping and balance sheets. To ensure accuracy and avoid any discrepancies, the accountants enter a value into accounts at the same time. One value is added as the debit and another one as the credit simultaneously. When an entry is added to to the debit accounts, it is subtracted simultaneously from the credit account. Vice versa, any value added to the credit accounts is subtracted from the debit account. This is the reason most people get confused about these terms. The following types of accounts are used for maintaining the records of a firm: Asset Accounts Expense Accounts Liability Accounts Equity Accounts Revenue A value increased in one account is automatically deducted from another account. For this, accuracy needs to be ensured to avoid any differences in the records. What is Debit in Bookkeeping? A debit is a value coming inside your accounts, ultimately increasing the value of your assets. On the other hand, the debits reduce the liabilities of an organisation. In other words, all the money or cash coming into the account of a company is known as the debit and it is added as a debit entry to a balance sheet. For example, it is added to the assets or expense accounts. At the same time, it is subtracted from the equity or revenue accounts lowering the liabilities of a company. The debit is the money earned by the company. For example, a company has received the payments from the clients and it will be a part of the debit accounts. The following types of accounts increase the value of debit accounts: Dividends (Draws) Expenses Assets Losses You can remember them as DEAL, as it will make it easier for you to add values as a debit to these accounts. The debit entries are made using the abbreviation of the dr. in the records. What is Credit in Bookkeeping? Credit is the opposite of a debit in finance. It is a value or money going out of the accounts of a company. It means to say the credit in bookkeeping reduces the assets and increases the liabilities. The credits are a crucial part of a balance sheet, and they represent the liabilities of a company. These are the payments a company has yet to make in future as the company has purchased some raw material or obtained a loan from a bank. Gains Income Revenues Liabilities Stockholders’ (Owners’) Equity Remembering as GIRLS would make the entry process convenient and error-free for you. The credits are entered with the abbreviation of Cr. in the sheets. What is the difference between Debits and Credits? Both the debits and credits are the transactions added to the accounts of a company. Every transaction has two sides. One is the transaction in which a company pays out of its accounts, reducing the money in that account. This is known as the Credit. On the other hand, a company achieves or earns money from the sale of products or services or by getting loans. This part of the transaction increases the money in the accounts of a firm. This increase in money is added as a debit to the company’s balance sheet. Accounts Debit Credit Asset Account Increases Decreases Expense Account Increases Decreases Liability Account Decreases Increases Equity Account Decreases Increases Revenue Decreases Increases Entry Recorded on the left Recorded on the right All the entries counted as an asset, cash or loan are added as debits. When a loan is paid back, it is credited. Similarly, when a company needs cash, it sells some of its assets. These assets will be credited and the cash received will be added as the debit. The Final Thoughts In conclusion, debit and credit are the two sides of the same coin. The debit is a value increasing the total assets or cash of a company. On the contrary, the credits are the values reducing the assets and cash of a company. So, it is very important to learn what is debit and credit and what is the difference between them. Moreover, you need to take care of how to increase and decrease the debit and credit in different types of accounts. Are you wondering about the difference between debit and credit? Feel free to ask us any questions and get consultation services at CruseBurke by calling us at 02086868876. Disclaimer: All the information provided in this article on what is the difference between debit and credit including texts and graphics is general in nature. It does not intend to disregard any of the professional advice.

What is Automated Credit Control and Why Does Your Business Need this?

George20/06/2022Finance

What is automated credit control? Many of you might be wondering about this question and why is it beneficial for your business. Customers with a credit history may cause a huge problem for the smooth cash flow of your business in the long run. The shortage of cash flow may drive you out of business due to the delayed payments by the clients. Therefore, the management of cash and credit is a crucial part of the financial strategy of a company. Many small medium businesses have to devote a lot of time and effort to carrying out smooth credit control management. Still, they fail to meet the criteria and it also increases the opportunity cost of time that could be used in another productive task. In this blog, we will walk you through the introduction of automated credit control and how it is used in an organization. Moreover, we will discuss why automated credit control is important for your business and what the steps to initiate an automated credit control system is. So, let’s delve deep! CruseBurke helps you reach your financial goals, ensuring you are managing your cash flow at best. Why not talk to our professional advisors and get the best services in the UK? Give us a call right away! What is Automated Credit Control? Automated Credit Control is the automatic debt recovery procedure for the customers. The customers, sometimes, are lazy in paying back their due payments and the management has to take pains to follow up on the customer’s invoices to make the cash flow available in the business. With automated credit control, the routine tasks of the management are performed automatically by the credit-control software. This cloud-based software helps the financial managers handle the documentation smoothly and make the workflow more efficient and effective by following the credit procedures until the invoice has been paid by the customer. Why is Automated Credit Control Important? Automated Credit Control is important for the smooth workflow of your business. It helps you get the debts as soon as possible. Moreover, the business owners can survive and beat the competitive markets by getting the cash flow available to the business. A free cash flow is important for carrying out the day-to-day operating expenses. Without it, small businesses cannot survive and grow in the market. With the help of the automation of credit, businesses can thrive in the market. Moreover, the customer relationships are improved for the efficient management of the invoices and the follow-up procedures. With automation, you can turn your customers into loyal and long-term customers as they start relying on the efficient management of the invoices. Above all, a business reduces the opportunity of managing the lengthy documentation procedure and following the credit of the customers. The saved time and effort can be utilized for another productive task, growing the efficiency of the business ultimately. What is the Process of the Automated Credit Control? The automated credit control system consists of the following six steps. This procedure helps boost the cash and efficiency of the credit recovery within the acceptable timeframe. Let’s discuss each of them! Order Confirmation: With a valid Purchasing Order (Po) number, the order is confirmed automatically on the receipt of the order by the customer. Pre-Invoice Due Reminder: A reminder is sent automatically to the customer before the due date to the customer. First Over-Due Reminder: The first reminder is sent to the client after one week to the client. Moreover, a notification is sent to the internal management system of the company that the client has been informed about the due payment. Second Over-Due Reminder: Still, if the client fails to make a payment, a second reminder is sent to them, with the inclusion of a decision-maker in the email. Penalties Notice: After three weeks of the due date, the customer and the customer account manager are informed that the payment will be accompanied by a penalty to the customer. Account Suspension Notice: Lastly, the account suspension notification is dispatched automatically to the client and the company management. The suspension notification is sent after four weeks and the time of one week is given to the client for the payment of the credit. Conclusion Lastly, we can say that automation leads to the availability of cash flow to a business. Cash flow is a major problem for businesses, throwing them out of the market in an instant. However, this dangerous situation can be avoided when a business manager is able to adopt an automated credit control system. Automation leads to the efficiency of the workflow and the increased productivity of the employees. This saved time and effort is helpful in devoting toward the more productive tasks. So, if your business is suffering from a credit problem and the customers are delaying their payments, you are in need of a credit control system to manage your credits and the cash flow. So, you don’t need to worry anymore about what is credit control as you have found all the answers to your questions and you can decide if you need this automation or not. If you are looking for a professional accountant and bookkeeper, consult our qualified team at CruseBurke to get the best advisory services for your business. Call us or send us a message! Disclaimer: All the information provided in this article on What is Automated Credit is general in nature. It does not intend to disregard any of the professional advice.

Charging VAT on Expenses: Disbursements vs. Recharges

George19/05/2022Finance , Marketing , Personal Tax , VAT

We are associated with the business world to carry out services for our customers. Whenever we offer a service to a client, we usually incur some form of cost. Whether you need to travel to meet a client, purchase a specific tool, or use paid software to deliver your service, it’s important to understand how these costs are treated when it comes to VAT—particularly in relation to recharged expenses and disbursements. This becomes even more crucial if you’re VAT registered. You must know how to treat these expenses on your invoices and understand when VAT should be charged—and when it shouldn’t. Even experienced business owners can find this distinction confusing. This article will help you understand the differences between recharged expenses and disbursements and explain how to handle VAT correctly in each case. How to Define Disbursement and Rechargeable Expenses? The term disbursement refers to the buying of the products or services that you intend your customers to receive from you and get the benefits of its usage. The demand depends on the requirement of the client, may it be business-related reading material or website hosting packages. On the other hand, rechargeable expenses are defined as the purchase of something that you need to fulfil the demands of your customers to work. There is no chance that you treat this as a disbursement, this is the rechargeable expense. Examples of travel costs that are planned for business causes as well as the amount of money you spent while you were posting some documents to your customers. Need help with VAT Registration? Understanding VAT rules can be tricky — but registering for VAT doesn’t have to be. Let our experts handle it for you. Register for VAT with CruseBurke. Learn To Invoice Your Client For Rechargeable Expenses You have to deal with the expense while you are carrying out work and getting your regular duties done as a contractor for your client, you do invoice your client for such expenses. The most used and simple suggestion is that you add VAT on the expenses regardless of the fact that you might have paid VAT or not. Invoice Your Client For VAT on Disbursement As discussed earlier while you are making a purchase of services and products as per the requirement of your customers, you tend to leave VAT calculation from these payments. Technically this depicts that it is the customer who has purchased and gotten the products or services. Your position is as a go in between all the processes. These kinds of transactions are considered disbursements with the purpose of VAT. Moreover, there are a few certain conditions that must be met to ensure that the payment can be treated as a disbursement. See the following listed conditions: The amount of money spent while making the purchase is a part of the billing that you will invoice your customer. The cost of products and services purchased is an additional amount mentioned in the billing for your customer. This is for the reason of carrying out the work all by yourself. The amount spent on the purchase of goods and services is clearly mentioned with relevant details on the bill. A separate section makes it outlined even more clearly. The customer should know that the products or services he has received are not directly from you but are outsourced from a supplier. The client has taken the responsibility to make the payment for the required purchase. The customer has received the product without a hassle and enjoys the benefit of using it. You played the role of an agent and your client had a piece of knowledge about this. You got the permission of your customer before making the payment. Regardless of what size of business you own, we are just the right choice to deal with your queries. Call us on 02086868876 or email us today. Can You Claim Back VAT? You can only reclaim VAT if you are the buyer and the invoice is in your business’s name. If it’s a disbursement, you cannot reclaim VAT because you were not the buyer. If it’s a rechargeable expense and VAT was charged to you, then you can reclaim the VAT (assuming the invoice is in your name and supports input VAT deduction). Wrapping Up The discussion of VAT on the disbursement can finally be wrapped up since you have gathered all you need to know for a basic understanding. You may have purchased the products and services on someone else’s behalf but if it is from a supplier who is VAT registered, this makes you ineligible to claim back VAT. The reason is that such transactions are considered as a disbursement by you for VAT purposes. Get the most benefit of the right decision-making and ensure your business growth. If you seek professional help to learn further in this regard, this is always a great idea to add to your basic knowledge. We hope these few minutes of reading will help you to make a permanent mark in the market and secure the future of your business. Disclaimer: The information about VAT on Disbursements provided in this article is general in nature. It does not intend to disregard any professional advice.

Step By Step Guide to Set Up An S Corporation

George09/05/2022Finance

When a businessman aims to initiate a business. This can come with a lot of excitement as well as complexity. You feel productive and receptive when an entrepreneurial idea hits your mind. However, what type of business structure will suit your idea is a head-scratching process. The idea of an S corporation is flexible enough to start small and then grow with the process. The question that arises here is that what is an s corporation? In case you have identified that an s corporation is suitable for your business idea. We have gathered really important information for your benefit. This will help to grow your business rapidly. Before we delve further into the discussion, let’s have a look at the points of discussion in today’s articles. This includes the following: What is an S Corporation? Pros and Cons of S Corporations Final Thoughts What is an S Corporation? An S corporation or s corp refers to a business entity that is legal. Its pass-through tax status helps to identify tax designation. A corporation can be called an S if it is meeting the requirements of the subchapter. The important part is that s corp goes without paying the corporation tax. For the purpose of federal taxation, the corp passes the following to the shareholders: credits deductions losses corporate income Pros and Cons of an S Corporation Let’s have a look at the pros that are major attractions for people to form s corporations are listed below for you. An S corporation refers to a business structure that is small. The taxation process of such companies is similar to sole traders and partnerships. Tax advantages are known to be the biggest attraction to form the company for owners. The profits and losses are going by the owner’s income tax. Corporate taxes can be avoided, however, you can file tax returns every year. Whereas, there are several factors that come under the disadvantages of setting up an s corporation. If your business is sold out, s corporation will reduce your taxable gains. A rollercoaster of expenses and losses will be a part of the initial stage in setting up an s corporation. Under the structure of S corporations, you can’t offer multiple types of stock. So, this way your options for business are limited. The requirement of daily s corp meetings makes it hard. This is why people find LLC an easy to go with option. Stuck with your accounts and looking for a helping hand? How about you get our guys on a quick call. We love talking about taxes, payroll management, and any opportunities that help you expand your prospects. Call us on 02086868876 or email us today. Final Thoughts Now that you have developed a basic understanding of what are S corporations and what are the pros and cons that you have to face in the process. Finally, we can sum up the discussion. Deciding what is the best structure for your business idea will not be easy. Moreover, the more you will study about forming a suitable business structure, the more you will be closer to your decision. The company situation and laws may vary from one area to another. You are requested to get professional help from tax and legal counsel. This process will guide you to find out a suitable choice for your individual needs. We hope these few minutes of reading will add to your knowledge and helps to make smart business choices. Disclaimer: The information about What are S Corporations provided in this article including text, graphics, and images is general in nature. It Does not intend to disregard any professional advice.

How to Calculate Profit Margin?

George27/04/2022Accounting , Finance

Are you going to analyze the financial health and financial performance of your business and you are advised to calculate the profit margin for this analysis? However, are you struggling to know how to calculate profit margin at the same time? Don’t worry!!! As we are going to discuss how to calculate profit margin in more detail in this blog for you, so that you can measure the financial viability of your business. But, let’s break down this topic into the useful information you must know before calculating profit margin. What is Profit Margin? Profit margin measures how many pounds have been generated for each unit of product sold in a given period. Moreover, this indicator reflects the financial position of the company relatively. In other words, profit margins are described as percentages or ratios, so you can use this figure to compare with the profit margin of your competitors in the same industrial sector. Without this financial statistic, no business can analyze the relative position of their business in an industry. You cannot rely on the numbers such as profits alone. Knowing the financial profitability requires you to calculate the profit margin. For example, you calculate the profit (Revenue – Costs) of your business which gives you a number. This number cannot make a whole picture for you as you cannot decide whether your business is growing is losing market share. Let’s make it clear with an example! Example Suppose there are two companies in a market. Company A is making a profit of £50,000 the same as Company A making. So, how can you decide which company is more profitable than the other? Because it is possible that Company A’s costs are higher than company B’s costs because Company A lacks managerial expertise, etc. To gauge the relative performance, both companies need to calculate profit margin. Let’s learn how to calculate profit margin! How to Calculate Profit Margin? Calculating profit margins doesn’t require the financial managers to dive deep into complex accounting equations and numbers. Instead, they need simply two numbers: Cost & net sales Profit Margin = Cost/Net sales Let’s Suppose Company A is manufacturing products at a cost of £50,000 and their sales revenue is £100,000. On the other hand, Company B is producing the same product at a cost of £100,000 and earning £150,000 in net sales. In this case, their profit is equal to £50,000. However, calculating profit margin will present the actual picture of both companies’ financial position. Profit Margin of Company A = [Cost/ Net Sales] * 100 = [£50,000/£100,000] * 100 = 0.5 * 100 = 50% Profit Margin of Company B = Cost/ Net Sales] * 100 = [£100,000/£150,000] * 100 = 0.66 * 100 = 66.67% So, you can see that Company A is potentially more profitable than Company A. Profit margins have given more clearer picture of their financial performance than other financial indicators. Get in touch, explain your requirements, or sign up online for customised services just like your business requires. Why is Profit Margin Important? Profit margin is essential to learning about the performance of a business. Moreover, financial experts find this indicator more insightful due to the relative nature and strong insight into the cost structure of a business. Moreover, it is one of the viable financial indicators that is widely used to measure the financial health of a firm. Analyze Relative Market Position Similarly, if you are an investor and wish to invest in a business by buying the stocks, you can decide by calculating the profit margin of that business. Besides, it helps you compare different companies in the same industry and make a final decision about investing in a potentially profitable business. Evaluate Managerial Decisions Moreover, you can judge the managerial expertise of a business by comparing the profits across different companies. It is possible that a product can be manufactured at lower costs, but poor management decisions increase the costs and lower the profit margins. Cost & Price Decision-making Lastly, the company managers can cut costs as this profit margin provides insights into the costs of producing more goods. So, if the costs increase on additional products, the manager can look into the costs and lower them to increase the revenues. On the other hand, he can increase the price to raise the sales revenue. So, we can say that profit margins provide key options to the company managers to accelerate the growth of their company. Conclusion Lastly, we can conclude the discussion on how to calculate profit margin by saying that it is one of the most crucial indicators, and without it, no business can move forward. As we have seen that profit margin is a key performance indicator for exploring the actual growth potential of a business, so profit margin makes a huge impact in making a key financially sound decision. Moreover, we have observed that profit margin helps shape the cost structure into the most favorable structure as business managers can decide on which costs are not viable and are useless liabilities. Besides, the profit margin is preferred over other indicators because it provides a relative position of a company in an industry or sector. So, you can get an edge over your competitors by making decisions that are better than your rival businesses. Finally, you must not get confused about how to calculate profit margin as you have read in detail with strong examples in this article. Stuck with your accounts and looking for a helping hand? How about you get our guys on a quick call. We love talking about taxes, payroll management and any opportunities that help you expand your prospects. Call us on 02086868876 or email us today. Disclaimer: The information about How to Calculate Profit Margin provided in this article is general in nature and does not intend to disregard any professional advice.