A post from the archive…adding costs for car and capital items

A timely article re posted here from the archive – Car expenses and buying hardware…how to represent these in your books (originally posted 12 Jan 2010) As there are a lot of folks doing their self-employment tax returns at the moment we’ve decided to do a few posts in answer to commonly raised questions – Read the full article…

SAVE THE DATE: MyCake sessions with our favourite accountants

Get your diary’s at the ready as we will be running 2 sessions in the new year with our favourite accountants. Save the date: Tuesday 15 January 2013                           Friday 18 January 2013 To express your interest in registering for one of these events and receiving further details in January, please email support@mycake.org with your Read the full article…

MyCake and My Accountant

MyCake and My Accountant – how they work together in practice

This is a post for the creative entrepreneurs out there who are working with an accountant or are considering doing so.

Before we look at the working relationship lets get clear on a few basics:

  • An accountant is working for you not you for them … sounds daft but this means that the work they do for you needs to be delivered in a timely manner for your business to help your decision making. So you can reasonably ask them to agree with you the deadline by which your accounts will be delivered for example. You want to avoid simply being another folder in the pile that they get to when they are ready!
  • You can choose what software you use for your business and should pick the right software for you not simply the software that the accountant prefers (because if everyone uses the same software it makes their lives easier)
  • You can ask for the accounts to be presented to you in a way that aids your decision making … by this we mean that there are some things that you will need to know about your financials that are not required for a tax return e.g. monies spent on entertaining are not tax deductable if you are self-employed but you need to know what you spend nevertheless. So you should think about how you enter data into your book-keeping system so that it shows key areas of expenditure, spend on different projects/clients etc and whilst you should certainly seek the opinion of your accountant it is not about only doing what they ask for and not thinking further about it!

Ok, with that cleared up here’s an idea of how your working relationship with an accountant might run through a year and through the process of an annual return (company or individual).

a) At the start of the year it’s worth having a conversation with your accountant on the headings that you are allocating receipts to and any methods of separating out different types of business or clients. If you’ve been working with an accountant for a while you might find that they send you a letter with your previous year’s accounts suggesting tweaks to the way you do things or informing you about changes to tax and accounting rules that you need to be aware of and implement.

b) Once you’ve made these changes you should be able to run your book-keeping pretty smoothly through the year. Occasionally you might ring up for advice on how to categorise some income or expenses, to check if/how to charge VAT internationally etc.

c) If your income has been dramatically different from the previous year you might want to negotiate the amount you pay in tax as the interim payment in July. If your income has been lower then this means that you can reduce the payment in July which will make things easier on your cashflow. If your income has been higher then you should consider upping the payment in July so that the full burden doesn’t land in the following January. If you don’t increase the payment make sure you set the money aside!

d) You may choose to have your accountant as the registered point of contact with HMRC. This means that they will submit your individual tax return for you and will be the first point of call for any enquiries from HMRC. Doing it this way demonstrates to HMRC that you take tax matters seriously and that there is a professional who has an overview of your activities.

e) At the end of the year you will deliver the hard copies of invoices and receipts along with bank statements to your accountant and give them online access to your MyCake account. Their job is to check through the hard copies to make sure that they tally accurately with what’s in MyCake. You may have forgotten things like bank interest or the percentage to apply for ‘use of home’ or ‘use of car’. They will probably make use of the ability to reconcile your MyCake accounts with your bank statements. They’ll also check how expenses have been classified and may exclude some of these e.g. entertaining for tax purposes.

f) It’s also worth noting that the sooner you can send in the paperwork the sooner your accountant can get on with it. In a perfect world you would send in your accounts in early April and they’d complete them in time for you to adjust the July payment. Failing that you’re aiming for the January deadline. Clearly there is no point in trying to find an accountant in the latter part of the year … they will be at capacity in terms of commitments to existing clients and will be unlikely to agree to take on an additional set of accounts for completion by January.

g) Your accountant will provide a set of accounts for your records and will complete the tax return. You will be sent these to sign before they are submitted.

h) As your accountant processes your data (many will call you to say that they’re starting, if you haven’t heard from them by November call and find out where you are in their queue) they’ll probably call for clarification on some of the expenses or invoices so keep your cheque book stubs to hand and be ready to download copies of missing bank statements etc. If it is a large firm then their will be a pool of juniors who do much of the desk work to check the basics and they may not know the details of your business as well as your key point of contact. Be prepared to go over things more than once!

i) Lastly once it is all done and dusted they’ll be sending you an invoice and your files will be ready to collect. Do ask them for an hour of their time to discuss the state of your business with them and to talk about how you see the year ahead. They are a valuable source of advice for small businesses. Make the most of it!

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MyCake and My Accountant – how they work together in practice This is a post for the creative entrepreneurs out there who are working with an accountant or are considering doing so. Before we look at the working relationship lets get clear on a few basics: An accountant is working for you not you for Read the full article…

What is a year end process and why does it matter?

At this time of year quite a few MyCake users are finishing off their accounts for 2010-11 and want to archive this data. We suggest you use the ‘year end process’ in the tools & reports section and here’s the why and the how of it: A ‘year end’ process is something that you do Read the full article…

What reports should I run in my book-keeping system?

  One of the benefits of using a proper book-keeping system as opposed to a set of excel spreadsheets is that there are usually a whole set of reports which you can run on the data without having to invent complicated charts for yourself. MyCake is no exception to this. In recent conversations with users Read the full article…

Money For Creative People – is LIVE

Hurrah, we’ve made it to the launch. Here’s the link to the product. In our view selling yourself short is as bad as selling out. Money for Creative People is an in-depth guide to financial management for your creative business, covering everything from cultivating a balanced mindset about money and creativity, through to assembling a Read the full article…