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What does this mean? – A guide to accounting jargon

One of the things that we pride ourselves on at PBATS is not following the  stereotypes of the industry, not just the stuffy suits but also avoiding using loads of jargon. However, sometimes we just can’t avoid a little jargon, so we’ve made this handy guide to help you out when you’re not sure what we mean!

  • Assets – These are things you own, not just physical things like your computers and equipment, but also your money in your bank.
  • Liabilities – These are what you owe, the bills outstanding that you need to pay.
  • Debtor – Someone who owes you money.
  • Creditor – Someone you owe money to.
  • Debtor days – How long it takes to be paid.
  • Prepayment – Something you’ve paid for that you’ve not yet received in full, such as an insurance policy, which may span more than one financial period.
  • Cost of goods sold – The total of your expenses for making your goods you’ve sold.
  • Overheads – Regular monthly costs such as rent & utilities.
  • Net profit – Your sales less all of of your business costs.
  • Gross profit – Your sales less your cost of goods sold.
  • Turnover – The total of all your income from sales & services sold.
  • Stock turnover – How long stock will take to sell
  • Break even point – The point at where your sales cover the cost of your expenses (so future sales would be profit).
  • Cash Flow – The money that is going in and out of your business account(s), income from invoices & outgoings for paying bills. A cash flow forecast will predict how your cash flow will be based on past information in your books and known future information (such as upcoming jobs or sales), predicting any potential issues you may have when funds get low. 
  • Accrual – This is a charge for work that has been done but not yet invoiced, such as if you pay for your annual accounts monthly in advance of them being done, for which provision is made at the end of a financial period.
  • Balance Sheet – A report that shows the value of your assets plus everything you need to pay out – this should be a positive figure, if it’s negative then we can help look at how to improve your finances.
  • Management Accounts – A series of reports produced regularly, usually monthly or quarterly, showing profit & loss and other useful financial information for the company, produced to suit your company and help you get useful information out of your books.

If there’s anything else you think should be on here please let us know! 

Can’t pay your creditors? Don’t panic!

*Note – Although we’ve written this during the COVID-19 pandemic the advice is relevant for other times too*
 
Everyone can have cash flow problems and these can cause a lot of worry for you, distracting you from running your business, so it’s important to ensure you get a plan in place to ease the worry. Speaking to your creditors is the first port of call, communication is key in a situation like this, many will have been there themselves and this is where those personal relationships you’ve built up will help lots, being honest with people and giving them an estimate for when you can pay will let them know where they stand and they can then decide if they’re happy with your plan, this could be the difference between them putting you on stop or letting you have another order of parts to complete a big project that brings in those much needed funds.
 
HMRC are likely to be one of those creditors and they shouldn’t be ignored, they too like communication and they’ll work with you to ensure you can pay you bill and get yourself back on track – they want you to stay in business so you’ll earn them more taxes! As soon as you know you’re not going to be able to pay your bill call HMRC to arrange your payment plan with them, don’t wait until it’s due or overdue, showing them you’re aware its going to be a problem and you want to sort a plan before will help a lot, they will be happier knowing what’s going on and it will remove a lot of stress from you too! 
 
Filing your return late won’t help, that just creates fines for late filing on top of the problem you have with not being able to pay, so keep on top of your filing. This will also mean when you call everyone is working from up to date figures.
 
Make sure when you call them you’ve got your reference number to hand and details of what it is you can’t pay. If you’ve an idea of what you can pay now and what you’d like your payment plan to be that will help, they will usually push for a payment of some kind to start the ball rolling while you’re on the phone so be ready for that! Again, having all this planned out shows you’re trying your best so helps with the situation. 
 
You will usually be asked why you can’t pay, as they’ll see it as you’ve had the money in so should have put it aside for them, although few businesses actually do this as using it to pay other bills is what everyone does! They may well ask about known future income, expenditure and savings & assets, they’re not just trying to squeeze every penny from you, they’ll be trying to make sure that the payment plan balances being realistic as well clearing your balance – neither of you want to be going through this again when you’re next payment is due and it will only cause you more stress! 
 
Right, now you’ve got it all planned it’s time to give them a call. You can contact the Payment Support Service on 0300 200 3835, Monday to Friday 8am – 8pm & Saturday 8am – 4pm (obviously at time of writing). If you’ve missed your Self Assessment payment date you’ll need to call 0300 200 3822. More information on the Payment Support Service can be found here.
 
Obviously if you’re a client of ours then we’re here to help you, we can help with all of the above, you don’t need to worry alone! Please do get in touch and please do not be embarrassed, it’s such a common problem for many companies so you shouldn’t feel ashamed! We know so many people delay asking for help and talking to creditors because of how they feel, we won’t judge you!
 
*During the COVID-19 pandemic they’ve temporarily changed the hours to Monday to Friday 8am to 4pm – They’ve also setup another number during this time, 0800 0159 559, again Monday to Friday 8am to 4pm*

You don’t have to wait until January!

April signifies the start of the new year (financial year obviously!), although we doubt this is news to any of you! (If you want to know why it’s April then have a looksie here). And what better way to start a new year than to tidy up last year?
 
Unsurprisingly, a lot of people don’t finalise their books from the previous year in April, with a large amount of people not getting around to their tax return until December & January, leaving them little to no time to prepare for the bill due 31st Jan – so why wait?
 
With so many people waiting until the last minute to file their returns, help may not always be available. So why not just do your return now? Getting it done early will mean it’s a weight off your mind, knowing what you’ll have to pay in January and gives you plenty of time to ensure you’ve got the money available, you won’t have to pay anything early just because you’ve put your return in early!
 
It also means that if there’s any questions raised that you stand more chance of remembering the answer as it won’t have been so long ago, if it’s about a transaction in April at the start of the FY and you wait until January it’s 21 months between them so the chances of remembering is slim! 
 
Of course, we’re not expecting an influx of people wanting to get their tax return done early, but if we manage to convince one person to do it sooner rather than later then it was worth the time it’s taken to write this blog! 

COVID-19 – Small Business Grant Scheme

Many small businesses are under the impression they need to be paying rates to received this grant – the opposite is actually true! 
 
The Small Business Grant Scheme is for businesses who pay little or no rates due to them being in receipt of either SBRR (small business rate relief) or RRR (rural rate relief). There is a government help page here that tells you the official wording.
 
Being a rate payer just means that you or your company are registered for business rates – you don’t actually have to pay anything! So if you get Small Business Rates Relief in full or partially, if you pay some rates or none at all, this grant is for you! It’s all done by your local council via their rates records to ensure only the right people receive it, it’s designed to help you cover rent and premises expenses during this uncertain period.
 
So in short, if you have a rate demand for your premises (even if it is credited in full for rates relief) you can definitely apply!
 
Most councils have online forms to complete, others are sending application forms via post, a few of the one’s we know are relevant to our clients are below:
 
 
 
At time of writing, Chelmsford are aiming to have their online form up by the end of 3rd April, Castle Point haven’t indicated any dates as to when their application system will be ready and Braintree were saying they will post applications forms which can be scanned and e-mailed back to them.
 
Please note this information is correct as of 2nd April.

COVID-19 – Self Employed Help

You may be here looking for our advice to the self employed following the announcements made by the government, but we’re not actually going to do a blog about it.

Why?

Because we feel the advice needs to be interpreted for everyone, we’ve already been in touch with all of our self employed clients to tell them what help is available for them and will of course update them if the situation changes, that’s not to say we’ll only advise our existing clients but we don’t want to add to the vague advice and opinions floating around, if you’ve any specific questions about how the help for self employed will affect you please do get in touch!

COVID-19 Help

We’re doing our best to digest the information coming from the government and advise what it means for everyone, we’re doing regular e-mails for all of our clients but we’re repeating that information here for all.

We’ll be putting that disclaimer at the start of each of our posts, along with the date that the information was correct as of so you know how old the information is. 

We’ve added a new menu item on the left to keep all the information in one place for you, check there for any updates.

As this is an ever changing situation please do get in touch with us, we are extremely busy helping people at the moment but will do our best to help as quick as we can.

COVID-19 – Government Assistance Update

We’re doing our best to digest the information coming from the government and advise what it means for everyone, we’re doing regular e-mails for all of our clients but we’re repeating that information here for all. Please note this information is correct as 21st March 2020.

Further to our previous blog, further assistance for businesses has been announced by the government during the week.
 
The headlines are as follows:
 
Coronavirus Business Interruption Loan Scheme (CBILS)
The detailed terms and conditions for this loan will be released on Monday 23rd March. 
 
It was announced this evening that these loans would be interest free for 12 months.
 
The loans we be accessed via banks rather than HMRC. We are happy to assist with the loan application.
 
Small Business Grant
A £10,000 grant will be available to small businesses who let premises with a rateable value that falls under the Small Business Rates Relief (usually £15,000).
 
A £25,000 grant will be available to small businesses in the hospitality, leisure and retail sectors who let premises with a rateable value of between £15,000 and £51,000
 
These funds will be provided by the local authority in which the premises are situated.
 
The local authority will contact your business during April with details of the grant and how to access this. To ensure more straightforward access to these funds you should ensure that your business is properly registered as the tenant at the premises which you are letting. We are happy to discuss this with you further.
 
Coronavirus Job Retention Scheme (CJRS)
We await detailed guidance next week to confirm the following information which was announced this evening:
 
If businesses cannot afford employees as a result of COVID19, from the 1st March 2020 to the 31st May 2020 the government will pay 80% of employee wages up to a maximum of £2,500 per employee.
 
These funds will be obtained via a grant from HMRC before the end of April.
 
This grant could be extended to wages payments beyond the 31st May 2020.
 
VAT Payment Deferral
We await detailed guidance next week to confirm the following information which was announced this evening:
 
The next quarter of VAT payments will be deferred.
 
No business will pay any VAT from now until the end of June.
 
The exact definitions here will be clarified next week when additional information becomes available.
 
Self Assessment Payment Deferral
We await detailed guidance next week to confirm the following information which was announced this evening:
 
The 31st July 2020 payment on account of income tax for the self employed will be deferred until the 31st January 2021.
 
At this point, the deferral of payment does not appear to relate to directors / owners of limited companies.
 
Self Employed
Those who are self employed, with reduced income as a result of COVID19, will benefit from increased levels of available Universal Credit.
 
If you are concerned by your business survival and personal finances please do not hesitate to contact either myself or Martin to discuss this further. We have already discussed business finance survival strategies with various clients and would like to offer this help to everyone who requires it. Please do not hesitate to contact either of us should you need to.
 
Rebecca and Martin

COVID-19 – Funding & Tax

We’re doing our best to digest the information coming from the government and advise what it means for everyone, we’re doing regular e-mails for all of our clients but we’re repeating that information here for all. Please note this information is correct as of 17th March.

We are aware that many of our clients business’ could be affected by COVID-19, ranging from a direct loss of work, to cash flow problems, staff absence, etc

We’ve had some clients contact us regarding what financial help might be available to them, especially following last week’s budget. 

Coronavirus Business Interruption Loan Scheme (CBILS)
At present, the terms and conditions of the Coronavirus Business Interruption Loan Scheme (CBILS) have not been finalised by the government. Updates on the availability of this funding can be found via the following link:

https://www.british-business-bank.co.uk/ourpartners/supporting-business-loans-enterprise-finance-guarantee/

Small Business Grant
In addition there is no update from the government on the £3,000 grant available to small businesses who let premises with a rateable value of less than £12,000.

When the CBILS and grant funds become available we can discuss your requirements and assist you and your business with the application for these funds.

Tax helpline for businesses affected by COVID-19
HMRC have set up a helpline for businesses and the self employed who are concerned by / cannot pay their tax liabilities as a result of COVID-19. Further details can be found via the following link:

https://www.gov.uk/government/news/tax-helpline-to-support-businesses-affected-by-coronavirus-covid-19

Due to this government initiative being in the early stages, it’s unclear at this point what HMRC will be able to offer to you in respect of setting up an instalment arrangement or the suspension of debt collection proceedings. We are happy to discuss this and the potential merits of your case.

We will continue to provide key updates as they happen. Should you wish to discuss any of the above please do not hesitate to contact either of us. 

Rebecca & Martin

Is my HMRC email a fake?

With the ever busy January behind us, we wanted to quickly address something a lot of people suffer from, receiving a fake HMRC email. 

So, how can you tell if it’s real? 

The first step is to think about what the e-mail says, if it sounds too good to be true, it probably is! Do you do a tax return or have any reason that the HMRC would want to contact you?

The really important thing to remember is if you’re not doing anything wrong then you’ve no reason to fear calling them to check the validity of an e-mail! There’s also some useful information online at https://www.gov.uk/topic/dealing-with-hmrc/phishing-scams

Remember, scammers are getting more and more sophisticated and fakes are becoming harder to spot. We’re more than happy to try and help you if you are still unsure, you can forward the e-mail to us for our opinion, please don’t send any attachments with it or we will probably not open it, we want to protect ourselves too!

But remember, if you’re in doubt then don’t click on any links, give the HMRC a call.

Got QuickBooks but need help?

We’ve had a few calls and emails over the last few months regarding QuickBooks with a similar theme, people have seen the adverts on TV and heard the radio ad’s saying how easy your accounts can be when you use QuickBooks and they’ve got it, set it up the best they can and then realised they still have to do more than they thought! I definitely feel that the adverts make it seem simpler and more automated than it is! 

We can help in a few different ways – if you want to remain independent without a bookkeeper or accountant helping, you could book some of our bespoke training, either in our training room at our office or at your premises. Being bespoke means it’s nice and easy to make it relevant to how you’re running QuickBooks and how your business runs. Being bespoke doesn’t mean it costs a fortune! 

Another way we can help is by helping you with the setting up of the system, making it easy to get the information you need and easy to put the information in to get that! Or we can take some of that strain away to let you get on with running your business, we love doing bookkeeping and accounts but know most people don’t!

So if you’re struggling with QuickBooks please get in touch and see how we can help!