Author: blue-dot-consulting

You can’t run a £1m business and only have your bookkeeping updated every three months!

Fair play – the two of them had got in touch because they knew something wasn’t right and were reaching out for help.

“You can’t run a £1m business and only have your bookkeeping updated every three months!”

There are things you say in meetings that you can’t quite believe needed saying, and that was one of them.

The context was a Xero training session with two people from the business and we were looking at their Xero file alongside a couple of other software applications.

Several common problems crawled out of the woodwork:

  • the bookkeeping was way out of date
  • historical balance sheets in Xero didn’t agree to Companies House
  • no customised reports (who wants an alphabetical list of overheads!)
  • the business was hemmed-in by mainly using the accounts in the standard chart of accounts

We all knew there would be more if we dug a little deeper.

And we all knew that this business was not alone in having great software used poorly.

Your accounting records are not up to date – why this matters

If you have incomplete or inaccurate bookkeeping data you’re flying blind and your business will under-perform.

  • Decision-making will be delayed or based on faulty information
  • Cashflow and tax shocks are more likely to happen
  • Profitability will suffer
  • It’s often more expensive to do this work badly
  • Running your business will be less enjoyable and more stressful

Fair play to the two people who had got in touch because they knew something wasn’t right and were reaching out for help.

And help was at hand.

Blue Dot Consulting can help you get more from your accounting software

You’re already using decent accounting software, such as Xero, QuickBooks or FreeAgent. We want to make it come alive for you and here’s how:

  • Bespoke training for your team using your actual data and transactions (Xero, QuickBooks)
  • Review and fix your current bookkeeping so it accurately reflects your business
  • Create custom reports so you see the numbers that matter
  • Offer ongoing help and advice so you’re not left alone

Our goal is simple: transform your accounting software into a decision-making tool, not just a digital filing cabinet.

And the real benefits for your business will include:

  • Decision-making based on facts, not guesswork
  • Profitability insights by product, service, or client
  • Better cashflow visibility and planning
  • Reduced stress and greater control

Can we help your business get more from its accounting software?

If you suspect your business isn’t getting the full benefit of its accounting software, let’s have a chat.

We’ll take a look at what’s working (and what isn’t), and give you practical, jargon-free advice to move things forward.

We run great bespoke training sessions for businesses which might be an ideal starting point

Call Michael Austin on 020 7125 0270 or email info@bluedotconsulting.co.uk and let’s begin to get your business to a better place.

Michael

People also asked:

Do we need to change our software?

No. The goal is to show your team how to make the best use of what you already have in place.

What about additional software and apps?

If you have bookkeeping issues that can be solved more efficiently by linking apps to your accounting software then we’ll look at that with you.

Do we need to change accountants?

Not at all. In fact they may have a part to play in the work that needs to be done.

Who are Blue Dot Consulting?

We’re London-based Chartered Accountants with a long and successful history of helping owner-managed SME business in London with their financial management..

Related links:

Overview of financial management for a business with sales approaching and passing £1m

Why don’t businesses make better use of accounting software?

Finance transformation

© Blue Dot Consulting Limited

Chartered Accountants – Bedford House, Fulham Green, London, SW6 3JW

E-commerce bookkeeping

Start the bookkeeping manually and make sure your accounting software is configured to produce reports that accurately measure your business activities.

E-commerce is a great enabler for businesses of all shapes and sizes the world over, a real and successful engine for economic growth. Of course all of the e-commerce transactions need to be accounted for, which means e-commerce bookkeeping is a necessary skill in the 21st century.

E-commerce is a broad church

Here are some examples of e-commerce that we see every day:

  • selling products on Amazon, being paid by Amazon
  • setting up an e-commerce website on Shopify and being paid by Shopify
  • marketing an event on Eventbrite and being paid via a combination of Eventbrite, Stripe, PayPal or directly by attendees
  • selling digital downloads or subscriptions to watch videos on your website and being paid via Stripe or PayPal
  • selling your own products on your own website and being paid via a merchant service such as Sagepay or Adyen

These are just some examples of e-commerce activities and transactions. Not only are there many more but new channels and platforms are appearing all the time.

And all these businesses have to get their heads around e-commerce bookkeeping.

E-commerce bookkeeping – map your transactions

This is the same for all businesses and organisations, whether they’re online or offline – you start by mapping your transactions.

Let’s say that Blue Dot Consulting (BDC) has an e-commerce bookkeeping webinar and let’s map what happens.

  1. BDC creates an Eventbrite account
  2. We promote our e-commerce bookkeeping webinar and point attendees to Eventbrite to sign up and pay
  3. Attendees sign up and pay by card
  4. We run the event (and receive many five-star reviews)
  5. BDC receives a sum of money from Eventbrite

Points to note / questions to ask:

  • The sum of money received will be less than the total paid by the attendees – because Eventbrite will deduct their fees before paying BDC
  • BDC is VAT registered – it has made sales which attract VAT in the UK but what if some of the attendees were from outside the UK?
  • Did some people attend because it was part of their work and did some attend in a personal capacity?
  • Does BDC have to create and send invoices to the attendees?
  • Is there VAT to reclaim on the Eventbrite fee?
  • How long does BDC have to wait to receive its money?
  • The receipt of one sum of money is not sufficient information for the bookkeeping. So, what reports are available in Eventbrite that show the transactions related to the event?

These are just the points that arise from my simple example – in your business you may have several more issues to think about, such as categorising the different products or services you’re selling.

Map your transactions – go to where the data is

The place to go is where the transactional data is being captured.

This could be your website, Shopify, Stripe, PayPal or somewhere else entirely depending on your e-commerce set-up.

But the data is available somewhere, often in a “Reports” section, and you need to download it.

Then you need to understand it and figure out how to use the data for your bookkeeping.

Do the bookkeeping manually to start with

Once you understand the transactional data it’s pretty simple to figure out the correct bookkeeping, making sure you get the VAT / sales tax element correct for the different customer groups, locations, products and services you’re selling.

Start the bookkeeping manually and make sure your accounting software is configured to produce reports that accurately measure your business activities.

You can use the reports to check your bookkeeping and to share across your business so everyone who needs to can track sales performance.

Apps and apprehension

There are many apps that connect e-commerce platforms to accounting software. And when they’re working successfully they will save a huge amount of time and improve the accuracy of your bookkeeping.

They’re also essential for when your business scales up. As your business grows you can’t afford for the e-commerce bookkeeping to be left behind.

But for every app there is an error waiting to happen if you’re not careful. And most cloud accounting software doesn’t allow you to take and restore a back-up so be very careful when you start to import large volumes of transactions.

That said, get the apps to do the heavy lifting once you know they will do it correctly.

How can Blue Dot Consulting help you navigate e-commerce bookkeeping?

E-commerce is here to stay, it’s constantly evolving and e-commerce bookkeeping needs to keep pace.

It’s not as simple as it can be made to look in the swish and fancy videos the software people point you towards. But once you get the building blocks in place and have a thorough understanding of your transaction data then you can progress to a joined-up world in which data flows from one app to another, morphing into useful financial information along the way.

We have a great deal of experience working with e-commerce businesses like yours, making sense of the sales transactions, accounting for them and generating useful financial information.

We can help you!

Let’s have a free-of-charge chat about your business – call Michael Austin on 020 7125 0270 or email info@bluedotconsulting.co.uk

Michael

Related links:

This is bookkeeping in the 21st century

Bookkeeping for your business

Spreadsheets in accounting – use fewer of them but learn how to build them better

© Blue Dot Consulting Limited

Chartered Accountants – Bedford House, Fulham Green, London, SW6 3JW

Employer’s national insurance increase – is your business worse off or better off?

The government announced a massive employer’s national insurance increase in the October 2024 Budget.

They set out three changes to employer’s National Insurance Contributions (NICs) to take effect from April 6, 2025:

  • An increase in the rate of employer NICs from 13.8% to 15%
  • A cut in the threshold at which employers become liable to pay NICs – down from £9,100 a year to £5,000 a year
  • An increase in the Employment Allowance from £5,000 to £10,500

The net revenue expected to be raised by these changes is predicted to be just under £24 billion in 2025-26 rising to just under £26 billion in 2029-30.

According to a research briefing in the House of Commons Library, HMRC expects the changes to impact 1.2m employers:

  • 940,000 employers will see their NICs increase
  • 820,000 employers will see no change
  • 250,000 employers will see their NICs reduce

Which are you?

How much more NI will each employee cost me?

The two changes are that NICs become payable on ALL earnings above £5,000 rather than above £9,100 AND the rate of NICs is increasing from 13.8% to 15%.

For someone on a monthly payroll, NICs at 15% will apply to earnings above £417.67 compared with 13.8% on earnings above £758.33.

Employer's National Insurance increase

If an employee earns £30,000 p.a. this means:

£30,000 salary example

If an employee earns £6,000 p.a. this means:

£6,000 example

This example for a lower-paid employee will affect industries such as hospitality in which there are many lower-paid, part-time employees.

Essentially, the employer’s national insurance increase means every employee earning over £5,000 will be more expensive for the employer from April 6, 2025.

What about the increase in the Employment Allowance?

The Employment Allowance is a rebate of employers’ NICs up to a level of £10,500 (previously £5,000) which means that IF YOUR BUSINESS IS ELIGIBLE:

  • Your annual employer NIC cost is reduced by £10,500
  • If your annual employer NIC cost is less than £10,500 then you pay no employer’s NIC

Check eligibility and, in particular, note that you cannot claim if your company has just one director and that director is the only employee liable for employer’s NIC.

That said, what does it look like when the Employment Allowance is factored in?

Example 1 – a company with six employees earning between £40,000 and £70,000 p.a.

£40k to £70k employer

This employer with an annual payroll cost of £290,000 is only paying £1k more in employer’s NICs.

Example 2 – a company with five employees earning between £15k and £50k

£15k to £50k employer

This employer, a bit smaller than the first example, is actually better off because the increase in the Employment Allowance is greater than the increase in employer’s NICs.

Example 3 – the single-director company with a low-salary-high-dividends remuneration policy

Single director company

Because this company is not eligible to claim the Employment Allowance the employer’s national insurance increase means a higher employer’s NIC cost.

Overall, how does the employer’s national insurance increase play out?

This is a massive increase in tax and most of the burden will fall on large employers.

Every employee earning over £5,000 will be more expensive for the employer from April 6, 2025, which makes sense if £24bn is to be raised every year.

However, for many employers the increase in employer’s NICs will be modest. Even in the example above where the payroll cost is almost £300k, the employer is only paying £1k more.

Some smaller employers will be better off but single-director companies may be worse off.

Many more employers will see no change because the Employment Allowance they can claim is greater than the employer’s NIC cost they incur.

Employers facing a higher employer’s NIC cost will pay less corporation tax if their profits fall as a result and vice versa.

The cashflow effect is that the Employment Allowance will last longer into the tax year than it used to but single-director companies will start to pay the employer’s NICs earlier in the tax year than previously.

Because the increase in the rate and the lowering of the earnings threshold work in the opposite direction to the increase in the Employment Allowance, the devil is in the detail when it comes to calculating whether your business is better or worse off and by how much.

Increasing costs of employment don’t stop with the increase in employer’s NICs. In April there are also significant uplifts to the National Living Wage and National Minimum Wage which employers need to be aware of.

Small print:

Much to think about and the devil really is in the detail. It all makes 2025-26 that bit more tricky to navigate even if your business will benefit from these changes.

Can we help you and your business as the year goes by?

Let’s have a free-of-charge chat about your business – call Michael Austin on 020 7125 0270 or email info@bluedotconsulting.co.uk

Michael

A useful NIC ready-reckoner

National Living Wage and National Minimum Wage increase – April 2025

Business growth – the financial essentials

© Blue Dot Consulting Limited

Chartered Accountants – Bedford House, Fulham Green, London, SW6 3JW