VAT Archives

This must be my profit, it says so on my phone!

Cloud accounting software is often sold as being everything you need, easy to use, do it yourself etc.

Well so is a Delia Smith cookery book – and you really don’t want to see my attempt at a soufflé!

“It’s on my phone so it must be right!” said a client of ours recently.

And it struck me that because we use our phones for pretty much everything, we tend to assume they tell us the right answer all the time.

But perhaps your smart phone is not so smart after all – or perhaps the users aren’t!

I’m talking here about the phone apps that accompany cloud accounting software packages such as QuickBooks and Xero.

They’re an extension of the software you can also access from a laptop, PC or tablet.

They let you carry out data entry on the go, such as new purchases and sales invoices, and access some reports, such as the Profit & Loss report my client was looking at.

Apps are the way of the world and it’s Canute-like to think this technology is going to disappear. It isn’t.

So the trick is to understand and use cloud accounting apps properly.

Is data entry on the go really a good use of your time?

It is if you use an app such as AutoEntry which allows you to take a photo of your receipt and will code it ready to be imported into your accounting software, along with the PDF of the receipt. You have to keep the receipts as proof of business expenditure and to reclaim any allowable VAT and AutoEntry will make this record-keeping very easy.

Also, use your business debit card (don’t leave home without it) to pay for everything and then the transactions appear on your bank statement. So even if you don’t get a receipt or can’t get one (TFL) you still don’t miss the expense because it appears in your bank account.

Visit our bookkeeping for your business page to learn more about how we can work on reducing your data entry time.

Creating sales invoices on the move

Yes, you can create sales invoices on the move. But you don’t want to get them wrong because that will delay payment and may damage your reputation with your client.

And think of the client – do they want or need your invoice right here, right now?

Not always.

Has everything been accounted for correctly?

Two aspects to this – “everything” and “correctly”.

Miss something and your profit is wrong, whatever your phone tells you.

Our experience is that users of cloud accounting apps and cloud accounting software, such as Xero and QuickBooks, need some help and training to get things right.

Cloud accounting software continues to be marketed as being everything you need, easy to use, do it yourself etc.

Well so is a Delia Smith cookery book – and you really don’t want to see my attempt at a soufflé!

Every transaction has to have been accounted for correctly (including transactions such as depreciation and corporation tax) for the profit to be correct.

Otherwise, it’s wrong.

Can Blue Dot Consulting help your businesses with its accounting?

Our client’s profit was not what his smart phone told him it was. It turned out the profit was a little higher, but it isn’t always like that.

We run practical Xero and QuickBooks training sessions help many businesses get just what they need out of their cloud accounting software. We use your live transactions to show you / your team how to use your chosen software more efficiently and how to get useful financial reports from it to help improve business performance.

Embrace cloud accounting software and cloud accounting apps but just take the time to really understand how to use them in the best way so you don’t mistakenly end up thinking you’re richer than you are.

Until then, don’t believe everything your phone tells you.

You’re reading this on your phone, right?

Michael

Related links:

Management information

Part Time CFO – if this is the solution, what’s the problem?

Outsource your financial management

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

Accountants in Fulham Green

We are not just accountants in Fulham Green, we’re accountants for any of the companies based there. Your accountant on your doorstep, couldn’t be better!

We are accountants in Fulham Green.

So, if you’re running your business from one of the four buildings, Bedford House, Chester House, Cavendish House and Riverbank House, and you want an accountant on your doorstep – pop in and say “Hi”.

Accountants in Fulham Green, accountants for Fulham Green

But we are not just accountants in Fulham Green, we are accountants for any and all of the companies based there. What could be better than having your accountant on your doorstep?

We specialise in helping owner-managed businesses with all aspects of their accounting and financial management, including:

Whether you would like to outsource your entire accounts department to us, cover for maternity leave or you need some help over and above the internal bookkeeping resource you already use, we can help.

Or perhaps you are reaching the stage where more experienced input would be welcome such as a part-time Finance Director.

This is what clients say about us

Blue Dot Consulting went above and beyond in helping us navigate not only the transition to cloud-based accounting but also in leading our accounts team through a broader period of transformation.

Their deep understanding of our unique needs and challenges was evident from the outset. They provided unwavering support to our team, ensuring they felt confident and well-prepared for the changes ahead.
Senior finance manager

The importance of good bookkeeping

Good bookkeeping is at the heart of every successful business.

Bookkeeping must be correct and complete if it’s to be useful and this is a skill like any other professional business service.

Any errors and omissions will mean the financial information you rely on to run your business will be wrong.

Embrace the technology which continues to improve bookkeeping – making it more efficient and accessible – and, if you need it, call in some outside help.

But the key message is: get on top and stay on top of your bookkeeping!

And don’t overlook that outsourcing your bookkeeping might be a sensible approach, leaving you and your colleagues free to focus on your business.

So, if you’re looking for accountants in Fulham Green….

Why not pop in and see us?

We’re on the first floor of Bedford House and would love to meet and learn about more of the local businesses that make Fulham Green such a vibrant and entrepreneurial environment.

Hope to see you soon!

Give me a call or email me at info@bluedotconsulting.co.uk and we can head to Cafe Plum for a coffee and a chat about your business.

Michael Austin – 020 7125 0270

_{Blue Dot Consulting Limited}

How do we solve a problem like Maria’s?

Our first piece of advice was for Maria to open a separate business bank account, tell all her clients to pay into it and to use it for ALL business expenditure.

Maria is self-employed, VAT-registered and has a turnover in the high tens of thousands each year.

She’s been using QuickBooks for several years but only for raising her sales invoices.

The sales invoicing is going well, all the invoices get paid, but earlier in 2025 Maria decided she needed to get all of her bookkeeping working in QuickBooks and, ideally, to do most of it herself.

Open a separate business bank account

Our first piece of advice was for Maria to open a separate business bank account, tell all her clients to pay into it and to use it for ALL business expenditure.

The impact was instant:

we connected the business bank account to QuickBooks which makes all her bookkeeping easier, quicker and more accurate
because all business expenditure goes through the new bank account, Maria never misses any business expenses which means her accounts are more accurate and she pays tax on the right amount of profit
all of Maria’s clients now pay into the business bank account and getting paid has become easier still

Accounting software – invest in training

Accounting software is a game-changer for small businesses.

There’s a wide choice of accounting software which is low-cost, accessible and will help you get on top of your business finances and tax.

It’s fair to say that bookkeeping and accounting are not for everyone and you may choose to outsource your business accounting to a local bookkeeper or accountant. Indeed, we can help you (see below).

But, if, like Maria, you’re at all curious about doing some or all of it yourself then – invest in training!

bookkeeping is cheaper if you do it yourself
parts of the bookkeeping, such as sales invoices, are things you’d probably do anyway
information such as income & expenditure and who owes you money become easier to undertsand if you’ve had a hand in the bookkeeping

What changed for Maria?

Now that all her bookkeeping is being done (and done very well) in QuickBooks, Maria is in a much better place:

the separate business bank account is beyond useful and makes the bookkeeping much easier
Maria can see her profit building up during the financial year and has a decent idea of her tax and national insurance liability
all of Maria’s receipts and suppliers’ invoices are saved in Quickbooks as part of the bookkeeping transaction – so it’s an online, paper-free filing system
we’re only a Zoom or Teams call away if she needs a helping hand
VAT returns simply fall out of the bookkeeping
As do the year-end accounts and Maria’s tax return

Bookkeeping is now one of Maria’s favourite things!

Making Tax Digital for Income Tax (MTD)

We got this far without mentioning MTD and that’s because the important part of MTD is the D – Digital.

Our view is that MTD is extra work for business and property ownes and their bookkeepers and accountants for no great advantage.

But there’s one big benefit, which is to encourage business owners and private landlords to get started with separate bank accounts and bookkeeping.

Be more Maria – start now!

How can Blue Dot Consulting help?

It’s an article of faith for us that ALL businesses should have good bookkeeping and we have a long track record helping businesses owners with:

outsourcing all of their bookkeeping, VAT, payroll etc. to us
software training for Xero, QuickBooks and FreeAgent
cashflow
explaining clearly what the numbers mean and how to improve them

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

Let’s grab a coffee or perhaps a drink with jam and bread!

Michael

Related links:

QuickBooks training for your business

Making tax digital – the useful bits have little to do with tax!

Improve your business by changing your accountants

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

Why two bank accounts are better than one

Your main bank account will certainly look to be short of money. But that’s partly the point!

Running two bank accounts puts a massive focus on cashflow and making more money.

It’s not always easy.

But it shines an objective light on profit improvement and should mean you always have the money put to one side to make those chunky payments such as VAT, rent, PAYE, corporation tax, bonuses and dividends.

More money in the bank and less stress. What’s not to like?

Where to start with two bank accounts?

Every week set aside in the new bank account as much money as you need in order to make tax payments.

It’s simple – VAT is at 20% and Corporation Tax is between 19% – 25%, so if you put aside 40% of all the money that comes in from customers during the week then you’ll always have enough money to pay these taxes when they fall due.

Of course, you reclaim VAT on purchases and you pay Corporation Tax on profits, not on sales, so maybe 40% is a little high.

Perhaps 25 – 30% of the money collected from customers is a better starting point. Set up a weekly automated transfer or, if you use Starling Bank, you can set up “savings spaces”.

Over time the second bank account gradually builds up a decent balance and each quarter when you come to pay VAT and nine months after your year-end when you have to pay Corporation Tax, there’s no panic, you know the money is there.

Ideally there will still be money left over.

But isn’t the main account short of money?

Your main bank account will certainly have less money in it. But that’s partly the point!

The second very powerful benefit coming from the exercise is that your main bank account should have a lower balance and this should act as a trigger to do something about it.

The target you’re aiming for is that you can comfortably pay your staff, suppliers and the monthly PAYE / NI payment without needing to bring money back in from the second account.

Of course the second account is there as a safety net but you don’t really want to be using it for routine monthly payments.

Actions to improve cashflow

You can boost the balance of your main bank account through a combination of three things:

Increase your margins and profitability
Improve credit control
Ask your clients to pay by direct debit
Reduce spending until you can afford to spend more – including your own drawings from the business

If you succeed with these measures then you’re on the way to a really sound, profitable, cash-generative business.

And isn’t that what you’re after?

Can Blue Dot Consulting help you with cashflow?

There are several ways we help businesses with cashflow.

Encourage them to have two bank accounts and help them hold their nerve along the way
Build and maintain a cashflow model that looks backwards as well as forwards so it’s anchored in the real world and shows the road ahead
Make sure their bookkeeping is complete, accurate and up to date. None of this works well without good bookkeeping
Profit improvement

Can we help you?

Call Michael Austin on 020 7125 0270 or email info@bluedotconsulting.co.uk and let’s arrange a free, confidential meeting to discuss your business and the steps you could take to get on top of cashflow.

Michael

How do I get started?

In your online banking simply programme a weekly payment of, say, £500 to get started. Over time you can adjust the value of the weekly payment.

Can I bring the money back if I need to?

Yes you can. But try not to. Two bank accounts really is a no-pain-no-gain initiative but the gains are so worthwhile.

How easy is it to implement some of the other cashflow improvement ideas?

There may be some tough conversations with customers and suppliers but provided you’re able to make changes you’ll soon start to see improvements in your financial performance and hopefully stress levels will reduce.

Related links:

Cashflow

Cashflow and upfront payments – don’t think you’re richer than you are

Don’t bank on your bank for cashflow

5 financial administration steps for your new company

Yes, you have to add VAT to your sales invoices but if your clients are VAT registered they reclaim the VAT so they’re no worse off.

There are 5 financial administration steps for your new company which you need to get out of the way before you get out there and make money.

We’d recommend you use a company formation service (such as ours!) to set up your new company but once it’s formed there are five financial administration steps you need to get out of the way before you can settle down to the business of making profitable sales.

These steps may sound like a lot of work, perhaps because they all come at once, but they’re really very easy and the sooner they’re out of the way the better.

1. Open two company bank accounts and get a debit card

Your company is a separate legal entity from you and needs its own bank account. You can probably get a free banking deal for 12 or 18 months, but definitely get a debit card and put some money into the bank account (a loan to the company) which the company can spend.

The debit card acts as a very useful audit trail and makes bookkeeping easier (particularly if you lose the odd receipt). It also means that the company is spending its own money instead of you having to reclaim out-of-pocket expenses, which cuts out unnecessary administration and reduces (perhaps eliminates) the burden of P11D reporting.

If your bank won’t give you a debit card from day one then go to a different bank.

The second bank account is one you can use to save for tax payments such as VAT, PAYE and corporation tax.

By putting enough money aside for tax, your main bank account becomes a very good barometer for the health of your profits and success of your credit control.

2. If you’re B2B – register for VAT voluntarily

B2B businesses should, by and large, be indifferent to VAT and with good bookkeeping (see below) VAT simply is not a problem. Also, from a marketing point of view, a VAT registered business always come across as more professional and reliable than one that isn’t.

This is step 2 because you need to have a bank account before you can register for VAT.

By registering voluntarily for VAT you can reclaim the VAT suffered on the products and services you buy – stationery, IT kit, rent etc. You effectively get a 20% discount!

Yes, you have to add VAT to your sales invoices but if your clients are VAT registered they reclaim the VAT so they’re no worse off.

If you’re a B2C business you might want to delay VAT registration until your sales approach the level where you have to register – currently £90,000 in any twelve month period. However, delaying to the last minute can also cause problems because you’re painted into a corner of either having to register for VAT or limiting the annual sales of your business.

3. Register your new company as an employer – if only for yourself

Once you begin to hire staff, you need to register as an employer and run a payroll, but even if it’s just you at the moment you might want to register anyway.

Everyone in the UK is entitled a Personal Allowance – the amount you can earn before you start to pay tax. So there’s a lot to be said for registering your company as an employer and paying yourself through the payroll an amount that at least covers your Personal Allowance – currently £12,570.

This payroll cost should reduce your company’s profit and thereby reduce the amount of corporation tax you pay.

4. Register for online services with HMRC

When a company is set up HMRC are notified and you should start to register your new company for online services with HMRC. Start with Corporation Tax as HMRC already know the company exists and as you register for VAT and as an employer you should register for these services as well.

Being able to see online what your tax situation is makes dealing with tax a lot easier and, despite what you may think of the tax man, the online environment is pretty good and very helpful.

5. Hire a bookkeeper or learn yourself

Get your bookkeeping done properly, in the cloud, from day one. You’ll know where you stand financially and a competent bookkeeper will stay on top of the VAT and PAYE for you.

Good bookkeeping throughout the year will make the production of annual accounts for Companies House and your corporation tax return easier, cheaper and there will be fewer surprises.

If you don’t know much about accounts now is the time to learn and in any event make sure you’re getting monthly management accounts, cashflow and credit control information.

Develop good financial habits now and growing your business will be a whole lot easier in the months and years ahead. Ignore the numbers now and you could well go bust without really trying.

Five financial administration steps for your new company

At the outset, dealing with these financial issues can make it seem as if all you’ve done is open a never-ending stream of red tape and hassle.

In reality it’s not like that. Once you deal with these five steps you really can spend most of your time running your business and making money, which is why you formed the company in the first place.

Michael

Related links:

Bookkeeping for your business

Profit Margins: Make more money with every sale

Get paid quicker – 5 tips to improve your sales invoices

Is my accounting any good?

Towards the end of this burst of activity the accounting processes should be working on “autopilot” and everyone can concentrate again on delivering the profit and achieving growth potential of the business.

Accounting is so important to your business that you literally can’t afford to be getting it wrong, particularly as you grow. But if you’re not an accountant, how would you know if your accounting is right?

The focus here is on the accounting that’s going on every day, week, month during your financial year. If this is accurate and up to date then year-end accounts and tax planning should be as easy as falling off a log (so make sure your accountant is not charging silly money when you’ve done most of the work!).

But if the day-to-day accounting work is not being done correctly you can be in trouble and not know about it until it’s too late.

Symptoms of your accounting work being done badly might include:

late / no / incorrect management accounts
persistent cashflow problems
PAYE / VAT not being paid
suppliers forever hassling to be paid
customers taking ages to pay and not being chased

Of course, these could also be the symptoms of a badly run business with a finance team that’s on a hiding to nothing!

But let’s assume that yours is a well-run, profitable business with good growth prospects. If you’re seeing these symptoms then it’s likely that you’re being let down by whoever is doing your accounting work.

And that is something you need to change – fast!

What does the world of better accounting look like?

When we work with MDs to improve the quality of their business accounting it’s amazing how much anxiety and stress disappears pretty quickly. Particularly by focusing on improving cashflow and gross profit.

Often this type of work involves a short but intensive period of:

bringing the bookkeeping and management accounts right up to date
getting credit management working right through the business
looking at “pricing for profit“
cost control
improving processes and systems

Sounds like a good place to be?

Thought so.

Michael – @bluedotmichael

Five tips to improve your sales invoicing

If you are being paid on credit terms then sending the URL instead of the invoice is simply creating a reason for your invoice not to be paid.

Sales invoicing is vital whatever you are selling: you have to get your invoices out to customers in good time or face ongoing cashflow difficulties that could make you go bust. Continue reading “Five tips to improve your sales invoicing”

Tag: VAT

Accountants in Fulham Green