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Do You Need An Experienced Xero Accountant?

I blame Monty Python.  Before they started to take the mickey out of chartered accountants, it was considered a noble and worthy profession.  It still is of course, but since John Cleese et al. had a go, there’s always the undertow of it being a tad boring. We all want to be lion tamers it seems.  And so the reputation stuck. Thanks, guys!

As you know, we’re doing what we can at Enso to break that staid mould.  We’re taking a modern, dynamic approach. We’ve left behind the dusty ledgers and brown suits of yesteryear. We’re accountants for the future. We’ve embraced technology and cloud computing to offer a different, more consultative approach to business financial support. 

Changing A Wheel?

I’m glad to note the team at Xero Accounting software agree with me. Have you seen their advert?  The one where a man is changing the tire on a car travelling on just two wheels? Wow! That might even be a bit too racy, even for me.  Nevertheless, their message is clear; ‘less time on accounting, more on what you love’.  

In short, Xero frees you up. It gives you time to drive your business forward, connect with your clients, make sales and promote the great things you’re doing. All while the Xero accounting software takes the strain. It’s a great message creatively illustrated. 

What’s more, with HMRC starting to push the Making Tax Digital message it begs the question. Why aren’t you using an experienced Xero Accountant?

A Xero Accountant?

Yes, an accountant that specialises in implementing and supporting clients who want to use Xero as their accounting system and gain all the business benefits that will bring.

Happily, that’s what we do at Enso. We support businesses in moving their accounting processes to the Xero platform and help them to adapt to the simpler, more responsive way to understand their business finances.  Xero will give you infinitely better business clarity. And, once it’s up and running, it helps the Enso team to add enhanced value to our clients than by crunching through spreadsheets and sorting receipts. 

The Future Of Accounting

Isn’t it time you made the change?  Embrace the future. Gain valuable business insights and be ready for the new way you’ll be filing your taxes.  Don’t wait until the last minute and have to do it all in a rush. If your current provider can’t help get in touch with me. My team at Enso know Xero backwards and forwards. We know how to set you up quickly and easily. 

We’ve seen the future of accounting, and it’s by using technology. So I ask again, why aren’t you using an accredited Xero Accountant? 

It’s what’s some would call a ‘no brainer’.

If you’d like to discuss setting up Xero for your business call me today on 07792686479 or email me at adam@meetenso.co.uk and let’s talk about how your company can gain the benefits of accounting technology.

Accounting For The Fashion Industry

Fashion or clothing is one of the oldest industries known to humankind. Since the dawn of civilisation, we’ve needed clothes to protect us from the elements. As the centuries have gone by it’s evolved into what we now call fashion. 

 

Fast Fashion

Today, depending on who you’re speaking to, it’s also referred to as ‘the rag trade’, ‘fast fashion’ or ‘haute couture’. Whatever you call it, one thing’s sure; it’s always been big business. Famous designers have gained an almost iconic status. Figures like Yves St Laurent,  Coco Chanel or Karl Lagerfeld are synonymous with high fashion. They created innovative clothing brands desired by people the world over.  

And it’s an industry that’s growing exponentially. Look at brands like Boohoo, ASOS or Pretty Little Thing and see the ever-increasing profits they’re posting.  Our tastes for contemporary fashion brands are accelerating year on year. Our desires are fuelled by online influencers and sophisticated targeted advertising.  

Who needs to go to a local shopping centre to get your togs anymore? In under an hour, you can order a brand new wardrobe online, and it’ll be on your doorstep in less than 48 hours. There’s no need to wait to become ‘on trend’!

 

Growth Through Tech’

Obviously, the internet has supercharged the fashion industry and supporting e-commerce platforms like Shopify, Paypal, and Amazon have revolutionised the shopping experience. Today, fashion is as much about technology as it is about apparel. 

And while fashion is definitely where the money is, if you’re in the business, you’ll know to need to manage your resources very carefully.

 

Control Is Paramount

Fast fashion needs to maintain strict control over cash and stock, as well as having the right goods to sell when demand is high. Fashion companies need to understand a rapidly changing market, especially to avoid overstocking. These firms will typically have long supply chains, including overseas suppliers and partnerships with businesses like couriers and information technology platforms. 

In reality, it’s complicated, and control is paramount.

 

Experience Is Everything

The good news is that the Enso team have considerable experience in the financial needs of the fashion industry. We’re proud to have supported Little Black Dress, an up-and-coming Manchester fashion brand in getting full control of their business finances and essential management information. Naturally, we used Xero as part of that project. 

They can now concentrate on selling their garments safe in the knowledge they have the financial and management controls in place to understand where the opportunities are and how to fully capitalise on them. 

As interesting is my recent business trip to China, where I supported a key player in the international fashion supply chain. In my time there, I got superb insight into how things operate while helping the company with their financial management and performance. 

What I also learned is that fashion is a fast-moving and exciting industry, and I now have invaluable first-hand experience in how best to support these unique businesses. 

You could say Enso is the height of fashion in this remarkable industry. 

If you’d like to discuss setting up Xero and essential financial management for your fashion business call me today on 07792686479 or email me at adam@meetenso.co.uk and let’s talk about how your company can always be at the cutting edge of your industry.

5 Bizarre Products We Pay VAT On

If you read my recent blog, you’ll have a good understanding of what VAT is and how it affects your business. Even now, I doubt you enjoy calculating and paying your VAT return. The sensible amongst you will leave it to your accountant to sort it out, but, alas, there’s no avoiding it. Sorry about that.

And don’t forget every day you’re shelling out VAT left, right and centre. It’s charged on your travel, your lunch, your stationery and fuel etc. etc. VAT is everywhere. But do you know which products include the Exchequer’s 20% bonus and which do not?

If you look carefully, you’ll see there are many bizarre rules around VAT that are either morally dubious or downright counter-intuitive. Indeed there are some things you might not even know include VAT or why. Welcome to the topsy-turvy world of UK VAT. Let’s have a look at a few of its most outlandish aspects.

Chocolate Biscuits

Normally biscuits, bread and cakes are seen as essentials and are therefore VAT exempt. That is until you cover a biscuit in chocolate, then it becomes confectionary on which VAT is chargeable. It seems it’s a simple rule. Adding chocolate adds VAT. Actually no. A chocolate cake is still exempt even though it’s all but the same thing.

Then there’s the thorny issue of the McVities Jaffa Cake. Is it a biscuit or a cake? The government thought the former and whacked on VAT. It took a high-profile legal tribunal to rule it to be a small cake, and the VAT duly fell off!

Potato Crisps

The humble potato. Inedible until fried to crisp perfection. Once its transformation to a potato crisp is complete, its final garnish is a 20% VAT levy. Should you want to avoid paying VAT on your salty snacks better to eat corn or maize products, like Monster Munch or Wotsits as these are VAT exempt.

And what about the distinctive Pringle you might ask. At less than 50% potato content, does it lie in a limbo state between the two? Sadly not. Despite legal efforts to avoid VAT, the High Court ruled it a potato snack and fried the makers with a 20% VAT levy.

Gas & Electricity

There’s an internal rule in VAT about essentiality. If a product is deemed essential, it’s usually VAT free. Why then do we pay 5% VAT on our domestic energy? Surely, these are prerequisites to modern life? Apparently not.
The cynical amongst you might assume that it’s an easy and lucrative source of revenue for the government; and that’s why VAT has been levered into the mix. Would a government really do that? Apparently so…

E-Books

This is a weird one. Buy a book made of old fashioned paper, and it’s VAT free. Buy an e-book, and you pay the full 20% VAT. E-books according to the EU are not repositories of culture and learning. No, they are in fact digital products. This is one of those irksome little rules helping to give the EU its patchy reputation. It’s being challenged but maybe by then, at least in the UK, it might not be relevant.

Tampons

It’s hard to believe that women’s’ sanitary products are classed as a non-essential luxury item and 5% VAT is applied. It’s a controversial tax and campaigners are looking to get it abolished altogether. Again, it’s EU law that states Tampons cannot move to a zero rating without the agreement of all 28 states.

It’s a shame that petty bureaucracy doesn’t recognise this is a discriminatory tax on women and allows common sense to prevail. But this is VAT we’re talking about, and the seemingly apparent laws of what’s morally right or wrong don’t always apply.

Showing You The Way

At Enso we can’t promise to take away some of these peculiarities of the VAT system, but we can help you understand how it affects your business. From there we can ensure you don’t pay a penny more in VAT than you need. Call me today on 07792686479 or email me at adam@meetenso.co.uk and let me navigate you through the complex, disorienting maze that is UK VAT.

Funny Things A Customer Asks For In The Restaurant Industry

As well as being a trailblazing accountant, I’m also a part-time restaurateur. An Interesting combination I’m sure you’ll agree. I quite enjoy the change of pace between the two professions. My accountancy work needs to be exacting and methodical to ensure my clients get a proactive service that maximises the finances in their business. 

The hospitality industry is very different. No matter how much you prepare, you never know what’s going to happen. On any given evening, any or all of humankind can turn up to your eatery and put you through your paces. And there are no spreadsheets or Xero databases to hide you from their requests. 

Indeed, look at this list of funny, bizarre or downright outrageous things a restaurant customer might spring on you. 

 

Any Discount?

One of the first things you are offered when you visit any restaurant is a menu.  An enticing document that should get your juices flowing and your wallet ready. A well-written menu will list the food on offer, its preparation and crucially how much each item costs. It provides all the info’ a hungry customer needs to work out what they can afford on their eating-out budget.  

Yet, it’s common for people to request a discount when presented with the final bill. It makes my accountant blood boil. It’s almost as if they’re asking for a tip for choosing your establishment. One can’t blame anyone for trying to get a few quid off, especially in these straitened times. However, this is one time where the phrase ‘don’t ask for a discount as a refusal often offends’ is always appropriate. 

 

When Is A Burger Not A Burger?

We serve epic burgers at our restaurant — a range of delicious, meaty treats designed to tickle the taste buds of just about everyone. Served with fries, it’s a restaurant classic. Occasionally we get requests like ‘can I get a burger without the bun please?’ Or, ‘just the bun and the burger, nothing else’. 

Photo by Valeria Boltneva from Pexels

I understand that some people don’t like the pickle, or tomato, or cheese but I’m not sure some of these requests actually count as burgers. Where’s the cut-off? Who knows? But as they say, the customer is always right.

 

The Kid’s Menu

This is always a minefield. Kids are notoriously fussy eaters even from the menu designed especially for them. Requests like, ‘can you remove the breadcrumbs from the fish fingers’, ‘he prefers baked beans to peas’ or ‘she’d like a pizza without the cheese’ are all very common. Then there are the adults who want to order from the children’s menu because they’re ‘not very hungry’. Why do they come to a restaurant if they don’t have an appetite? 

You have to hand it to the serving staff for diplomatically dealing with these issues with great dignity and patience.

 

I’m Allergic To…

This is shaky ground. As restaurateurs, we have to be very careful about our ingredients and food labelling because, for some, an allergic reaction can be life-threatening. However, it seems having a mild food allergy is quite fashionable these days.  

How many times have we seen a client ask if a menu item is gluten free while nibbling on a complimentary breadstick? Or the person with a supposed ‘dairy intolerance’ who asks if the mousse is dairy-free, only to order ice cream instead. You couldn’t make it up.

 

Do Drop By

Having said all that, I wouldn’t have it any other way. I love my involvement with the restaurant. It’s a welcome contrast to my daily work helping my clients with their accounting challenges. So if you want a good meal do consider visiting us at www.sweetdiner.co.uk/

Sweet Diner, Denton.

And if you’d like to discuss your business accounts and taxes, setting up Xero for your business, or managing your VAT, call my team today on 07792686479 or email me at adam@meetenso.co.uk and let’s talk about your company, maybe over lunch?

 

VAT – Should We Or Shouldn’t We?

VAT – Should We Or Shouldn’t We?

One of the most common questions I am asked by my clients and other SMEs I meet is: should I register for VAT and what’s the benefit? I can’t blame them. VAT is one of those taxes that can be as complex as a Gordian knot and the benefits are hard to see.  Let’s see if I can unravel it for you.

What’s VAT?

Value Added Tax applies to goods and services on top of the costs of sale or delivery. The standard rate is 20% of the sale value.

It’s known as a consumption tax that we all pay regardless of our income. While there are some exemptions, VAT applies to the majority of products and services that registered EU businesses provide.

In the UK, VAT must be charged on eligible goods and services provided by every business whose turnover exceeds £85k. You need to apply for a VAT registration number and then make regular VAT payments to HMRC.

It’s interesting to note that VAT is not a tax a business pays directly. Instead, the businesses customers pay the tax, and the company makes the VAT return. This doesn’t make it any more pleasant though!

Push Me, Pull You

A complex element of VAT is that it is administered on an input/output basis. That is, a business can deduct the VAT they have paid in providing their services from the VAT they have been charged. This can result in an extra payment or a VAT credit depending on the difference.

I’m Not VAT Registered.

Now, this is where it gets interesting.  If you’re not turning over £85k p.a., you don’t have to charge VAT. That means on average you can be 20% cheaper than your competitors. And, of course, you don’t have the hassle of VAT returns. Yay!

However, some SMEs worry that not being VAT registered flags them as being a low turnover enterprise and they won’t get business from the ‘big boys’. That’s an understandable dilemma. Let’s look at the issues in the round.

  • If you’re a small creative business or freelancer, then it could be argued that no one would reasonably expect you to be VAT registered anyway.
  • If you’re already paying a lot of VAT even below the £85k turnover threshold, then it may be in your interest to register and get a credit.
  • If your business is growing rapidly, and you’ll hit the £85k threshold pretty soon, you may as well register. Rip the plaster off, as it were!
  • Most large businesses don’t worry about VAT. It’s a bill they have to pay, and it shouldn’t affect their decision-making. You’re better off providing an excellent service rather than worrying that you are charging VAT.

Need Help?

 This has been a brief overview of the UK VAT regime. Believe me; there are lots of other petit rules, dead ends and blind alleyways in the system. I wouldn’t blame you for being confused.

Happily, you can discuss your VAT concerns with the Team at Enso. We do know VAT and can help you understand where you are in the system and to make informed decisions that are right for your business.

Where required, we’ll help you get registered, and file your VAT returns on time, every time. Call me today on 07792686479 or email me at adam@meetenso.co.ukand let me unravel your VAT queries. I quite enjoy it, believe it or not!

You may not like paying your VAT bill, but at least with the help of the Enso team, we’ll make it as hassle-free as possible!

 

R&D Tax Credits – Are SMEs Missing Out?

R&D Tax Credits – Are SMEs Missing Out?

If someone to sidles up to you and offers you some free, legal money it would be strange to refuse this seemingly no strings offer.  Yet there are thousands of UK companies doing just that. They are effectively saying no to a cash injection for their business. By not engaging with the Research and Development (R&D) tax credit scheme, they are potentially refusing some free cash.

Why Are They Doing This, You May Ask?

It mainly boils down to a simple lack of knowledge and an unwillingness to understand the issues. Companies in the SME sector simply do not have the right information and sometimes this is due to poor accountancy support.

Give Yourself Some Credit

R&D tax credits have been available in the UK since 2000.  It’s a progressive scheme that allows companies tax relief on their R&D activities.

The scheme aims to encourage innovation in UK businesses. In effect, it’s Government help to develop the products and services that will keep our economy healthy in the face of ever-growing globalisation pressures.

But the shocking fact is this benefit is woefully underused, especially amongst SMEs.  Only a fraction of the £1.5bn the Treasury sets aside annually for R&D tax credits is claimed.  What’s going on?

Let’s Look At The Facts

A quick overview of the R&D tax credit scheme offers a clue. It states for qualifying projects, R&D related corporation tax relief may reduce your overall bill or indeed generate a tax credit.

The system applies if you’re running an R&D project that seeks ‘to achieve an advance in overall knowledge or capability in a field of science or technology’.

And right there we can see an issue. The opaque language could be off-putting to the average SME. Many businesses would find they qualify if helped by a more straightforward explanation and the right accountancy assistance.

Qualifying Projects

Even now, you may still be under the impression to qualify you need to be wearing a lab coat and staring intently into a Petri dish.  So here are a few ‘real world’ examples to prove that R&D tax credits apply much more broadly than you may think.

  • E-commerce and fast fashion. On the face of it hardly cutting edge stuff. However, this industry relies on technology and ever-evolving business processes to ensure it can fulfil orders in a competitive market. This industry’s lifeblood is fast-paced innovation that would qualify for an R&D tax credit
  • Food and drink. In recent years, the hospitality sector has exploded. And so has the range of food delivery formats. Add in menu innovation in terms of food tastes and textures, and you find plenty of qualifying R&D.
  • A traditional, salt of the earth industry. But in the push to create sustainable buildings and address housing shortages, R&D work now includes construction efficiency, eco-credentials and building safety and durability. There’s room to make an R&D claim here.

So What’s On Offer?

Let’s concentrate on the SME scheme. From 1 April 2015, R&D tax relief increased to 230% on their qualifying R&D costs. In certain circumstances, loss-making companies can surrender their losses in return for a payable tax credit at 14.5% (of turnover?).

Better still, you can claim the relief for the previous two tax years. This is a highly attractive benefit especially if have been undertaking some protracted R&D work.

Costs associated with direct and externally procured staff, subcontracted R&D work, consumables, software, trials, prototyping and independent research costs may all qualify for R&D relief. Exclusions include capital expenditure on specialised equipment or expenses related to the production and distribution of goods and services.

If You Don’t Ask, You Don’t Get

You may still be wondering if the scheme applies to you.  Indeed judging which projects and activities will qualify for R&D tax relief is the area where most people seek our help.

At Enso, it’s what we do — squaring the R&D tax scheme circle. We’re experts in this area and happy to help you assess if you can apply for R&D tax credits. Just ask!  We’ll soon see if you have a qualifying project and then help you to make a quick and painless claim.

If your company could do with some extra cash, then R&D tax credits could indeed be an option. Call me today on 07792686479 or email me at adam@meetenso.co.ukand let’s talk about your company’s R&D activities.

Accounting and Fitness, can the two really be alike?

Accounting and Fitness, can the two really be alike?

I know what you are probably thinking, accounting and fitness couldn’t possibly have any similarities. Well, that’s where you are incorrect. Accountancy must be a well-oiled machine, just like the way fitness helps you run smoothly. Working with Alistair Mills has really opened up my eyes as to how our businesses are comparable in day to day life.

Regular exercise improves your overall health and focus, that is not news to any of us. Having regular account upkeep can have the same benefits to your life. Keeping up to date on your accounts will result in less stress and free up more time to enjoy aspects of your life. When you exercise you begin to build up stamina which results in being able to focus on tasks longer. More regular fitness equals better sleep, consistent accounting will do the same. By making sure your accounts are always up to date you won’t be up all night worrying.

Just like fitness should be a life-style adjustment, so should staying on top of your accounts. We all know fad and fast diets are short-lived, so why should your finances be the same? By staying consistent and up to date with both of these important aspects of your life will surely equal a happier life.

 

Fitness

 

Alistair has this to say:

Success in a training program comes down to a few basic elements:

  1. A Vision

Figure out what you want, when you want it and make sure the reason ‘why’ is really strong.

  1. A Plan

Any goal requires a step by step plan with regular reviews to track the progress.

  1. An Expert

Amateurs learn from their own mistakes, pro’s learn from other people’s. Get a pro in your corner and increase productivity.

  1. Continuous Learning

Find someone to take the journey with you who’s passionate about improving, who comes up with new ideas and motivates you.

 

Finding a good accountant can help you execute a vision for your business, saving you time and money in the process. Just like a trainer can help you you achieve your fitness goals.

 

How can Enso help?

We are happy to give you a free consultation where we can review your finances and take the stress away from you. Contact us on 07792686479 or  adam@meetenso.co.uk for more details.

If you would like to talk to a fitness expert, email Alistair on alistair@swimnow.co.uk for details.

How buying a Tesla can save you tax!

How buying a Tesla can save you tax!

In case you’ve been living in a cave – the last few years Tesla has been dominating the market with their self driving cars and their very ambitious founder, Elon Musk.

My personal take on a Tesla: best car I’ve ever driven. It really is a fantastic drive, and the built-in tech in the car makes the experience so much better. It is years ahead of the competition.

However there is one snag, it is 100% electric. But this should be a positive. If you have a charger installed at home, it could be even more convenient than putting fuel in a normal car at the petrol station. With superchargers throughout the country, your Tesla can be fully charged from empty in 15 minutes.

Being electric has a few other benefits. The price of a Tesla is knocked down a fraction from a government grant. There are also fantastic tax benefits that come with buying an electric vehicle. Below I’m going to show you how buying/ leasing an £80k Model S Tesla will save you tax.

 

Corporation Tax

I’ll start with the best part. As the car is electric, you will be able to reduce taxable profits by 100% (First Year Allowance) of the value of the car. So an £80k car will save you a whopping £16k.

If you are leasing the car you will be able to reduce profits from the lease payments.

From a business point of view, I would prefer to buy the car outright rather than lease. The EBITDA stays higher this way which makes your business healthier. Also buying the car outright lets you take advantage of the tax savings in year one rather than over a few years.

Remember, this will end on 31 March 2021, so if you do want to buy electric, I would recommend buying before this date!

Personal Tax

If you were thinking of buying a car personally anyway, remember you would have to pull the money out of the business. Assuming this was by dividend, it is another huge tax saving. In this scenario you would not be paying the full 80k but instead on finance and deposit. Assuming the deposit is 10% so £8,000, and then payments of £800 a month. That totals £17,600 year one and £9,600 onwards. Depending on your tax bracket (assuming you’re on a higher rate at 20%), pulling that dividend would cost around £3.5k year one and £1.9k year two onwards.

VAT

This was the part I did the most extensive research, and unfortunately it’s bad news. HMRC states that if the car is available for personal use, then VAT cannot be claimed. So if you are very strict, do not use the car for commuting, or any personal use at all. The cases I’ve read which have won and allowed to claim back the VAT have been cases where it is written in the employment contract that the car was stored and locked on site overnight. That availability of the car, even if your home is your office, will stop you being allowed to claim the VAT back.

It’s not all bad, if you do lease the car you will be able to claim back 50% of the VAT if it is for business use.

Benefit in kind

Assuming the car is for personal use you will need to pay benefit in kind. This is an additional tax you pay on behalf of the employee for benefits from the company. The rate isn’t great at the moment. You would pay tax on 13% of the value of the Tesla for year 2018/2019. It is 16% in 2019/2020. However, it drops all the way down to 2% in 2020/2021. It swings about though as from 31 March 2021 you won’t be able to claim the 100% First Year Allowance of the car.

The BIK in the next three years on a 20% tax rate would be £2,080 year one, £2,560 year two, and £320 year three.

How can Enso help?

We are happy to give you a free consultation where we can review your finances and company cars for your business. Contact us on 07792686479 or  adam@meetenso.co.uk for more details.

Making Tax Digital is Coming!

I’m sure you have heard of Making Tax Digital somewhere, be it friends or LinkedIn. Hopefully this guide will help you understand exactly what it is and how it will effect you.

5 Steps to Setup a Start-up

I have done this several times for myself and I have also done this for many, many clients! There is a lot more to it than registering your company. Here I will show you all the things you should think about, and I’ll throw in a few tools I’m personally using.