Income Archives - Stepping Stones Accountancy

Should your business have a savings account? https://steppingstonesaccountancy.co.uk/wp-content/uploads/2023/11/should-your-business-have-a-savings-account.jpg 758 513 Stepping Stones Accountancy Stepping Stones Accountancy //steppingstonesaccountancy.co.uk/wp-content/uploads/2017/01/stepping-stones-acountancy-icon.png 24 November 2023 27 November 2023

Should your business have a savings account?

As individuals we are encouraged from a very young age to open a savings account so that money can be put away for future needs. So, the key question is why do businesses not adopt the same approach and use a business savings account?

Speaking to several business owners some of the common reasons of not having a savings account are because spare cash is limited, locking up money in an account that is difficult to access is not viable and managing multiple accounts can cause issues. However, business bank accounts are now very flexible which makes it very easy to segregate money in and out of savings accounts by the month, by the week, by the day and by the hour.

They key benefit of having access to a business savings account is taking advantage of a better interest rate which in turn increases the value of investment being put aside. One important recommendation is to keep a good track of cash flow and accurately forecast expenditure versus income. This will ensure that any additional funds can quickly be transferred to savings and can also remain in the account for a longer period rather than it having to be quickly moved to be used for bill payments.

Of course, the fact that funds can quickly be moved from a savings account into a normal account for paying an unexpected bill is also beneficial.

We have spoken a lot about flexibility and the fact transferring money is made easy through the most common type of savings account, also known as an instant access account. However, there are also some alternative options available.

Firstly, there is a fixed term account which is used when money transferred into it will remain in the account for a set-period and can only be accessed when this time frame has lapsed. This is ideal for a business that is comfortable with cashflow levels and knows that they won’t need access to the savings. This type of account yields the best interest rate so offers a higher level of income.

Secondly, there is a hybrid savings account more commonly known as a notice savings account. It will offer better interest rates compared to a standard savings account but less than a fixed term account. You can withdraw money at any time but the process to extract the money is not instantaneous but will involve an agreed notice period.

In conclusion, there are a number of reasons why a business should use a savings account. It provides good returns and excellent flexibility. Access to money is easy, there are no restrictions on minimum or maximum contributions and withdrawals can be easily planned.

If you have questions or need some accountancy help, please call us on 01173 700 079 or e-mail hello@steppingstonesaccountancy.co.uk. You can also book a free call with Yarka – https://calendly.com/yarka-ssa/20min

How to get a mortgage if you are self-employed https://steppingstonesaccountancy.co.uk/wp-content/uploads/2023/11/how-to-get-a-mortgage-if-you-are-self-employed.jpg 758 513 Stepping Stones Accountancy Stepping Stones Accountancy //steppingstonesaccountancy.co.uk/wp-content/uploads/2017/01/stepping-stones-acountancy-icon.png 10 November 2023 27 November 2023

How to get a mortgage if you are self-employed

At various times in our working life, we may all have a desire to do something for ourselves and step into the world of business ownership. However, it is only a very small percentage of people that take the plunge and become self-employed. Those that do take the required steps benefit from total independence, a true love for what they do, flexibility in working hours and potentially unlimited earnings.

There are a number of excellent benefits of being self-employed. However, the one problem that can arise is with trying to secure a mortgage. Historically securing a mortgage when you are self-employed can be a challenge as lenders are concerned about the lack of evidence when demonstrating income. To help with this process there are several steps that can be taken to put a self-employed professional in a positive position when applying for a new mortgage.

Preparation

Keep excellent bookkeeping records of income and expenditure, look to use an accounting system which, when populated, can prepare reports of accurate and meaningful data. Always ensure you have a positive credit score and if possible, have a good level of savings.

Speak to the experts

There are several excellent mortgage advisors that specialise in self-employed mortgages. Seek their professional advice and guidance as they can complete an initial fact find, check on affordability scales and match you to the right lenders.

Seek financial accounting help

Use a professional accountant to prepare all financial information. A lender will look more favourably on the application if the accounts have been prepared by experts. The credibility of providing accurate information gives a lender lots of confidence.

Credit history

Try to maintain a positive credit score and if there are any negative connotations then work to address these and allow time before completing the mortgage application. It goes without saying the better your credit score, the better the chances of securing a mortgage.

Positive cash flow

Try to ensure you have a positive cash flow which demonstrates that any bank accounts have a healthy credit. Where possible also have good levels of personal savings which, should income one month be slow, demonstrates that the repayment of mortgage fees will always be covered.

Present the right documentation

Copies of trading history (for the previous two years), HMRC documents such as an SA302 and evidence of upcoming contractual agreements will be required when any mortgage applications are made.

Other personal information used for evidence will also be required these can include passport or driving licence, utility bills, council tax bills and bank statements.

Finally, being on the electoral register with the right to vote is also advantageous as a lender can research this and use it as verification for identification purposes and proof of address.

If you have any questions or need some help with any aspect of self-employment and accountancy support then would be happy to help. Please call us on 01173 700 079 or e-mail hello@steppingstonesaccountancy.co.uk. You can also book a free call with Yarka – https://calendly.com/yarka-ssa/20min

A simplified tax reporting for small businesses https://steppingstonesaccountancy.co.uk/wp-content/uploads/2021/08/simplified-tax-reporting-for-small-businesses.jpg 758 513 Stepping Stones Accountancy Stepping Stones Accountancy //steppingstonesaccountancy.co.uk/wp-content/uploads/2017/01/stepping-stones-acountancy-icon.png 9 August 2021 26 August 2021

A simplified tax reporting for small businesses

As part of the Government’s Making Tax Digital (MTD) plans to simplify the tax system and to speed up the time it takes for self-employed professionals and small business owners to complete their tax returns, the Government are proposing changes to the existing tax reporting rules.

The changes, planned by 2023, would mean that any business not incorporated would be taxed on profits arising in the tax year as opposed to profits on accounts ending in the tax year.

In short, the changes will see all businesses having to align their basis period with the 5/6^th April tax year. Whilst the majority of businesses already do this, there are about 7% of sole traders who choose not to as it fits better with their business model.

For example, a business who runs their accounts to the 30^thof June each year, their income tax for 2023/24 would currently be based on profits for the year ending 30^th June 2023. Under the new rules the income tax for 2023/24 would be based on 3/12 of the income for the year ending 30^th June 2023 in addition to 9/12 of the income for the year ending 30^th June 2024.

The Government estimates that around 3% of sole traders and 15% of partners will face an increase in costs as a result of these proposed changes but believes that they will reduce errors and overpayments and bring tax returns in line with other assessments such as property income.

Whilst the changes are broadly welcomed and the consensus is that it will simplify life for business owners, the consultation period is due to conclude on 31^st August. Some claim that this is too quick and businesses need more time to prepare and propose a delay of 12 months in order for business to provide proper feedback and ensure that the scheme works for everyone.

If you have any questions or would like to discuss this further please feel free to call us on 01173 700 079 or e-mail hello@steppingstonesaccountancy.co.uk.

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