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Translating The Accountancy Jargon | Accountancy Terminology |
Translating the accountancy jargon 758 513 Stepping Stones Accountancy

Translating the accountancy jargon

People usually go into business because they feel that they have something special to offer; a unique skill set or product that the market needs and a desire to offer the very best customer service to complement that offering.

Whether you are gifted at capturing the perfect photograph, capable of building distinct websites or have a unique talent for developing flavour combinations for that favourite of lunchtime foods, the humble sandwich, you are a specialist for a reason and you are no doubt passionate about what you do. However, as business owners there are lots of areas that you are not a specialist in. For example, apart from a web developer few people need to understand what CMS means or apart from a photographer only a small number of people will understand what the use of bokeh is. There are so many business acronyms and technical terms that we will probably never fully understand and perhaps have no need to understand.

If we look at the world of accountancy, how many people really know their accruals from their capital gains or their liabilities from their overheads?  To help you navigate the plethora of phrases commonly used in accountancy, here is an A to Z of some of the most popular ones and what they actually mean:

Accrual – an expenditure that has not yet been paid for or invoiced
Balance Sheet – a summary of the assets and liabilities within the business
Capital Gain – the profit that you make on the sale of asset which is purchased and used within the business (rather than sold on)
Depreciation – the devaluing of an asset purchased within the business
Equity – the value of the business to its shareholders
Fixed cost – a recurring cost that remains the same for a dedicated period of time
Goodwill – the intangible asset associated with the value of a business, e.g.  goodwill, brand recognition, copyrights, trademarks, customers, etc
HMRC – Her Majesty’s Revenue & Customs, the UK’s tax, payments and customs authority
IFRS – the accounting standards set by International Financial Reporting Standards
JSA – job seekers allowance is the money paid to people who are unemployed but that are actively seeking work
Kashflow – one provider of the many solutions for online accounting software
Liabilities – either money or debt which the business owes and results in funds quickly coming out of the business
MTD – a HMRC scheme called Making Tax Digital which is focussed on digitalising the tax system
NI – known as National Insurance which is a payment made by everybody who is employed with a salary over £9,500
Overheads – the fixed costs which do not relate to sales, e.g., rent, fees and depreciation
P45 – a formal document issued to an employee when they leave the company
Quarterly – accountancy processes that need to be completed four times a year e.g., VAT returns and MTD updates
Retained Profit – the sum of all profits when all taxes and dividends have been taken out of the business
Self Assessment Tax Return – personal tax used by HMRC to collect relevant income tax payments
Tax Planning – the process which can be completed to help reduce the burden of large tax payments
UTR – this will be a 10-digit number (known as the Unique Taxpayer Reference) which is given to self-employed professionals for either self-assessment or setting up limited companies
VAT – the tax payments that needs to be made on business purchased (also known as Value Added Tax)
Worker – the newest phrase predominantly used in the ‘gig economy’ for a person’s employment status
Xmas Party Tax Relief – for annual events such as a Christmas party there are tax free benefits as long as the costs is no more than £150 per person
Year End – the closing period of a business’s accounting year
Zero Rate – all goods that are rated zero rate means not VAT is applied to their cost

If you have any questions or unsure about any other accountancy terminology then please call us on 01173 700 079 or e-mail hello@steppingstonesaccountancy.co.uk.

Contractors and Construction Industry Scheme | Accountancy Advice
Contractors and the Construction Industry Scheme 758 513 Stepping Stones Accountancy

Contractors and the Construction Industry Scheme

The Construction Industry Scheme (CIS) requires contractors to deduct payments from any subcontractors that they use in order to make advance payments towards the subcontractor’s tax and National Insurance.

It is a legal requirement that all contractors register for the scheme, whether a sole trader or a limited company, if:

  • they pay subcontractors to do construction work
  • their business doesn’t do construction work but usually spends more than £1 million a year on construction

There are a number of professions within the construction industry though who are exempt from the CIS including architecture, surveying, planning and civil/structural engineers. Such peculiarities can make the scheme a little tricky to understand.

For those companies who are required to register though there are some very specific guidelines that must be followed:

  • they must register for CIS before taking on their first subcontractor
  • they must check if they should employ the person instead of subcontracting the work. There may be a penalty if they should be an employee instead
  • they must check with HM Revenue and Customs (HMRC) that their subcontractors are registered with CIS
  • when paying subcontractors, they usually need to make deductions from their payments and pay the money to HMRC.
  • they need to file monthly returns and keep full CIS records – they may get a penalty if they don’t
  • they must let HMRC know about any changes to their business

Whilst more information is available from GOV.UK , the rules surrounding the Construction Industry Scheme can be somewhat confusing so it always best to get professional advice if you are unsure.

At Stepping Stones we work with many companies within the construction industry and as such are well placed to provide advice and guidance to both contractors and subcontractors. Why not give us a call and see how we can help you, we would be delighted to work with you.

 

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