Its tax return season and lots of sole traders are thinking about what expenses they can and can’t claim.  Here are my top 12 tips on expenses you can claim:

1.    Car expenses 
Car expenses are a pretty complex area of expenses for small businesses.  I could write a whole guide on this topic, but luckily there is a simple way to deal with it too.
If your business is under the VAT threshold, it doesn’t matter if you’ve voluntarily registered for VAT, you can claim a mileage allowance.
You’ll need to keep a log of your business mileage but for each mile up to 10,000 miles you travel in a car you can claim 45p per mile.  After this you can claim 25p per mile.   There are lots of apps you can use, or a diary. 
If you use a motorbike you can claim 24p per mile, and even if you use a pedal cycle you can still claim 20p per mile!
You can also claim a passenger allowance if you are taking a colleague with you to training or a meeting.  You can’t claim for the kids if you happen to be dropping them somewhere on the way!
Travel to and from a normal place of work cannot be claimed, but if you work from home every business mile you travel is a business expense.

2.    Working from home 
If you work from home, then you can claim a portion of your household expenses as business expenses.  This includes:

• Heating
• Lighting
• Mortgage interest 
• Rent
• Insurance
• Council Tax

There are two ways to calculate the business portion.  We call them the ‘apportionment method’ and the ‘lazy method’.  It’s worth doing a quick calculation for both to check which is best, but if you do more than a few hours work per week from home normally the apportionment method will work out most advantageous.

The Apportionment method
Firstly, calculate the number of rooms in your home.  Don’t include halls, bathrooms or toilets.  Next work out the number of rooms you use for business purposes.
You will need to calculate the percentage of the time you use these rooms for business use too.  Finally calculate the total of your household bills.          
Example
Bob has a 3 bedroom house, with one living room, one kitchen and one dining room.  He uses one bedroom as an office.
This means 1/6th is used for business purposes.
Bob uses the office for 7 hours a day, but in the evening his children use it to do their homework.  Therefore, the proportion of time used for business use is 7/9ths 
Bobs total household bills come to £5660 per year.
His business expenses are:
(£5660 x1/6) x 7/9 = £726

The lazy method
The next option is to use the lazy method.  HMRC allow a small monthly amount to be claimed for the use of home as an office.  It is based on the amount of time you spend working at home, and not the space you use.
It is calculated as follows:
£10 a month for 25 hours to 50 hours working from home. 
£18 a month for over 50 to 100 hours 
£26 a month for over 100 hours 
Which is best? It really depends.  You should do both calculations to get an accurate answer.  
If we take the example of Bob.  If he followed the lazy route he’s be able to claim £26 x 12 months or £312.
From our earlier example you’ll be able to see that Bob would be able to claim expenses of £518 more just by taking some time to do a simple calculation.
 
3.    Stationery
This includes items such as business cards or compliment slips, as well as the more usual pens and paper.   You can claim tax relief on the full amount of this cost – its my favourite tax-deductible treat.
4.    PostageYes people do still post things.  Don’t; forget to make a note of stamps you use, chances are you had them already so its easy to forget to make a note and include them in your accounts.  Remember it all adds up so record everything. 
 
5.    Professional subscriptions
You can claim tax relief on the cost of annual subscriptions paid to a professional institute or society, if membership of that body gives you the right to use a qualification and you use that qualification in your business. For example, a self-employed bookkeeper could claim the cost of their Institute of Bookkeepers subscription. You can also claim tax relief on the cost of subscriptions to trade associations such as your local Chamber of Commerce.  You can check the approved list on HMRC

6.    Telephone and Broadband 
As a sole trader, the chances are that you’ll be using your home telephone and/or broadband for business use as well as personal use.  
If this is the case, then like other household bills you can claim a portion of the cost.
It will take a bit of work to calculate the proportions of each.  The simplest way is to keep a log one week every two months or so.  As long as these weeks are representative then it should suffice.
Line rental as well as business calls are a legitimate expense.
The alternative is to get a second business line, but this can be costly.  There are alternatives like VOIP or voice over internet protocol which can give you a business line using your broadband at a fraction of the cost of a second line.

7.    Training Costs 
If you are learning something new then the costs of this cannot be claimed as a business expense.  This is seen as a capital expense in the same was as website development.
If, on the other hand, you are updating a skill you already possess then this can be claimed as a business expense.  Be prepared to justify your reasoning here and as always, if in doubt seek professional advice. 

8.    Travel

Flights
You can only claim the cost of flights if the primary purpose of the journey is business.  If it was mixed business and private, then you can only claim costs that you can clearly separate from the private part of the journey.  If you can’t separate them, you can’t claim anything.

Hotels
As with flights is it was just for business you can claim the full cost, if not only the portions that can be separated can be claimed. 

Tolls and car parking
You can claim tax relief for the full cost of tolls and car parking fees you pay while travelling on business. If you are claiming tax relief using the mileage method, you can claim tax relief on the costs of tolls and car parking in addition to the mileage. Don’t forget, however, that you can’t claim tax relief on parking fines or speeding tickets.

Train tickets
Same as for hotels and flights – only the portion that can clearly be shown to be for business can be claimed.
 
9.  Insurance 
If you need to have insurance to carry out your business, then this is a business expense you can claim.  This includes public liability insurance, employer’s liability insurance or professional indemnity insurance but is not limited to these. 

10. Magazine subscriptions 
If you subscribe to a magazine which is relevant to your field of business, for example a web designer can subscribe to a web design magazine like .net, then this can be claimed as a business expense. 

11. Networking Meetings 
Costs of attending networking meetings to promote your business to others is also a legitimate business expense. 

12.    Professional fees 
And last but not least (in my opinion) The cost of hiring a professional for your business like a solicitor to draft your contracts or a bookkeeper or accountant to keep your accounts are also a business expense you can claim.  So by hiring a bookkeeper you can actually reduce your tax bill.  For more details about these circumstances, visit HMRC’s guidance here: http://www.hmrc.gov.uk/manuals/bimmanual/BIM46400.htm
 
The expenses you can legitimately claim vary from business to business so it’s always worth checking with a bookkeeper or accountant.  The basic rule for any expense to be allowable is that it must be ‘wholly and exclusively’ for the purposes of carrying out your trade.

Remember that you need you keep evidence of the expenses for 6 years after the end of the tax year they are incurred.

One of the biggest frustrations I find my clients have in common is getting paid.  It can be a nightmare for your cash flow – you have done the hard work, delivered what your client asked for is it too much to ask to get paid?  Not only can late payments cause big problems for your cash flow, they also take up a lot of your time and divert your attention from the areas of your business you enjoy.  Don’t panic – below I outline a few top tips to help you get paid quicker and with less effort.
​
1. Invoice as soon as the work is done
You don’t have to wait until the end of the month to invoice your clients.  If the work is completed send the invoice ASAP.   The sooner you invoice, the sooner you get paid.  If you have clients on monthly retainers many of the software programmes can automate the sending of these monthly invoices for you - it’s so easy once you have set them up the software creates and sends the invoices for you.  Put time in your diary at least monthly to do all your invoice.  If you don’t have the time to keep on top of your invoicing this is something you could outsource.

2. Make it super easy for clients to pay you
Make sure you list the details of how you want to be paid and the account details clearly on your invoice.  Without these your client can’t pay you!  Another option is in many of the accounting software packages you can include a link on your invoices that enable your customers to you direct from the invoice.   Think about how your clients want to pay you: is it bank transfer, Direct debit, Credit Car or PayPal.   Anything that makes it easier for your client to pay you is a good thing.   If you have regular payments e.g. retainers consider using a system like GoCardless to enable you to take fees via Direct Debit.  I love it, it makes life so much easier for me and my clients.  You can also use it to take one off payments once your client has set up the Direct Debit.

 3. Think about your payment terms
If you don’t list payment terms on your invoice they will default to 30 days.  It’s up to you what terms you choose e.g. 7 days, 14 days, you can have different terms for different clients based on how well you know them and their track record.  Longer credit terms should be earned.   For higher value pieces of work, you could also consider requesting a percentage or full payment up front before any work is handed over.  Make sure your terms are shown clearly on your invoice so the client knows when you will start chasing and they will start incurring late fees. 

4. Be clear and accurate
You would be surprised at the number of invoices I see that don’t contain all the necessary information.  E.g. what the invoice is for, payment details, payment terms.  Make sure your invoices are clear and contain everything necessary that way the client has no excuse for paying you.  

5. It’s good to talk
It’s not as easy as sending the invoice and waiting for the cash to arrive, sending the invoice is just the first step.  It’s important to follow up with clients and keep communicating with them.   If you have 14-day payment terms, you could call or email after 7 days as a friendly reminder that the invoice is shortly due, this also serves as a check that they’ve received your invoice and are not disputing the contents.  Again, this is something you can outsource or automate to save some time.  Software such as Satago connects to your accounts software and does all the chasing automatically.

If your invoice isn’t paid on time send a statement and keep chasing at regular intervals.  Getting paid can take persistence, don’t give up at the first hurdle, you have earned that money.
6. Don’t be afraid to use late fees
You have the right to charge interest of 8%, in addition to the Bank of England base rate, if you don’t receive payment within your payment terms.  If you state that you will charge late fees, don’t be afraid to do so. 
If you want to discuss how a bookkeeper could help you get paid quicker don’t hesitate to get in touch

When I offered to do some work for a friend back in 2008 I had little idea where it would lead. The friend was starting a business and finance wasn’t his thing. So I started helping out…and ended up as financial director.
 
When my husband was posted to Washington, the whole family moved to the US for three years. I seized this opportunity to get qualified, taking an Open University course in accountancy. Once back in the UK, I decided to set up own bookkeeping business, giving me the flexibility to work around my children, as well as the variety of working with different businesses.
 
As a bookkeeper, I take care of the financial burdens for small businesses. I’ll take a look at where my clients are at and what they need. For smaller clients, I can set up a system they can manage themselves. For bigger businesses, I’ll work with them each month to keep everything up to date, nudging them to meet their deadlines and managing their VAT return.
 
I works with clients that realise they need help if they’re to take their business to the next level. They’re focused on building a business that works for them and their family. Increasingly, many have an element of remote working, something that also appeals to me.
 
As a military spouse, I enjoys working with people that share my military connection and value the support network this brings. I also relish the challenge of helping builders with the different regulations they have to contend with and all the paperwork they need to process.
 
I like to get to know my clients and be part of their team, rather than just someone that crunches the numbers at year-end. That way I can suggest ways to make improvements.  I love it when the figures balance. The best thing is taking the stress and the worry away -  when someone tells me “You’ve made my life so much easier”.
 
If I wasn’t a bookkeeper, I would probably be working at Disneyland. Me and my family are huge Disney fans. “I love that anyone can go to Disney and be a big kid. We have so much fun and we see groups with people of all ages spending time as families. And the service is second to none”.
 
I'm is the first person in her family to run a business. In today’s changing world, I thinks it’s important that my children see this as a possibility.  My sister is a partner in an accountancy business, so maybe I was destined to work with numbers after all.

There are big changes coming to the way savings income is taxed with the introduction of the Personal Savings Allowance.  The changes come into effect on 6th April 2016.  The changes mean that if  you are a basic rate taxpayer you will be able to earn up to £1,000 in savings income tax free.  Higher rate taxpayers will be able to earn up to £500.  

The result is that most people will no longer pay tax on savings interest and banks and building societies will stop deducting tax from your account interest.  

What counts as savings income?

• interest from bank and building societies accounts
• interest from credit union or National Savings and Investment accounts
• income from government or company bonds
• interest distributions from authorised unit trusts
• most types of purchased life annuity payments.

Interest from ISAs doesn't count towards your Personal Savings Allowance as it is already tax free.

You don't need to do anything to claim the allowance. If the amount of savings income you receive is higher than the allowance, banks and building societies will provide details to HMRC and they will amend your tax code to collect any tax due. If you complete a Self Assessment tax return you should carry on doing this as normal.

For further information go to https://www.gov.uk/government/publications/personal-savings-allowance-factsheet/personal-savings-allowance 

If you have any questions get in touch and I can help demystify it for you

The summer budget brought the announcement that individual landlords will no longer be able to offset the interest cost of mortgages and loans against profits.  This means that many private landlords could see potential increases to their tax bills from 2017 onward. 

At present interest on loans used in a property business gain full tax relief as an allowable expense.   This includes mortgages and other loans that may have been used to purchase that property, finance repairs, etc.  From April 2017, tax relief on interest in property businesses (including single buy to lets) will be restricted so that by 2020, interest will no longer allowable expense in computing the profits of the business.  Interest but will attract tax relief at 20% which will be the lower of:

• finance costs not deducted from income in the tax year
• profits of the property business in the tax year
• total income (excluding savings income and dividend income) that exceeds the personal allowance and blind person’s allowance in the tax year

Any excess finance costs may be carried forward to following years if the tax reduction has been limited to 20% of the profits of the property business in the tax year.

If you are a higher rate tax payer then your tax relief will reduce from 45% to 20%.

The changes are being phased in gradually and deductions for interest from property income will be restricted to:

• 75% for 2017 to 2018
• 50% for 2018 to 2019
• 25% for 2019 to 2020
• 0% for 2020 to 2021 and beyond

If your loans have a low interest rate you won’t affected as severely by the changes but if you have a high interest rate on your loans you may find your tax bill increases dramatically.

Remember these changes are only relevant to individual landlords, if you operate your property business through a Limited Company then you can still claim tax relief for finance costs.  The changes also don’t impact property that meets the criteria for a furnished holiday let.

It is important to get advice now on the impact these changes may have on your business so you have time to make any changes necessary.  Don’t automatically think changing to a Limited Company is the answer as it may give rise to Capital Gains Tax and Stamp duty. 

If you are a landlord and need help working out how this may impact your business please get in touch.

This is one of the most common question I get asked and the answer is it depends on your business structure. Are you a sole trader or limited company?

Sole Traders 
As a sole trader your personal and business affairs are treated as one for tax purposes. i.e. you are your business. This means, in theory, you can use your personal bank account for business transactions.  (check if your bank allows this)  Even though it is not a requirement I strongly advise having a separate account for your business.  

It doesn't have to be a business bank account but many banks may insist on this being a business account which can have charges.  

There are advantages to having a separate account:

• Bookkeeping is easier.  You know all the transactions in the account are business related.  At the very least it will save you time and money when you hand things over to your bookkeeper or accountant to prepare your accounts.
• It looks more professional - you can have the account in your business name, you can use a ‘trading as’ (t/a) name, so that all payments are made to a business name rather than your personal name.
• Its easier to keep an eye on your cashflow and whether you have been paid by customers.

Limited Companies
Limited companies are separate legal entities from their shareholders and directors and therefore the personal finances of company owners are distinct from those of the companies they run.    This is one reason many people choose to operate as a limited company rather than sole trader.  

A Limited Company has to have to have an account in the businesses name and usually a bank will insist on this being a business account.

Having a separate account for your business really will make your life easier.  When looking for an account shop around, most banks offer free banking introductory periods
​

The term ‘success’ in the business world can mean a whole load of different things.

Your business is your baby – your pride and joy. It’s an extension of you. 

The bottom line is this – if you’re making money you’re doing something right, because if you’re not making money – or on the way to getting those sales, it’s a hobby.

There are three ways of assessing the health of your business; your turnover, your profit and the amount of cash you have in the bank.

Let’s say two cars pull into the petrol station to fill up. The first is a brand spanking new Porsche 4x4 with all the kit. The driver gets out, immaculate in her designer gear (it’s got to be a female driver so I can be jealous as I write!). She goes into the kiosk to pay for the fuel with her platinum–uber-gold whatever card and then goes to the cash point in the kiosk.

Pulling up behind the Porsche is a 10 yr old Ford focus. A smartly dressed woman fills up and goes in to pay with her debit card, then goes to the cash point. The Porsche chick has left behind her printed statement, which is dangling like a loose tooth about to drop from the slot.

It would be natural to assume the designer Porsche lady is wealthy, enjoys a privileged lifestyle, and sleeps well at night. But no – her account shows she is £30,000 in the red.  Ford focus lady has a few thousand in her account.

My point? It’s lovely having a turnover to boast about (i.e. the Porsche), but it means nothing if you can’t afford the petrol to run it – the turnover ends up being a smokescreen to the realistic health of the business.  Regardless of how many zero’s the turnover figure has, the amount of money coming in has to be the bigger then the number going out. There has to be some profit.

So once you have the scales tilting in the right direction give yourself an almighty pat on the back. You did £1000 of billable work/sales and it only cost you £600. Fabulous – you made a 400 quid profit. UNTIL THAT £400 IS IN YOUR ACCOUNT IT DOESN’T EXIST. So don’t rely on it. Get your mitts on it quickly. You earned the money, so your client needs to pay up!  Bottom line – the cash is the reality because it is the cash that will buy you the bubbles to celebrate your success, not the numbers.

Simply Balanced Solutions are here to help get you to the bubbly!

It can be hard to afford the deposit on a property in the private rental sector and this fact has been recognised by Government and within the MOD.  

To assist with this the Tenancy Deposit Loan scheme has been announced.  The loan is an advance of salary which must be used to pay for the deposit on a rental property and your landlord must put it in a government backed tenancy deposit scheme.

The loan is paid back over a period of 12 months by being recovered from the serving persons salary.  For more information search Tenancy Deposit Scheme on the MOD Defence Intranet or go to 
https://www.gov.uk/government/news/help-to-secure-a-rental-home-the-mod-tenancy-deposit-loan-scheme

For once this is HMRC trying to be helpful, although it may not feel like it the first time it happens to you.  Basically you are paying installments on your tax bill so that you don’t have to find it all in one go for 31st January. 

When does payment on account apply?

If you owe more than £1,000 in tax and less than 80% of your income tax is collected at source e.g. thought PAYE, then HMRC will require you to make payments on account.    For example if you tax bill for 13/14 was £2,000 then you will pay 2 installments of £1,000.

When do you need to pay?

You make 2 payments each year:

• 31st January during the tax year in question
  
• 31st July after the tax year end
  

By making 2 payments you spread the cost a bit like paying monthly if you are an employee.

How does HMRC know how much you need to pay?

Payments on account are based on the last tax year.  Therefore if you owed £2,000 for the 14/15 tax year you will need to make 2 payments on account of £1,000 for the 15/16 tax year.

If you know you are going to pay too much in tax, e.g. you are winding your business down, you can apply to HMRC to have the payments reduced.  Be warned if you reduce the payments too much then you could be charged interest and penalties by HMRC.

If it turns out that you should have paid more tax in the year then you will need to make a balancing payment on 31st January and future payments on account will be adjusted.   For example it turns out that your tax bill for the year is £2,500 you have already paid £2,000 so a balancing payment of £500 will be due on 31st January.  You future payments on account will be increased to £1,250.

Making payments on account for the first time

This can be a nasty surprise if you haven’t prepared for it as you will be expected to pay all the tax for the previous tax year and the balancing payment all in one go.  Using the figures above that would mean a bill of £3,000 (£2,000 for 14/15 and £1,000 payment on account for 15/16).

It’s one reason to do your tax return as soon as possible so you have time to save for the bill if you hadn’t expected it.

The good news is that the more tax you owe the more money you are making which is the aim of being in business!

If you need assistance with completing your tax return or understanding payments on account please get in touch  

Forces Help to Buy are interest free loans designed to help serving military personnel buy a property.   They are considered beneficial loans by HMRC and are therefore subject to tax as a Benefit in Kind.  You will be taxed on the cash equivalent of the loan if it exceeds £10,000 during the year.    

The cash equivalent benefit is the difference between:

• the interest that would have been payable on the loan had it been worked out using the official rate of interest, and
• the amount of interest that was paid during the year.  In this case none.
  

A simple example.  
A loan of £25,000 is taken.  The current official interest rate is 3.25%, therefore interest of £812.50 would have been payable using the official interest rate.  This makes the cash benefit £812.50 for the year.

• For a basic rate (20%) tax payer this would mean paying £162.50 in tax for the year
  
• A higher rate (40%) tax payer would pay £325 in tax.
  

In practice an average loan amount will be used as the loan decreases through the year as repayments are made.  This is done by adding the outstanding balance at the beginning and end of the tax year and dividing it by 2, this figure would then be used to establish how much interest and therefore tax should be paid.

The tax would be collected through an adjustment to your PAYE code so there are no calculations for you to make and no requirement to start completing Self assessments if you don’t already do so.   The loan will be listed on your P11D.

These figures are for illustration only and are not a substitute for seeking personalised professional advice.  

If you need more information about Forces Help to Buy  Loans this blog has excellent information  http://evolutionforwomen.co.uk/blog 


If you have any questions please get in touch alison@simplybalancedsolutions.co.uk
Simply Balanced Solutions takes every care in preparing material to ensure that the content is accurate and up to date. However no responsibility for loss to any person acting or refraining from acting as a result of this material can be accepted by Simply Balanced Solutions. You should always ask your accountant to give you specific advice which is tailored to your personal and business circumstances and properly implemented.

If your business uses invoices to bill clients it’s important that you get the information right.  That way you get paid quicker, and if you are VAT registered, have the right information for your VAT return.  If you are VAT registered then by law you have to give your customer an invoice.

 The information that you must include on invoices is:

1. The word “Invoice” must be clearly displayed
   
2. Date of the invoice
   
3. A unique invoice number which follows on from the number of the previous invoice
   
4. Seller’s name, or trading name, address and contact information
   
5. Customer’s name, or trading name and address
   
6. Description of what you’re charging for, sufficient for your customer to identify the goods or services being supplied
   
7. Invoice date
   
8. Amount(s) being charged
   
9. VAT amount if applicable
   
10. Total amount owed
    

Sole trader
Invoices must also include:

• your name and any business name being used
  
• address where any legal documents can be delivered to you if you are using a business name
  

 
Limited company invoices

• The full company name as it appears on the certificate of incorporation.
  
• Your company’s registration number 
  
• If you include the names of your directors on your invoices, you must include the names of all directors
  

 VAT invoices

If you and your customer are VAT registered you must issue VAT invoices which have additional information that must be included.  If you issue simplified VAT invoices for retail supplies under £250 the  requirements are slightly different. Get in touch if you need more information.

The extra information required on a Vat invoice is:

• VAT number
  
• Tax point (time of supply) if this is different form the invoice date
  
• Unit price or rate Excluding VAT
  
• Quantity of each item
  
• Rate of VAT applicable per item, if an item is exempt or zero rated make it clear that there is no VAT on this item
  
• Total amount payable Excluding VAT
  
• Rate of any discount per item
  
• Total amount of VAT charged
  
• Total amount including VAT
  

 Other items it is good practice to include on invoices are:

• Payment details e.g. bank details to ensure swift payment
  
• Payment terms – if none are stated then the default is 30 days.  
  
• Other contact details such as social media
  
• Reference numbers – either a client reference, or Purchase Order number (often required by accounts departments to facilitate swift payment)
  

Getting your invoices right helps speed up payment by cutting down on queries.  For assistance with getting invoicing right get in touch

Armed Forces personnel who use their own vehicle for work journeys may be eligible to claim Mileage Allowance Relief (MAR) and receive a tax refund.    

If you are reimbursed for business travel at rate below the HMRC approved rate (currently £0.45 per mile for the first 10,000 miles, £0.25 per mile for subsequent miles), MAR can be claimed on the difference. For example during 2014 the MOD reimbursed mileage at a rate of £0.25 per mile, therefore MAR can be claimed at a rate of £0.20 per mile.  

HMRC have confirmed that serving personnel who receive Motor Mileage Allowance (MMA) for approved Business Travel are entitled to claim Mileage Allowance Relief.

Home to Duty (HDT) and Get You Home (GYH) Travel allowances will continue to be paid tax free and will only be eligible for MAR claims if the Temporary workplace rules are met.  HMRC regard a ‘Temporary Workplace’ as a place an individual is required to attend for a period that is expected to last for 24 months or less.

In order to make a claim the key points to remember are:

• Claims apply to business travel in your own vehicle, not pool or hire cars
• You must claim on your self-assessment if you already complete one
  
• If your allowable expenses are under £2,500 for the tax year and you don’t already fill in a Self-Assessment tax return, you can claim using  form P87.
• If your posting is for less than 24 months this counts as a temporary workplace and claims can be made, even if HDT or GYH Allowances have been received.  You must declare the amount of HDT or GYH received, you will receive Mileage Allowance Relief on the difference between this and the HMRC approved Mileage rate.
• Claims can be back dated for the last four tax years if you have not previously claimed Mileage Allowance Relief for Business Travel or for travel to a temporary workplace. The tax year runs from 6th April one year to 5th April the following year.
  
• The amount of any tax relief received from HMRC will depend on your total income and personal allowances.
• Keep records of the dates and mileage and Assignment Orders to support your claim

If you require assistance with making a claim please contact alison@simplybalancedsolutions.co.uk

More detailed information can be found on the Naval Families Federation website:  http://www.nff.org.uk/news/1244-mileage-allowance-relief

Simply Balanced Solutions takes every care in preparing material to ensure that the content is accurate and up to date. However no responsibility for loss to any person acting or refraining from acting as a result of this material can be accepted by Simply Balanced Solutions. You should always ask your accountant to give you specific advice which is tailored to your personal and business circumstances and properly implemented.

As a small business owner chances are you work at least part of the time from home, for example catching up on paperwork. HMRC allows you to claim tax relief for some of your home expenses. This guide applies to sole traders.

The expenses you can claim a portion of include:

• Lighting
  
• Heating
  
• Mortgage Interest
  
• Rent 
  
• Insurance
  
• Council tax
  

There are 2 ways to calculate what you can claim – the simplified expenses (lazy) method or the apportionment (splitting/sharing) method.  It is worth doing a calculation to check which suits your business best.  If you do more than a few hours per week at home it usually works out more advantageous to use the apportionment method.

Simplified Method

This is based on the number of hours you work from home each month; a flat rate applies depending on the number of hours.  Each month you record the number of hours and apply the relevant flat rate.  It means you don’t have to work out the percentage of bills that apply to your business.  The flat rate covers heat, light, power, telephone and broadband/internet costs.  For other costs such as mortgage interest and council tax you will still need to work out the business proportion.

The current rates are:

£10 per month for 25-50 hours working from home

£18 per month for 50 – 100 hours

£26 per month for over 100 hours working from home.

Remember:  Simplified expenses can only be used if you work for 25 hours or more a month from home and it includes broadband and telephone costs

Apportionment method

This takes a bit more effort but can give you a figure which may be more realistic and therefore beneficial when working out your profit at the end of the year. Basically all you are doing is working out what share of your expenses can be allocated to running your business.

You can either base the apportionment (split/share) on the number of rooms used for business or on the percentage floor area used.   Whichever you choose the principle is the same.

1. Calculate the number of rooms in your home (you don’t need to include halls & bathrooms) 
2. Work out the number of rooms you use for business. 
3. Work out what percentage of time you spend working in each room. Base this on the number of hours a day a room is used, if a room is used for 10 hours a day and you work in it for 1 you can claim 10%.
   
4. Total the bills you are apportioning, once you have done this divide by the number of rooms giving you the cost per room.  
   
5. The final step is to work out the percentage of the cost for each room you can claim then record this in your accounts.  
   

Broadband and Telephone costs are worked out seperately as they may be exclusively for business or if shared out the percentage of business use.

It is important you keep records that can back up your claim – e.g a diary logging hours worked at home .  Your apportionment should be reasonable, documented and stand up to scrutiny by HMRC.   We recommend that you do not to over-claim because this could trigger an HMRC aspect or full enquiry.  

For help working out which method suits your business request a free consultation Find out more about our best selling packages .

IIts almost the end of the year and like most people I find it a good opportunity to reflect on the last year and plan for the next.  Did you achieve what you hoped in 2014? What have you learnt and what do you want to achieve in 2015?  All big questions that need some thought.  
2014 has been a great for Simply Balanced Solutions and I am proud of what I have achieved in my first year of business.  I started the year with a fledgling bookkeeping business; I wanted to grow my business organically allowing me to deliver great customer service focused on what my clients want, while still being able to spend time with my family.  As the year progressed I added services,namely payroll and VAT, in response to client requests.   I also discovered that many small start-ups don’t have the budget to pay for ongoing support; they just need advice on how to keep their bookkeeping records and get their systems set up so I now offer a start-up package.  Another achievement was becoming Xero Certified as the cloud is where many people want to do their bookkeeping and offering this alongside Quickbooks, Excel and other packages means I can find the best solution to fit a client’s software needs.

I am pleased to say my first year in business has surpassed my expectations, I love what I do.  I have been privileged to work with some really exciting businesses and look forward to continuing to work with them in 2015 and see them grow and achieve even greater success.   I enjoy the variety of working with different clients – either remotely or at their offices - it means no 2 weeks are the same.  It's fun to be challenged and to have to learn new skills to help a client solve an issue.  It's partly why I set up Simply Balanced Solutions; the variety is exciting and rewarding.  Whilst no 2 clients are the same they all want the same thing, accurate, up to date financial information to inform business decisions and allow them to focus on what they do best.

My goals for 2015 are simple, I want to keep growing Simply Balanced Solutions and continue to help my existing clients achieve their goals.   Rather than setting goals for the whole year, I am setting short achievable goals to help me achieve my plan for 2015.  By breaking things down into quarterly targets it allows me to focus and adapt as the year progresses, maybe adding new services or changing the way I use social media in response to Facebook changing its rules again.    I have 1 other target I am setting myself this year - I want to blog more.  I am going to aim to blog at least twice a month - so if you have any ideas for blog posts let me know.  This is the first post so I am going to start end 2014 as I mean to go on in 2015!

What are your goals for 2015?  I would love to hear them.  Maybe you want to increase your client base by 50%, your double your turnover or reduce the time it takes your clients to pay.  Whatever they are you will need good solid financial information to base them on and to check whether you are achieving them.    The basis of this is financial information.  If you would like help with where to start or just want to chat to see if you are on the right track email or call me now alison@simplaybalancesolutions.co.uk  02392006466  

Wishing you a very Happy New Year and I hope you achieve everything you set out to!  I'll let you know how I get on.

I stumbled across this quote the other day and it really struck a chord with me. It perfectly describes how I came to be a bookkeeper. 

I started out working for a friend. Initially I was setting up a database, but it soon became clear they needed help with their bookkeeping. There were no systems, they never knew how much money was in the bank and invoices went unsent and unpaid. Just like many new businesses they were living one day to the next financially, never knowing if there would be enough money to pay the bills. I offered to help out – and discovered I loved it!

It was extreme bookkeeping. I had never done it before and was learning as I went – in other words in a storm! There were no systems, invoicing had been sporadic and clients only paid when hassled. There was never enough cash in the bank and we never knew when more would arrive.

I got stuck in and set up record keep systems, learnt how to manage clients, get invoices paid on time and juggle suppliers.  There were times when we couldn't pay our own wages as cash flow was so tight, even though it was a successful and growing business.  Slowly but surely things got onto a more even keel and the storm calmed, but never abated.  The business transitioned from sole trader to a Limited Company, became VAT registered and took on its first employees – again I learnt as I went. 

So when did it calm? That came when our family got the opportunity to move to Washington DC for 3 years.  I took the time out to enjoy exploring the USA but also to get qualified as a bookkeeper – learning in the calm.  When our time was up in the USA Simply Balanced Solutions was born, taking everything I learnt in both the storm and the calm to help your business avoid, or at the very least weather the storm.

Get in touch now and we will help you navigate your way to financial calm.

Everyone loves a Bank Holiday don’t they? A couple of weeks before this blessed three day event, picnics and family bike rides all seem possible; BBQs and Pimms - a distinct possibility. Even the BBC weatherman can’t cast doubt on the need for sun block from this distance.

One week before and you start to pay more attention to the orange-aproned DIY lot and their discounted peonies and state of the art grills. Clients enquire what your plans are for the weekend and even the weather forecast offers a 30% chance of sunshine between 2pm and 2.03pm.

By the Thursday you know you were fooling yourself. The pile of invoices and receipts are huddled together for companionship - let's face it, they’re getting no attention from you. You realise that this Monday was actually a chance for you to catch up on the dreaded paperwork while your inbox, phone and appointments are forced into a temporary silence.

At Simply Balanced Solutions, we say “NO!” that’s what we’re here for. We will give that pile of paperwork all the attention it needs – and some!  

You deserve that Pimms and that bike ride in the rain. You deserve to sit in the beer garden of your local pub with your face tilted toward the sun between 2pm and 2.03pm.

So if this Bank Holiday Monday was more filing than flipping burgers, you need us in your life.   Email or call us now to see how we can help so that you can enjoy the next Bank Holiday which is only 3 weeks away.  Not only will you recharge your batteries making you more productive, we will produce useful information to help your business grow and succeed.

Simply Balanced Solutions – We will give you back your Bank Holidays.

According to accounting bites these are the top mistakes made by small businesses when it comes to their finances.  How many are you guilty of?

1. The shoebox approach 

This is the most common mistake, book keeping is best done as you go along. On the plus side you should have all the paperwork you need to give your bookkeeper but you will have no real idea of how your business is actually doing unless you turn it into something useful.  If you have a box of receipts lurking somewhere then gvive it to me and I will happily convert it into a set of figures you can use to figure out how well your business is doing.

2. Not keeping receipts

 Many businesses don’t claim all the expenses they are entitled to as they lose receipts, especially for small amounts.  Over time this can add up to significant amounts meaning that your accounts may not truly reflect expenditure and therefore profitability.

3. Not reconciling

 It is vital that you reconcile your bank accounts to your cash book on a regular basis.  If you don’t you may fail to record all of your income and expenses.  Bank reconciliation is all part of the service from Simply Balanced Solutions meaning you will always have an up-to-date picture of your business finances.

4. Mixing business and personal expenses

Whilst there is no legal requirement to have a separate business bank account unless you are a limited company it is advisable to do so.  If you mix up business and personal bank accounts, or don’t even have a business bank account, this can cause errors and often means that a sole trader will either claim too many expenses or too few.

5. Using the wrong accounting system

Each business has its own requirements.  For some businesses a manual cash book and records are fine but for many accounting software will be needed to keep track of debtors, creditors and VAT. Make sure you understand your accounting system and operate it correctly.  Simply Balanced Solutions can help you choose the right software for your business or design spreadsheets for you to use. 

Whether you are guilty or some, all or none of the above Simply Balanced Solutions can help you avoid the pitfalls that many small business encounter when running their finances.  Get in touch for a free no obligation chat and quote to see how we can make your life easier and more profitable.