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What type of accountant do you need?

As the gap between what different accountancy firms offer widens, is it time you started to question your current accountant and what they have to offer you?

There are two distinct types of accountant, both able to satisfy you statutory obligations, but have you thought about the other services that your current accountant offers? Accountants can be grouped into one of two categories, traditional accountant or modern accountant. Remembering that the key difference between the two is that a traditional accountant is very reactive to your needs and a modern accountant is proactive and has an active role to play throughout your fiscal year.

If you want an accountant to complete your year end accountants & tax returns and stop there, then a traditional accountant is what you need. You will find these accountants make up the vast majority of the market and easy to find. They sell their services like a commodity and compete on price. They do not actively deliver value added services, but they are more often priced accordingly.

If you want an accountant that you speak to on a monthly basis, who is in touch with you and your financials and can provide tax saving strategies, then a modern accountant is want you need. This type of accountant will set up accounting systems in your business to help monitor your finances and proactively assist you in future planning, whilst also looking after the historic information and statutory requirements.

The beauty of a modern accountant is that they will be able to work with you remotely, opening up your choice to the whole of the UK. You no longer need a local accountant. Nimbus Accounting is a leading player in this arena. Nimbus is a modern accountancy firm and we believe our service stands out in the industry. If you feel that you could do with a new approach to your accountancy needs then give Nimbus a call today to discuss why you should have a modern accountant. 

What is so great about FreeAgent online accounting software?

There are an increasing number of online accounting packages available for contractors/freelancers and small businesses. At Nimbus Accounting we evaluate all cloud accounting products regularly to ensure we are only recommending the best for our clients. Currently, the majority of our clients use either Xero or FreeAgent.

The key feature that our clients find invaluable in FreeAgent is the informative homepage. It includes an integrated tax time line, snap shot of your bank balances, outstanding debtors and creditors. This information is essential for any business owner who wants to keep an eye on future cashflows and plan for them accordingly.

FreeAgent is very user friendly, probably because it wasn’t designed by accountants, so the interface and language is targeted at the end user, something that contractors/freelancers or small business owners have not had in the past from other software providers. FreeAgent delivers everything you would expect from an accounting package, with many additional features designed to assist in the day to day management of a business. For instance, you can track your time spent on a project and create an invoice directly from this data. Once you have customised your invoice template, you can email invoices directly from FreeAgent straight to your customers.

FreeAgent enables you to upload your bank statements directly into the software and hopefully soon they will also support live bank feeds. Analysing your bank transactions couldn’t be simpler with FreeAgent, everything is completed with a click of the mouse, saving you time and removing the need for spread sheets.

If you are a contractor/freelancer or small business owner and don’t understand where you are with your business finances, then you should consider FreeAgent. As soon as you have uploaded and processed your bank statement, FreeAgent can automatically estimate your VAT liability, your PAYE payments, your future corporation tax and what personal tax you could be liable for. All of this information, including payment dates, are displayed on your fully customisable homepage.

If you are not sure what software you should be using, then please contact us and we can help you understand the benefits of Xero and FreeAgent. It may well be that some other software may be more appropriate for your business. If this is the case, we can assist you with implementing another solution. We recommend, if you are switching to an online software provider, that you seek an accountant with the relevant experience to assist in the transition.

Nimbus Accounting was set up exclusively to support clients who want to use online accounting software. We are experts in the market and we are confident that we can help you select the best package to help you grow and develop your business. Why not call us today to discuss how Nimbus Accounting can help you.

When is claiming for clothing an allowable expense?

Unfortunately most claims for business clothing are non-allowable, this is due to them having an “intrinsic duality of purpose” as set out in the famous case of Mallalieu v Drummond [1983]. In this case a barrister wanted to claim for her “court clothing”, something that she would not wear outside of work, however the judge ruled that a wardrobe of everyday clothes even, if they were used solely for work, have a dual purpose in that the clothes gave warmth and decency.

There are a number of occasions when you can claim the cost of clothing; if you are an actor you can claim the cost of your ‘costumes’.  If you are a TV presenter it is allowable to claim a suit if acquired solely for use in front of cameras. If you were so lucky to be attending the premiere performance of your latest film, then you can claim the cost of your gown. However, the gown is only allowable if the sole purpose was for the premiere only. Now here is the amazing part about the gown, if after the premiere there was some private use, then this DOES NOT result in a disallowable expense.

You can also claim for clothing if it is required for health and safety, such as overalls, gloves, boots and helmets etc. These expenses are typical of the construction industry, but what you can also claim for is the repairing, cleaning and replacement of these specialist clothes too.

If your current accountant has not claimed these expenses for you, then it’s time to question “are they proactive in looking after you?”  If the answer is no, then it’s time you called Nimbus Accounting to arrange a free initial meeting to discuss how we can save you tax. 

Saying our final good-bye to ESC C16

If you have never heard of ESC C16, or if your accountant has never explained to you what ESC C16 is, here is a brief introduction, albeit a little late as it is being removed on 1 March 2012.

ESC C16, lets the owners of a business “wind” their company up without going down the formal liquidation route, it is only available if the company has cleared all its outstanding creditors. The advantage of “winding up” under ESC C16 is that the reserves of a company can be distributed as capital, rather than having to take the remaining surplus as a dividend.  This has always be a great tax planning tool for higher rate tax payers, as the capital payment should qualify for entrepreneurial relief and is therefore taxed at 10%, alongside your annual exemption of £10,600 (2011/12).

Unfortunately the government is scrapping ESC C16 on 1 March 2012, therefore if you want to take advantage of ESC C16, then you need a commercial decision as to why you need to close your company. This is obviously only relevant if you are a high rate tax payer, if you are in this situation we would strongly urge you to discuss this with an accountant (maybe Nimbus Accounting) as soon as possible and well before 1 March 2012 otherwise it could be too late.

From 1 March 2012, you can still wind your company up without a liquidator, but you can only take £25,000 as a capital item, any remaining surplus will have to be distributed as a dividend.

After 1 March 2012 you can still “wind up” your company and distributed the funds as a capital item and potentially pay 10% capital gains tax, but you would need to appoint a liquidator. A liquidator could become costly, but depending on the amount of reserves this option could be more beneficial than paying higher rates of tax on your dividends.

If you would like to discuss any points in this blog, please do not hesitate to contact Nimbus Accounting.