ZB Accountancy Services

Managing cash in a small business is a key skill for any owner and can determine whether the business is successful or not. Cash flow refers to the money that comes into and out of the business. Cash coming in is the monies received from the customer or clients, maybe also loans or capital introduced by the owner. Cash out is against expenses e.g. stock, salaries, office stationery etc. Cash coming into the business needs to be enough so that is covers the payments on expenses out. It might appear quite basic and the principles of good cash flow management straightforward but it can be a area where businesses struggle.

One way to be able to excel at cash flow is to have a good credit control system in place. Have very clear credit limits and payment terms for your clients, send out invoices quickly and start chasing debts as soon as they are due, these controls should all help in being able to stay positive in the cash flow situation.

Introducing Merlin, my other gorgeous rescue cat!

Another really important task for business owners is reconciling your transactions. This task is normally done at the end of the month, usually when you have your bank statement. This involves checking that your financial records match up with the transactions you have shown on your statement.

This is a good opportunity to find any unexplained purchases or charges, also make sure that no double payments have been made and confirm that monies from customers or clients have been paid against invoices issued.

This again is something that is easily done by a manual process but software does do this automatically if it has been set up with a bank feed option, this can provide a way of saving some time if that is a concern.

Having had a brief look at the different types of keeping your records from manual (book based) to digital (cloud accounting software) it is worth noting that as from 2026 legislation is set to come into effect which will require digital reporting quarterly of your accounts. This is being brought into effect in a tiered system depending on how much your turnover is. The legislation has already been moved back once from an initial date of 2024 so it is question of whether there will be further delays or not, we will have to wait and see.
To start preparing for this change if you don't already use some form of computer to record your transactions then it is a good idea to prepare by looking into what system you would like to use. If you use spreadsheets then you will require some form of bridging software to upload them to your digital tax records to HMRC. If you opt to use the cloud accounting software then the processes required will be built in already by the manufacturers.

If you have any questions please do ask, or join my Facebook group Bookkeeping and accounts for the self employed small business UK.

As well as my horses I adore my two rescue cats! This is Misty who had been de-cobwebbing when this was taken 😆

Essentially bookkeeping is all about recording how much money has entered the business and how much money has left it. At the end of the year this information is given to HMRC who then calculate what tax is owed.

So what is the way to record all these transactions? Presently this can be done in a few different ways depending on the way you find easiest and works for you. You could have a monthly book where both incoming and outgoing expenses are recorded. The totals could then be taken forward to the next book and so on until you have the totals at the end of the year. Traditionally these type of books would have been called ledgers and in a more complete way of recording there would have been a ledger per customer, type of expense and bank. With the advance of the computer this basic style of account keeping moved into spreadsheets, which is still a good way of recording transactions but with further advances there is now available a large selection of cloud based software which can make life even easier and faster.

We touched briefly on income tax in my last post so a point to always consider is how to reduce your tax bill at the end of the year.

Anything that is a business cost can help reduce your tax bill so this can include:
- Computers, software, printers, toners, internet access
- Stationery, advertising, leaflets, cards
- Phone bills (or a percentage if used for personal use and not a dedicated business phone)
- Mileage or vehicle costs (depending on how you use your vehicle etc)
- Rent (or a room allowance if working from home)

If you are VAT registered then you must remember to keep all receipts (not just the card copy) which should have a VAT number on them to be able to claim. If you have travel expenses then try to buy them online so you have an email record etc. Always request a receipt when you buy anything for business - some shops/outlets don't automatically provide one.

This is just a very brief look at what you can include as expenses. I will be exploring this in greater detail in a future post.

By accurately keeping track of your expenses you can save on your final tax bill so it's a good habit to establish on routine for recording them.

Any question please do ask or join my group Bookkeeping & accounts for the self employed small business UK.

As you know I adore my horses! Here is a photo of Mocha with a very newborn Freddy! He was about 5hrs old here 🥰

Income Tax - so what do you actually have to pay out and what can you keep?

Self employed tax rates are the same as those for employed people. There is a standard tax free personal allowance which apply to most people with different rates, bands and thresholds.

Presently the personal allowance is set at £12,570, which means you can earn up to this amount with a 0% tax rate. Once you earn over this and up to £50,270 the tax rate is 20%. Over this and up to £150,000 it's the higher rate of 40% and then goes up to the additional rate of 45%.

The rate you pay is dependant on your trading profits within each bracket and not a single rate on the overall amount.

For example if your trading profits were £51,000 you would pay:
No income tax on £12,570
20% on the next £37,700
40% on the remaining £730

Then you have to consider Class 2 National Insurance which for the tax year 2022/2023 was £3.15 per week. This is paid on consideration of your profits so for 2022/23 you paid it if you were above the small profits threshold.

It's worth noting that for 2022/23 onwards the rules have changed and you pay Class NIC if your profits are above the Lower Profits Limit (£12,570). If they are below the Small Profits Threshold then you can choose to pay voluntary Class 2 NIC. If your profits fall between these two levels then there is no Class 2 NIC to pay and it will be treated as if you are making Class 2 NIC payments.

The final thing to consider is the Class 4 NIC which again is paid in profit bands.
Up to £12,570 nil
Over £12,570 up to £50,270 9%
Over £50,270 2%

I always advise my clients to take out 30% from their monthly earnings and put into a savings account or such like. This way they shouldn't find themselves worrying about a large tax bill come January 31!

As a sole trader you will have registered with HMRC and you need to understand the rules around naming and running your business.

You have to keep records of sales and expenses, submit an annual self assessment tax return and pay income tax on your profits. You will also need to pay Class 2 and Class 4 National Insurance and take responsibility for the running of the business and any debts that occur. Detailed bookkeeping is crucial as you have to report accurately how your business has performed over the year and declare any profits. All records will need to be kept for six years and HMRC can carry out random checks to ensure compliance with the current tax regulations.

As I mentioned in a previous post it is always good to try and set up processes to make sure that you are compliant and record all income and expenditure transactions for your business just in case they ever do need to inspect your records. You will then feel very confident that everything is in order and be able to show it.

Charlie was the most amazing horse for me. He was a six year old grey gelding that had been sent for schooling on the yard where I was working ( I think I said I was totally infatuated with them and left school as promptly as possible to go and work with them!). I obviously fell in love with him as soon as I sat on him though he had a very wicked sense of humour and mainly did what he wanted to do which is why he was there in the first place. After a few months I left the yard as I finally realised that a career in horses was not going to make me any money and had a change of direction. I was heartbroken to leave Charlie behind and really missed him over that summer. In the November I passed my driving test and finally had freedom!! One of the first things I did was go and visit the yard to say Hi to everyone and was told that Charlie had been advertised the weekend before in the paper (that's how it was done in the 80's!!!) and someone was coming to view him. Luckily that sale fell through and I was over the moon (to say the least) when I came back from babysitting one evening to be told that he was mine! My Mum and Dan had brought him, without me knowing, and he was the best present ever!!

One area that makes life easier when being a sole trader or self employed is having a separate business account so personal and your business finances are kept apart. This will make it so much easier when managing your bookkeeping and you will be very thankful later when there are more transactions to keep on top of as your business grows. It will also help with cashflow as you will be able to see very clearly when invoices are paid and ensure you have enough money to cover business costs. If you have a larger contract or job it might be worth considering staggered payments or deposits to help with cashflow as opposed to waiting for completion before you send your invoice.

We all know how hard it is being a sole trader, there are so many aspects of your business to keep on top of it can be really easy to let the accounts slide.

To keep the accounts accurate every receipt, customer and supplier invoices must be logged. Best way to manage this is to do it every time there is a point of income or expenditure transaction. There are many software programs that enable you to do this and are also able to directly input these into any accounts software package that you use. Although this is very helpful it can be possible to keep it basic and not use this method. Always make sure you request a receipt for any purchases and store it carefully, if you're car/van based perhaps have a small box in which you place it straight away or an envelope in the side pocket of a handbag or wallet compartment. This way every expense is clearly available to reclaim and also remember that as a sole trader all records and receipts must be kept for a minimum of five years from the 31 January submission deadline of the relevant tax year.

Any questions regarding any points that are concerning please do join the Facebook group Bookkeeping & accounts for the self employed small business UK and I will do my best to help.

I would like to introduce myself a little bit more - as well as having been interested in bookkeeping and accountancy for many years I am also an avid equestrian! Which is just another way of saying I'm horse mad! I remember when I was around five I was playing with a friend who said that she rode ponies, I went and asked my mum if I too could go and ride ponies to which she agreed and I have been totally hooked with them ever since! I was very lucky when I was able to have a pony on loan when I was around twelve which just made me more infatuated with them and determined to have one of my own one day. My wish came true when I was eighteen and I had my first horse called Charlie 🥰🥰

So what is bookkeeping and why is it important?

Bookkeeping involves keeping accurate records of all the money going in and out of your business. It is essential for creating accurate tax returns and business plans but this can sometimes feel like a very daunting task! The best thing to do is to get into good habits right from the beginning and setting up a regular time each week to look after the accounts side of the business is a really good start. It's never too late to begin making changes and implementing them into your routine. I like to spend a quiet hour or two on a Sunday time blocking for the week, this way I know when I can fit in any extra appointments or have the time available if some other area in my life doesn't quite go to plan!

The main area that can confuse people when they are looking for help with their finances is whether or not they need a bookkeeper, an accountant or both!

A bookkeeper records the financial data that is required. So in the basic form keeps the list of money that comes into the company and money that goes out! This is done by keeping track of all the invoices issued to clients, sales to customers, invoices received from suppliers and when these are all settled and the money has gone into the banking system and listed as debits and credits for the business. This information is then collected into financial statements which simplified says whether there is profit or not. This information is submitted to HMRC who will then say whether or not tax is going to be charged.

An accountant focuses on the interpretation of that data and the effect that it will have on the company moving forward regarding performance etc.

Bookkeepers focus on the business's daily transactions and an accountant looks at the overall picture using data provided by the bookkeeper.

Hope this helps clarify the difference.

Hi everyone,

I just wanted to clarify an area that I've noticed appears to cause confusion when an invoice is produced for a client/customer.

The minimum information, as required by HMRC, to be shown on an invoice is as follows:
- an identification number that is unique to that invoice
- your company name and registered address
- current contact information, email, telephone etc
- the name and address of your customer
- a description of what the charge is for
- the date of the invoice and supply of goods/services date if different
- the amount being charged
- VAT amount, if registered and you must also show you VAT number
- the total amount owed

If you are a sole trader you must include your name and any business name being used. If you are using a business name then also an address where legal documents can be sent to.

I also like to include payment terms and bank details as this makes it much clearer when and how you expect to be paid!

It's very easy to miss one of these details so I hope that this checklist helps for anyone newly setting up their business!

Hi everyone, realised that I've not posted anything in a while as it's been very busy with chatting and helping new clients.

With the end of year looming now is the time to make sure that your records are up to date so that you are able to promptly give them to your bookkeeper or accountant.

Now is also the time to chase the unpaid invoices that might have slipped through, send out reminders and follow them up.
Ensure you maximise your benefits and make sure you claim all the expenses you are entitled to.
Gather all your paperwork that proves your incomings and outgoings, copies of bank/loan statements etc.

This isn't a full list of what is required, your bookkeeper will be able to provide that if you need one, or contact me if you need more information on what to do.

End of year tasks are easier if you can get your paperwork sorted in advance and help is also available directly on the HMRC website.

Happy New Year!

My name is Zara and I would like to welcome you to my page, introducing my bookkeeping and accountancy services.

I have been a bookkeeper for over 18 years and my goal is to provide help with keeping accurate accounts and financial reporting to HMRC.

I like to help businesses run without the stress and worry of the record keeping side. This allows them to operate with more focus and profitability as they can concentrate on the reason they actually started their business!

If you have any questions or think I can help you, please do get in touch. 🤗