Tag: #bookkeeping

How To Avoid Payroll Mistakes

Payroll management is a vital and fundamental element of running a business and it is paramount that you avoid making payroll mistakes. It is important that payroll processing is carried out accurately and is compliant. You will want your employees to be paid correctly and on time and you will also want to avoid any fines or legal issues. There are lots of hurdles to jump over including complex legislation, auto-enrolment, rolling deadlines and RTI submissions. With large fines for mistakes, it’s worth getting the process right. Here at team4, bookkeepers with worldwide clients, we often witness payroll errors when we are called in to put things right. Here is our list of the most frequent payroll mistakes and our tips on avoiding them.

Misclassifying workers

This involves misclassifying the status of somebody doing work for you. It is one of the most common payroll mistakes. It often involves not distinguishing between an employee and a self-employed contractor. There are many distinctions you will have to make including new starters, those with a second income and employees with company benefits such as a vehicle or private medical insurance. Contractors and freelancers are not eligible for the same rights as employees such as holiday allowances and pensions. Your workers’ status should be based on HMRC guidelines and employment law. Here at team4, we advise efficient record keeping and keeping up-to-date with the latest legislation.

 

Application of incorrect tax codes

If employees are given the wrong classification, this can lead to over or under taxing them. Tax codes should be reviewed regularly and it is important to do this if an employee’s circumstances change. Tax codes can be checked with HMRC and therefore you are expected to assign the correct tax code to each employee. You can review and download tax codes by signing up for the HMRC PAYE dashboard.

Not implementing an Auto-Enrolment pension scheme

Auto-enrolment in workplace pensions is now a legal requirement. You will need to contribute to your employees’ pensions and of course comply with the regulations and rules. Fines can be imposed if you fail to comply, so make sure you implement a robust pension scheme. There are frequent changes in thresholds and regulations so it is vital to regularly review publications from The Pensions Regulator to avoid payroll mistakes.

Missing deadlines

There are strict deadlines for payroll submissions. This includes Real-Time Information reporting and payment of taxes. To avoid penalties, we recommend careful planning and keeping meticulous and correct records.

Inaccurate record keeping

Records of employees pay must be kept accurately and large fines are applicable for failure to do so. As an employer you must maintain records of hours worked, bonuses, overtime and deductions. According to the government you must collect and keep records of:

 

  • What you pay your employees and the deductions you make
  • Reports made to HMRC
  • Payments made to HMRC
  • Employee leave and sickness absences
  • Tax code notices
  • Taxable expenses or benefits
  • Payment Giving Scheme documents including agency contract and employee authorisation forms

 

How to prevent payroll mistakes

 

  • Keep accurate and up-to-date employee records
  • Schedule payments on time
  • Track employee leave and absences
  • Keep abreast of tax regulations
  • Use reliable and the right payroll software for your business
  • Outsource your payroll

 

How can team4 help you to avoid payroll mistakes?

Without the right tools, resources and knowledge, employee payroll can be a minefield. We hope our latest blog has highlighted the most common payroll errors and will help you to avoid them. Careful planning, accurate record keeping and staying up-to-date with the latest legislation are your three keys to success. However, if you really want to avoid these payroll mistakes, the answer is to outsource your payroll to an experienced and knowledgeable team. For more information on how we can help, please get in touch. We have experts in this field to ensure you are always compliant and your employees are paid on time. Call us on +44 1825 763378 or +44 1903 442511 or email info@team4bookkeeping.co.uk

How Much Should You Spend On Your Marketing Budget?

In a competitive and ever changing business world, marketing can make or break a company, but how much should you spend on your marketing budget? There is certainly no one-size-fits-all answer to that question. In this article, team4 looks at what a marketing budget involves, the criteria you should use to establish how much you spend and what is considered an allowable marketing expense.

What Is a Marketing Budget?

“A marketing budget is an outline of the costs that a company will spend to market its product or service. The marketing budget covers a finite period of time, the length of which can be anywhere between a quarter to a year.”

ProjectManager

It will need to include what your marketing goals are and how much you intend to spend. Marketing in itself encompasses a vast array of activities such as paid advertising, your marketing team or consultants, social media spending, leaflets and flyers and of course your website. It often helps if you can include a degree of flexibility.

Criteria for deciding how much to spend on your marketing budget

  • Size and type
  • Goals – establish short and long term goals including Key Performance Indicators (KPIs)
  • How established – new up and coming or older and more established
  • Understand your target audience – location, age, income, education, job titles etc.
  • Comprehend your market and competition – demographics, customers, influencing factors etc.
  • Optimal channels for reaching your audience

Opportunity Marketing suggests that between 5-15% of revenue is the acknowledged rule of thumb. However, your marketing budget should be set following a thorough analysis of your business, including the criteria we have outlined above.

What can you claim for marketing your business?

According to the UK Government website, you can claim allowable business expenses for:

  • Advertising in newspapers or directories
  • Bulk mail advertising (mailshots)
  • Free samples
  • Website costs

However, you cannot claim for entertaining clients, suppliers and customers and event hospitality.

When it comes to Subscriptions, you can claim for:

  • Trade or professional journals
  • Trade body or professional organisation membership if related to your business

You cannot claim for payments to political parties, gym membership fees or donations to charity, although you may be able to claim for sponsorship payments.

Controlling your marketing budget

Do your research to help you decide on the most effective marketing channels for your business. These could include video, blogging, social media, online advertising, events and/or print advertising. Once you have decided, and this may change, allocate the financial spend for each channel. You can then work out how much revenue and profit you should generate and how that will impact on your cash flow.

Choose the right accounting software for your business

Your marketing spend can then be tracked by your accounting software to give you a detailed breakdown of your marketing spending. This will also give you the data required in order to track performance over time, so you remain in complete control of the money you are spending. By understanding this, you can make more informed decisions in the future. You will know where you are spending the money, which channel brings the best ROI and of course how much you have spent. If you are unsure which accounting software would best suit your business, ask your bookkeeper or accountant.

How can team4 help you with your marketing budget and allowable expenses?

The latest blog from team4 did not set out to tell you how to market your business. However, it is clear to achieve success, your business must stand out from the crowd. In this way, you will grab the attention of your potential customers and clients. Without effective marketing, your business may struggle to compete in the market and reach your objectives. Your business is unique, which should be reflected in your marketing activities and budgeting strategy. Some of your marketing will fall into allowable expenses and if you want to understand more about your marketing spending and your ROI, we are happy to help. And of course, if you need to outsource your accounts, including setting up cost codes in your accounts software, please get in touch with team4 by calling us on +44(0)1825 763378 or email info@team4bookkeeping.co.uk to find out more.

You Are The Business As A Sole Trader

If you are starting a new business, do you want to set up as a sole trader? It’s certainly an exciting time as you think of what to call your company, how to brand the business and get noticed by those all-important customers. There is certainly a lot to do, but part of the process is picking the right structure for your new company. You will want to adhere to all the legal requirements and to also stay tax compliant. Whether you set up as a sole trader or a limited company is an important consideration. If you are not sure whether you should register as a sole trader, our latest blog explains what it entails, the benefits of being a sole trader, as well as the disadvantages and how team4 can help you.

What does being sole trader entail?

 A sole trader is a self-employed person who owns and runs their own business as an individual. The simplest way to run your business is to register as a sole trader. By doing this, you do not have to pay any registration fees, but you must register as self employed. You will need to inform HMRC and you will then pay tax through Self Assessment. This means filing a tax return every year. It’s at this point you will have to decide if you are going to do the accounts yourself or whether you need a bookkeeper to do them for you. By going down the route of being a sole trader, you get to keep all the profits you make. Sounds good? However, you are also personally liable for any debts that your company incurs. This could be a risky way to do things if your new business needs a lot of investment. In short, if your company runs into financial trouble, creditors can come after your house and possessions.

Benefits of being a Sole Trader

  • No requirement to register with Companies House
  • Can start working straightaway
  • Complete control with no shareholders or directors
  • No Corporation Tax or Accounts to Companies House
  • Easier to set up than a Limited Company
  • Simple to switch to being a Limited Company in the future
  • Financial information is kept private
  • You are your own boss – you are the business

You will need to register within three months of starting up your business and then submit an annual Self Assessment form and pay Class 2 NICs.

Disadvantages of setting up as a sole trader

  • Unlimited liability – you are personally responsible for any debts and losses of the business, including outstanding tax, rent etc.
  • Less credibility – not as appealing as a limited company to customers, so check how your competitors have set up their businesses
  • More difficulty in getting financing
  • Full responsibility – you are accountable for everything and make all the decisions

How can team4 help you as a sole trader?

You will have to maintain accurate accounting records as a sole trader that follow standard accounting practice. These will have to include records of your sales and expenses. You’ll actually find that these are invaluable when completing your annual self assessment tax return. Here at team4, we can help you decide whether this is the most flexible and cost-effective route you should take and also advise you when it’s time to set up as a limited company. The most important thing for us is that the operating structure you decide to implement is the most beneficial one for you and your business. We pride ourselves in helping self-employed people to not only set up their businesses but to also grow them as well. Please get in touch with us so you can decide if starting out as a sole trader is right for you. Call team4 on 01825 763378 or email info@team4bookkeeping.co.uk

Next time we will be looking at Limited Companies in more detail, so stay tuned.