Resources

Check out our resources library for useful articles and up to date news.

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Collecting payments via
GoCardless for Xero

We know how important it is for our clients to get paid on time and reduce hours spent on admin. That’s why we recommend GoCardless for Xero.

GoCardless for Xero allows you to collect payments automatically or manually for any Xero invoice. The free GoCardless for Xero app can be linked straight to GoCardless providing a fast, efficient way to collect invoice payments from customers with the absolute minimum of hassle.
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This has a number of key benefits that will make your finances slicker:
1. Remove late payment issues while improving cashflow
2. Provide an easier way for customers to pay
3. Reconcile payments automatically
4. Cost-effective payments solution
5. Fast and simple setup
And your customers will love how simple and straightforward it is – meaning you get paid faster!

Integrating GoCardless with your existing Xero account is totally free. Also, running the GoCardless Direct Debit solution to collect customer payments is a truly cost-effective option. You pay 1% of the total transaction fee plus 20p and capped at £4, keeping costs down and bringing in steady, predictable income streams in the most productive way possible.

As a GoCardless Certified Partner we can provide you with 3 months free transactions – contact us today for your unique referral link.

  • Terms and Conditions are here
  • Clients referred will receive 3 months of free transaction fees, any monthly fees will still be payable (applicable to Plus and Pro users only)
  • Clients must use our unique link to receive the benefit. Clients who sign up via other methods will not be eligible for the discount
  • The 3 month free trial will commence on the first Friday following creation of a new GoCardless account via our link

Integrating GoCardless with Xero couldn’t be simpler and this video walks you through the steps.
Connect your Xero account to GoCardless, set up your customers automatically and start collecting payments.

As a Xero user, signing up for GoCardless solves late payment, cashflow and reconciliation issues with one simple integration and your customers will thank you for providing such an easy way to settle invoices by Direct Debit.

We love GoCardless and use it ourselves for our payments. For us GoCardless is a no brainer – it’s set up in minutes and saves hours of chasing payments. Drop us an email today to get your account set up with 3 months of free transaction fees.

Source: GoCardless, Xero

Credit Limit for Customers

Xero have added a new feature giving you the ability to set a credit limit for a customer so you can keep track of what they owe you.
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The credit limit can be set within the contact record, see the help notes here

You can also add a credit limit block to a customer to stop invoices from being sent if they have exceeded their credit limit, however this doesn’t apply when repeating invoices are automatically approved or approved for sending.
(this feature is only available if you have switched to the new invoicing)

To check a clients credit limit while generating an invoice, see the help notes here
Source: Xero

Furlough Scheme –
Coronavirus Job Retention Scheme (CJRS)

The Government released the Coronavirus Job Retention Scheme to run from 1 March 2020. All UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis and all UK businesses are eligible.
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You will need to:

  • Designate affected employees as ‘furloughed workers’ and notify your employees of this change. Your employees should not undertake any work whilst furloughed. This will allow you to claim a grant of up to 80% of their wages, up to a cap of £2,500 a month per employee. You could choose to fund the difference between this payment and their salary, but you do not have to.  Your employee will remain employed while furloughed.
  • The information will need to be submitted to HMRC about the employees that have been furloughed and their earnings.

The Coronavirus Job Retention Scheme (CJRS) extension means:

  • Part time furloughing available from 1 July 2020 – businesses already using the scheme will have the ability to bring furloughed employees back to work part time
    • The government will continue to pay 80% of the wages for any of their normal hours they are not working, up until the end of August 2020.
    • Employers decide the hours and shift patterns and will be responsible for paying their wages in full for the hours they work.
  • Employer Contributions – From August the government grant will be slowly tapered
    • in June and July the grant will continue to cover 80% of wages up to a cap of £2,500, as well as ER NI & ER pension contributions for the hours an employee doesn’t work
    • In August the grant will continue to cover 80% of wages up to a cap of £2,500 but employers will pay ER NI and ER pension contributions
    • In September the grant will cover 70% of wages up to a cap of £2,187.50 for the hours the employee does not work
    • In October the grant will cover 60% of wages up to a cap of £1,875.00 for the hours the employee does not work
  • The scheme will close to new entrants from 30 June. From this point on employers will only be able to furlough employees that they have furloughed for a full three-week period prior to 30 June
    • This means that the final date by which an employer can furlough an employee for the first time will be 10 June for the current three-week furlough period to be completed by 30 June. Employers will have until 31 July to make any claims in respect of the period to 30 June

Job Retention Bonus

A one off payment of £1,000 will be available to employers that have used the Coronavirus Job Retention Scheme (CJRS). To be eligible, employees will need to:

  • Remain in continuous employment until 31 January 2020
  • Earn at least £520 per month on average for November, December and January
  • Have been furloughed at any point and legitimately claimed for

Employers will be able to claim the bonus from February 2021.

Source: HMRC

National Minimum Wage

From the 1st April 2020 if your employees are on minimum wage or receive the living wage they will be due a payrise.  The new hourly rates are as follows:
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Date Age 25 & Over Age 21 – 24

Age 18 – 20

Under 18 Apprentice
From 1st April 2020 £8.72 £8.20 £6.45 £4.55 £4.15
Previous rate from 1st April 2019 £8.21 £7.70 £6.15 £4.35 £3.90

 Please ensure all rates are updated for all payruns after the 1st April 2020.

Source: HMRC

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Self Assessment & On Account Payments

If you are a sole trader you must file a self assessment tax return every year, either on paper or online.

Before you can file a tax return you must register as self employed, with HMRC here. When you register you can also request online access, if you didn’t do that at the time of registering you can do that here.
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The tax year runs from 6th April – 5th April, for the purpose of this article we’ll use the 2019-20 tax year that runs from 6th April 2019 – 5th April 2020. The tax return for that year must be filed on paper by 31st October 2020 or online by 31 January 2021.

Once you have created your tax return (or had a bookkeeper do it for you) and submitted it online you will need to pay your tax and national insurance liability by 31 January (the online filing deadline).

If your liability is over £1,000 you will also need to make 2 on account payments for the next tax year, when you pay for the current years’ liability. For example:

Your tax & NI liability for 2019-20 tax year is £1,200 and it’s due to be paid 31 January 2021.
Because your liability is over £1,000 50% of your 2019-20 liability needs to be paid on account towards your 2020-21 liability.
So, also on 31 January 2021 you’ll need to pay £600 on account for 2020-21. Making a total of £1,800 due 31 January 2021.
The 2nd on account payment is due 31 July 2021 for £600.

When the 2020-21 tax & NI liability is due, you’ll need to make sure you deduct the 2 on account payment from the total, before paying over.

NOTE: If you submit your tax return yourself HMRC do not deduct these on account payments from the calculation screen at the end of the submission. However, if you submit your return before November you usually get a statement of account in January to remind you what you need to pay, and this will take into account the on account payments.

Invoicing:
What to Include on your Invoices

When you issue an invoice to a customer there are certain things you must include on them (especially if you are VAT registered) and some that are best practice.
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The checklist below should help ensure you don’t miss anything

  • Your company information: full name, address, email & telephone number
  • Client company information: full name, address, email & telephone number
  • Invoice number, date & due date
  • Itemised breakdown of goods or services, amount being charged, VAT amount (if applicable) & total due
  • If VAT registered: VAT registration number
  • Bank details
  • Your terms & conditions, if not already communicated & agreed

We recommend using accounting software, this will prompt you to include all these things automatically.

We are Xero Silver Certified Partners and can help you set up your invoice templates and accounting software, get in touch with us for more details.

Do You Have Trouble Getting Clients to Pay on Time?

Do you have a formalised process for invoicing your clients and collecting payments?

The following steps are an example of the process you should have in place to ensure speedy payment:
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  • If you don’t have a contract in place make sure your client signs up to your terms of business
  • Every company should have terms and conditions drawn up by a reputable solicitor
  • You should ensure these are signed by your client on or before work starts
  • These terms should cover all eventualities but at the least:
    • Charging – what is the fee & when is it invoiced (up front, in stages, at the end etc)
    • Payment – what your payment terms are and how you accept payment
    • Queries/disputes – what is the policy and how should these be raised
    • Any industry specific clauses (copyright, transfer of rights etc)
  • Issue your invoice promptly
  • About a week after issuing the invoice make contact with the client and confirm the invoices has been received – check that there are no issues with goods or services received, or with the invoice
  • On the due date, if payment has not been received send a statement – a statement is not a request for payment, but will be a prompt if the client has forgotten
  • If the invoice becomes 7 days overdue send a reminder letter or email requesting a payment date
  • If the invoice is between 7 and 14 days overdue call the client and query why the invoice hasn’t been paid. Make a note of the conversation
  • If the invoice becomes greater than 14 days overdue a second letter should be sent warning of late payment charges (these should be in your T&C’s)
  • If the invoice is greater than 21 days overdue ascertain the reason for delay. If you have provision for ceasing work due to non payment make sure you highlight this to the client.
  • If payment is still not received by day 30 you need to weigh up the risk of continuing to supply services that aren’t paid for.

Don’t forget this is business, you
cannot survive on relationships alone!

At every one of these steps make sure you keep notes of who you had contact with and what was said, keep copies of emails as this will assist you when challenging broken promises.

If all else fails – Debt Recovery

If you would like template letters and emails to send, send us a message and we will forward copies.

BrightPay Connect

BrightPay Connect is a cloud add-on to the desktop payroll software we use to process your company payroll. The powerful online features include an automated cloud backup, online employer dashboards, annual leave management, client payroll entry and approval and an employee self-service portal. The payroll itself is still processed by us but the payroll information is stored online on a secure cloud server.

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Employer Dashboard
Employers can access a secure online dashboard which gives an overview of the payroll information in one place. The employer dashboard includes notifications, all employee contact details and payslips, any outstanding amounts due to HMRC and reports that have been set up in BrightPay on the desktop application.

BrightPay Connect includes an employee calendar, which can keep record of all employees’ past and scheduled leave, including annual leave, unpaid leave, absence, sick leave, and parenting leave. This is an employer-wide calendar encompassing leave details for all active employees.

The document upload feature allows managers to share documents with individuals, teams or the whole company at the touch of a button. Upload an individual’s contract of employment, performance or training records. Circulate team plans, training material or memos. Distribute the company handbook including all policies and procedures. The document upload feature ensures company documents are organised and that employees can securely access HR information anytime, anywhere.

Employee Self-Service
Employers can invite employees to their own personal employee self-service portal. Employees can view and retrieve current and historic payslips and other payroll documents such as a P60, P45, or P11Ds and auto enrolment letters. The self-service app provides a digital platform employees can securely anytime, anywhere. Through these app features, you can provide your employees with access to GDPR compliant self-service tools, a payslip library and a user-friendly holiday leave management facility.

User Access & Restrictions
Employers have the option to add as many users as they wish to a BrightPay Connect account at no additional cost.
An administrator has full control over a BrightPay Connect account, with the ability to edit account settings, add other users and invite employees (usually done by us when a new employee starts).
A standard user has the ability to view financial information including payslips and reports, employees marked as confidential, and requests to approve employee holiday. Standard users can have their access limited for example, by department, to only view employee requests or employee documents, to name a few.

Source: BrightPay

Reverse Charge VAT for Construction Industry

This new regulation intends to cut down on ‘missing trader’ fraud – where companies receive amounts of VAT from their customers, but do not declare or pay this to HMRC.
The Domestic Reverse Charge (DRC) has been around for a while for some industries but is now being extended and comes into force from 1st March 2021 (was originally 1st October 2019 and then 1st October 2020) for the construction industry.
Read more

If you’re not VAT registered, then you don’t need to worry, just carry on as normal!
If you are VAT registered there are some changes you need to be aware of – carry on reading!
Sales between subcontractors and contractors will be subject to the Reverse Charge, unless they are sales to a contractor that’s an end user – ie, someone who uses the construction services for themselves rather than selling these as part of their construction business.

Changes to sales invoices to your clients
It is up to you to get confirmation from your customer if they are the end user or a contractor for reverse charge VAT.
If your customer is the end user, then you need to add VAT to your invoice for labour and materials as normal.
If your customer is a contractor, then you do not charge VAT on your invoice. When raising your invoices in Xero you’ll need to select the Reverse Charge option under tax rate.

Changes to invoices from your sub-contractors
Speak to your sub-contractors to confirm to them that you are a contractor and that they no longer charge you VAT on their labour and materials.

Obviously if your sub-contractors are not VAT registered then this doesn’t apply to them and just continue as normal!
You will now need to include your sub-contractor’s VAT on your VAT return under the ‘reverse charge’ rules – so this means that you add it to one part and deduct from another part of the return – so in effect they cancel each other out and you are not out of pocket. The good news is if we are doing your bookkeeping and VAT returns, we will handle this whole process for you – just submit your receipts/invoices as normal.

If you handle your own bookkeeping, and VAT returns, then similarly with the sales side you’ll need to select the Reverse Charge option under tax rate when entering a bill onto Xero.

Are all construction services included?
As usual nothing with HMRC is that straight forward – some construction services are included within these new rules – and some aren’t! Here is a list of services from HMRC and whether or not they are included within these new rules:

Included services:

  • constructing, altering, repairing, extending, demolishing or dismantling buildings or structures (whether permanent or not), including offshore installation services
  • constructing, altering, repairing, extending, demolishing of any works forming, or planned to form, part of the land, including (in particular) walls, roadworks, power lines, electronic communications equipment, aircraft runways, railways, inland waterways, docks and harbours
  • pipelines, reservoirs, water mains, wells, sewers, industrial plant and installations for purposes of land drainage, coast protection or defence
  • installing heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection systems in any building or structure
  • internal cleaning of buildings and structures, so far as carried out in the course of their construction, alteration, repair, extension or restoration
  • painting or decorating the inside or the external surfaces of any building or structure
  • services which form an integral part of, or are part of the preparation or completion of the services described above – including site clearance, earth-moving, excavation, tunnelling and boring, laying of foundations, erection of scaffolding, site restoration, landscaping and the provision of roadways and other access works

Excluded services:

  • drilling for, or extracting, oil or natural gas
  • extracting minerals (using underground or surface working) and tunnelling, boring, or construction of underground works, for this purpose
  • manufacturing building or engineering components or equipment, materials, plant or machinery, or delivering any of these to site
  • manufacturing components for heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection systems, or delivering any of these to site
  • the professional work of architects or surveyors, or of building, engineering, interior or exterior decoration and landscape consultants
  • making, installing and repairing art works such as sculptures, murals and other items that are purely artistic
  • signwriting and erecting, installing and repairing signboards and advertisements
  • installing seating, blinds and shutters
  • installing security systems, including burglar alarms, closed circuit television and public address systems

You can read further HMRC guidance here (warning: it’s quite hard going!). As always we are here to help so if you have any questions please just ask.

Source: HMRC

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What is Bookkeeping and why do we do it?

Bookkeeping is a key part of our services, but what is bookkeeping and why do you need it?

In a nutshell, bookkeeping is taking all your records – bank statements, sales invoices, purchase receipts, mileage logs, stock take, etc – and recording them in a proper format to allow the accounts to be prepared.
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At LilyIris Accounting, the bookkeeping for our clients is done on Xero, with the help of Hubdoc. Clients raise their sales invoices and email out to their clients through Xero. All purchases are sorted through Hubdoc – just snap a picture of a physical receipt or forward any email receipts on to a special email. Your bank account (current, savings, credit card, PayPal etc) are all connected to Xero (all completely safe and no actual access to your bank account) so transactions are imported. We are then able to reconcile all the transactions – which is basically matching up the invoices and receipts to your bank account and ensuring all transactions are recorded properly. Any transactions outside of your bank statements are then also recorded properly to ensure your bookkeeping is complete.

Bookkeeping is the foundation of your accounting system; without all these transactions being recorded properly the annual accounts can’t be prepared, so it is an essential part of the process.

At LilyIris Accounting we do the bookkeeping for you, all you need to do is raise your sales invoices (we can do this as well in some cases) and take pictures of your receipts/forward emails to Hubdoc and we will do the rest.

Keeping your bookkeeping up to date allows you to have a full picture at all times of your finances and where you are situated, profit wise. This is why we complete bookkeeping for our clients on a daily – or at the very least, weekly.

With up to date numbers you are able to understand your business better and use the numbers to help you to grow. With up to date records you’re able to see easier who owes you what – and deal with late payers more efficiently.

With daily bookkeeping it also means you’re able to answer queries quicker – how many times have you come to do your accounts and can’t remember what a receipt 8 months before was for?! With daily bookkeeping you’ll have everything fresh in your mind. It also means it’s little and often, not some horrible, huge task that you keep putting off doing. And as it’s all done regularly and up to date it means quarter end for VAT and year end are all so much easier as the foundations are all there ready for you to build on.

LilyIris Accounting logo

Working With Us

We are always excited when new clients come on board and we can make a difference to their business.

Are you:

  • An existing Limited Company
  • Searching for a bookkeeper that does more than simply reconcile your bank
  • Looking for professional support for your business journey

Talk to Us - Book a Discovery Call 

Are you a Sole Trader, Quickbooks/Sage user or looking for tax advice?
We only do Sole Trader Tax Returns for people working in the Construction Industry. We don't do any other Sole Trader Tax Returns, tax planning or use Quickbooks/Sage - but we can recommend some fabulous people that do!

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