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#isitok – to just be a really good management accountant?

I never really knew what I wanted to do for a living, just that I was good at maths, economics & geography which pointed towards some form of business occupation. I did a degree in Accounting & Financial Analysis at Warwick Business School, without truly knowing what accounting was. After graduating I just did some temp work in an accounts office (they hired me full time within a few days) before a recruiter sat me down one day and said I needed to get my act together and get qualified if I wanted a proper career. It didn’t need much research to work out CIMA was the route to go. Following this route enabled me to become a Chief Accountant, Financial Controller then Financial Director within a fairly short space of time. All of this was in the small company environment and I was involved in every key decision, which was fascinating and rewarding! But the politics were rife and the hours were long!

The question – How can I do all the fun stuff, the analysis/reporting/decision support/director mentoring without selling my soul to the business? My answer was to go freelance and try and emulate what I had done before but across a number of businesses in different sectors. This just reinforced what I’d previously thought – I had found my vocation in life – working with owner managers or MD’s of smaller companies, understanding their aspirations, delving into the businesses, providing the right information, making a difference, adding value, finding solutions to problems, evaluating everything for them – but not taking it home every day.

During all of this I entered into the CIMA Members in Practice world, a place full of very successful people, a mix of high flying entrepreneurs, some more traditional accounting practices offering compliance as a lead service, some specialist consultants, but as far as I could see not so many freelancers like myself. At the annual conferences in the midst of all these success stories I’ve quite often sat back and thought ‘Am I doing something wrong?’ My worry was that I had no desire to build an ever expanding business, I had no appetite for compliance work, I didn’t possess a specialism where I would stand out from the crowd and I didn’t feel I needed the best looking website or my own app (or certainly couldn’t afford it). On reflection, the last 15 years has confirmed to me I’m not doing anything wrong, it’s actually ok to focus on what you feel you’re really good at.

#isitok – to just be a really good management accountant? – I think it is.

Cheers
Mark
www.avalon-ma.com

Mark Tomsett, Avalon Management Accounting Limited
Celebrating 15 years as a Freelance Management Accountant

Weekly Work Life Balance Formula

It just occurred to me the other day that I think I’ve found a good work-life balance. Being a freelance management accountant gives you freedom to work from home and plan your own day but you also need to engage with people at your customer sites to stay in tune with how businesses thrive and survive. You also need to have some flex for the urgent customer requests, keep your education on track, fit in your business admin and plan some midday slots down the gym (it’s less busy and there are less biceps and six packs to be compared to).

Nearly everyone has key elements to their job that if balanced well could make for a better work life.

So I’ve created a formula for my ideal work life balance as a planning tool for my own work;

My Weekly Work Life Balance Formula is:
WWLB = 2.5C + 1.5H + 0.25A + 0.25E + 0.5F
© 2015 Avalon Management Accounting Limited

C = Day working at Customer Site
H = Day working at Home
A = Day of Business Admin
E = Day of Education
F = Day of Flex (for anything unplanned – if not required
 for work use for Marketing)

This formula can be applied in any order during the week and the days at home, on admin and education can be partly early morning or in the evening to allow extra social time during the usual “9-5” working day.

Have a think about your ideal formula.

Cheers
Mark
http://www.avalon-ma.com

Mark Tomsett, Avalon Management Accounting Limited
Celebrating 15 years as a Freelance Management Accountant

Hobby Trading Losses

You might think you have a business, but HMRC can disagree with you.  If HMRC considers that you are never going to make a profit, they will also refuse any loss relief.

Losses and profits

You might think that HMRC is being unfair in refusing loss relief, but if your activity is a hobby you won’t have to pay tax on profits either.  This rule can be tricky as revealed in the case of P, when  HMRC dismissed his claim for loss relief.

Trade or personal loss?

HMRC challenged P’s claim at a tribunal because in its view it related to non-business transactions and so was a personal financial loss and not one arising from a trade. Non-trading losses can’t be set against taxable income and it’s not just HMRC being difficult.

Trading tests

HMRC and tax specialists refer to the so-called “badges of trade” to decide if a trade exists. These tests were set out in a court judgment decades ago, but remain valid today. One of the tests to establish if a trade exists is that there must be an intention to make profit from a business. In P’s case the tribunal extended this test a little further.

Incapable of making a profit

P started two “businesses”, neither of which made a profit because, in the tribunal’s view, he was inexperienced and couldn’t devote enough time to them. Neither venture was capable of making a profit without P reducing the hours he spent in his main job. In essence P didn’t have the business acumen or time to devote to making his business profitable.

Putting the boot on the other foot

The ruling in P’s case is useful, not just for guidance on when losses are deductible, but for countering HMRC if it claims money you make from a hobby is taxable. Its view has always been that if you advertise your hobby in a newspaper or online you’re probably trading. But the tribunal’s judgment, supported by HMRC, dispelled that idea. If you don’t have the time or intention to carry on a trade, profit you make from isolated sales isn’t liable to income tax.

Turn your hobby into a business

For advice on converting your hobby to a profitable business, including help with setting up a limited company or registering for VAT, please contact Alterledger.

What are the differences between employees and contractors?

According to figures released by the Office for National Statistics last week, self-employment is at its highest level since records began almost 40 years ago.

There are currently 4.6 million people self-employed, with the proportion of the total workforce that are making a living for themselves sitting at 15%, compared to 13% in 2008 and less than 10% in 1975.

As highlighted by Everreach and the Daily Mail.

A worker’s employment status, that is whether they are employed or self-employed, is not a matter of choice. Whether someone is employed or self-employed depends upon the terms and conditions of the relevant engagement.

Many workers want to be self-employed because they will pay less tax, this calculator gives you a quick comparison between being employed, self employed or taking dividends in a limited company.

HMRC have a an employment status tool to help you determine whether a worker can be self-employed or should be an employee http://www.hmrc.gov.uk/calcs/esi.htm

Workers

steve@bicknells.net

A closer look at home workers

Tax Benefits

http://stevejbicknell.com/2013/01/06/what-are-the-tax-issues-and-advantages-of-a-home-office/

Why use a Freelancer

http://stevejbicknell.com/2013/08/12/5-reasons-why-freelancers-are-taking-over-the-world/

20 Home Based Businesses

http://stevejbicknell.com/2013/10/16/20-businesses-you-can-run-from-home/

 

steve@bicknells.net

VAT Simplified Invoices

 

man looking at invoice

HMRC have released an update this month to their notice on Keeping VAT records.  One of these changes relates to VAT simplified invoices which were introduced earlier this year as part of the simplification and harmonisation of VAT rules in the EU. Previously only retailers were exempt from providing full VAT invoices to unregistered businesses.

However the changes mean that any business issuing VAT invoices for £250 or less (including VAT) can issue simplified invoices.

What to include in a simplified invoice:

Your name, address and VAT registration number

The time of supply (date)

A description which identifies the goods or services supplied

The each VAT rate charged, the amount of VAT charged.

How does a simplified invoice differ from a full VAT invoice:

In addition, a full VAT invoice must include:

A sequential number based on one or more series which uniquely identify the document

The date of issue (if different from the time of supply)

The name and address of the person to whom the goods or services are supplied

For each description, the quantity of the goods or the extent of the services, and the rate of VAT and the amount payable, excluding VAT, expressed in any currency

The gross total amount payable, excluding VAT, expressed in any currency

The rate of any cash discount offered

The total amount of VAT chargeable, expressed in sterling

The unit price

The reason for any zero rate of exemption.

VAT invoices over £250

If issuing VAT invoices over £250, a full invoice must still be issued or a modified VAT invoice showing VAT inclusive rather VAT exclusive values.

 

Rebecca Taylor ACMA

IR35 – How are deemed payments taxed?

And now round two of justify it

The Intermediaries legislation known as IR35 was introduced on 6th April 2000.

The aim of the legislation is to eliminate the avoidance of tax and National Insurance Contributions (NICs) through the use of intermediaries, such as Personal Service Companies or partnerships, in circumstances where an individual worker would otherwise –

  • For tax purposes, be regarded as an employee of the client; and
  • For NICs purposes, be regarded as employed in employed earner’s employment by the client.

Many Freelance Contractors have some assignments within IR35 and some outside, you can ask HMRC for their opinion.

If you would like HMRC’s opinion on a particular engagement you should send your contract(s) to:

IR35 Customer Service Unit
HMRC
Ground Floor North
Princess House
Cliftonville Road
Northampton
NN1 5AE

e-mail: IR35 Unit

Tel No: 0845 303 3535 (Opening hours 8.30am to 4.30pm, Monday to Friday. Closed weekends and bank holidays) Fax No: 0845 302 3535

If your contract is within IR35 its not the end of the world, the chances are that you will still pay less tax than a direct employee, to calculate the tax you have to work through 8 stages of calculation, here is a summary:

  1. How much were you paid? deduct 5% for business costs
  2. Add any other payments/non cash benefits
  3. Deduct business expenses – travel, meals, accommodation
  4. Deduct capital allowances relevant to the work done
  5. Deduct pension contributions made by your company
  6. Deduct any NIC paid by your company on your salary and benefits
  7. Deduct any salary or benefits already paid and taxed
  8. If the answer is zero or negative then there is no deemed payment, if the answer is positive you do have a deemed payment which will be taxable

HMRC have a spreadsheet you can download which has further details.

steve@bicknells.net

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