Browsing Tag

self assessement

0 In Stories from an Accountant

The Language of Accountants

The Language of Accountants - Account-ant

To most people who are not Accountants, the terminology we use can be down right confusing.

It’s like we’re speaking a different language…

The truth is, we’re all from “Planet Abacus” and want to learn this Earth thing you call “plain speaking”…

But we haven’t quite got a handle on it yet…

But we’re trying!

Rachel Account-ant


On a more serious note, I’m sure there are the odd few Accountants out there that give us all a bad name, by purposefully confusing people with jargon to inflate their own ego. 

The good news is they few and far between.

Most Accountants want to see you thrive and achieve your dreams. Because that in turn will help us thrive and achieve OUR goals!

Super happy clients are THE best advert you could ever wish for.

Here’s an opportunity to go and grab yourself a coffee and a biscuit and settle in to learn a little bit of our language!

Below are the financial terms you’ll come across during the running of your business.  You may not be aware of them all yet, but as your business progresses, you’ll gain a better understanding of them all…(And it’s not really that hard!)

Accounts Payable – Purchases you’ve made on credit.  i.e. you bought some stock and need to pay in 30 days.

Accounts Receivable 
– Sales you’ve made on Credit.  i.e. a customer has purchased something from you and is due to pay you in x number of days.

– Big things you own, e.g. buildings, stock, vehicles.

Balance Date – The last day of your financial year.

Beneficiary Current Account – A detailed account showing the amount that has been distributed to a beneficiary from a Trust and the amount that has been withdrawn by the beneficiary, like a bank account. The balance shows the amount available to the beneficiary to withdraw at the end of a period. When the balance is in brackets, it is overdrawn and the beneficiary has withdrawn too much.

Cost of Goods Sold
– These are the direct costs involved in getting goods / services ready to be sold, e.g. if I was a joiner, it would be the timber it took to make my product.

– People or Companies you owe money to.  i.e. Suppliers

Current Assets – Cash and other assets that could be liquidated (sold) to cash within 1 year 

Current Liabilities – Obligations payable within the next year, e.g. creditors, PAYE, short term loans. 

Depreciation – Spreading the value of an asset over its expected useful life.

Directors’ Annual Report – A company report which presents financial information such as business activity, donations, employee remunerations, audit expenditure, etc.

Dividends – Distributions of cash or other assets from a company to its shareholders.

EBIT – Earnings Before Interest and Tax – a measure of your firm’s profit excluding interest and income tax expenses.

Gross Profit – The difference between income and cost of goods / services sold.

Liabilities – Things you owe, e.g. bank loans, creditors.

Net Loss – You’re expenses are more than your income! Net Profit

Non-Current Assets – Assets that are not expected to be consumed or sold within one year, e.g. investments, goodwill.

Non-Current Liabilities – Liabilities that are not expected to be paid within one year, e.g. bank loans, hire purchases.

Notes to the Financial Statements
– Notes that clarify information presented in the financial statements, as well as expand on information where additional detail is needed.

Retained Earnings – You’ve made a profit, you’ve paid your tax and dividends and well done – you have profit leftover!  This is a running total.

Share Capital – The total amount paid in by shareholders for shares in the company.  When you set up a Limited Company, Companies House Defaults to £100 (£1 per share).  Most people therefore pay £100 on set up.

Shareholder’s Equity – This is the amount that would be returned to shareholders if all assets were liquidated and all its debts repaid.

Work in Progress (WIP) – You’re in the middle of making your product at the end of a month/year.  That is WIP. 

Shareholder Current Account – This is also known as Director’s Loan Account or Current Account.  When you set up a business you inenvitably end up having to inject some cash in.  This is a record of that as well as any non-business related expenses you’ve had paid by the company.  You can withdraw this within the year.  If the number is in brackets, it means it is overdrawn and you will need to pay money into the company within 9 months of year end or face taxation fees.  

Statement of Financial Performance / Profit and Loss Statement – A statement that reports on the income and expenses of an entity for a period, and the resulting net profit / loss.

Statement of Financial Position / Balance Sheet – A statement that reports on the assets, liabilities and owners’ equity of an entity at a specific date.

If it’s still a bit alien, give me a call and we can go through your questions in more detail!

0 In Stories from an Accountant

I was my own Book-keeper and Other Stories

I was my own book-keeper and other horror stories - Account-ant

Anyone who knows James and I will know that there was a time when we’d relax on a Sunday morning and watch a horror movie or two…

This was obviously pre-children!  This blog post is somewhat inspired by those days 😊

Let me tell you a little story about… John the Joiner.

John the Joiner has been a sole trader for nearly a decade.  His business is steady away but the bookkeeping is the bane of his existence.  He must force himself to sit down and do what’s necessary in his Business.

Rachel Account-ant

Why is that?

Managing your own Bookkeeping and Accounts can seem like an obvious money-saving task for a small business.

However, it’s not always the best idea!! 

You might think I am biased but here’s a few little reasons why… 

Let’s use John as an example:

John approached Rachel at Account-ant totally frazzled and wanting a break from it all.  He wanted to go to work, make his money, and then just forget about it when he gets home. Weekends became paperwork days – not days with his family, which he craved!

He’d heard a few radio ads from Quickbook which extolled its virtues and apparent godlike ability to make having an Accountant on your side, completely unnecessary.

However, John got himself in a bit of a muddle!!

He didn’t have the time to go through the training.  

He wasn’t an Accountant or a Bookkeeper.

John found out that trawling through all those numbers, transactions, tabs, tools and tech ended up costing him more at his standard hourly rate, than if he had engaged with a good accountant in the first place!

Wasted time. Wasted money. Wasted energy!

Energy better invested in growing your Business and celebrating your Clients!

Here are the top 4 mistakes we, as Accountants see when a sole trader comes to us.

  1. They’ve either already completed their self-assessment or come to us very close to the deadline and asked for help.
  1. Not distinguishing between capital and revenue expenditure.
  1. Not utilising your tax-free allowance and the small amount of flexibility with your annual investment allowance.
  1. Getting caught out on the payment on account when completing your Tax return in January..

Capital vs Revenue Expenditure

Revenue expenditure is the day to day costs of running a business such as travel, rent and rates and professional fees (like accountancy costs 😉).

Capital expenses are big purchases that will be used recurrently over the years like laptop, machinery, or a vehicle.

These are treated differently in the accounts. If you get confused, you could end up paying too much tax! And no one likes that!!!

Your tax-free allowance is USE IT, OR LOSE IT. So only claim enough Annual Investment Allowance to bring your profit down to the equivalent of the tax-free allowance, and carry the balance forward into a pool to claim the Writing Down Allowance the following and subsequent years.

Doing this will save you overpaying tax in the following and subsequent years.

If “Annual Investment Allowance” and “Writing Down Allowance” has sent you into a bit of a spin, don’t worry – that’s what Accountant’s are for!

Perhaps that’s even another blog post idea 😊

January Self Assessment completion .

It’s January, you’ve put your self assessment through the Government Gateway and HMRC have automagically worked out that the tax due on your profits is £4,000.  

But HMRC are asking for £5,500 now and another £1,500 at the end of July…

duh duh duh…

You have been smacked in the chops by HMRC’s Payment on Account requirement!!

If you’ve read my blogs before then you will know that if your tax bill is over £1,000 then HMRC will ask for 50% of the estimated bill for the current year at the end of January, and the other 50% at the end of July; just after the current tax year finishes.

You’re now in shock because you thought that submitting your tax return in January would be done and dusted, leaving you to pay your next tax bill in January the following year.


And now you have to scrape the funds together to pay your tax bill earlier than expected!!

Set a reminder for 6th April each year and get that tax return in – pronto!  Plus if you are due a refund, they will process it within days.  So why wait?!

The Payment on Account shocker is mainly an issue when you first get caught out by the Payment on Account, and it does balance out eventually.  But it’s still a shock to the system when it happens!

Hopefully this little blog post has not scared you too much.  It’s not even Halloween!  If it has raised any concerns at all, please do get in contact.  Do not suffer in silence! 

p.s. If you wondering how John is now.  He’s fine.  His accounts are tidy and we are ship shape and Bristol fashion.

0 In Stories from an Accountant

Storms Ahead?

Storms Ahead? - Account-ant

“Hurricane a comin’, Stand Fast, Secure the Rigging!”…..

This is a line from Disney’s The Little Mermaid and I thought it summed up at least one side of Forecasting for your business.

When I was growing up I had one Disney movie on tape – It was “The Little Mermaid”. I’m 95% sure I know all the words from that film…. including songs.

So naturally it was going to make it’s way into my blogs at some point! Our toddler even tolerated 30 minutes of it a few weeks ago, and it was pure joy for me….

Yes! I have successfully converted the child to love Ariel, Flounder and Sebastian… my work here is done! 😊

On a more serious note though, as a Small Business Owner, cashflow is the key to success.

Forecasting is a way of looking ahead to see where you will be in the future.

Rachel Account-ant

The London School of Economics have said that the two biggest obstacles facing small businesses are:

  1. Poor financial processes.
  2. Lack of access to funding.

Whilst Albion Centures, a venture capital investment firm, says that only 1 in 5 SMEs believe cashflow is a major concern.

So there’s a difference between what business owners think are issues, versus what the actual concerns may be….

I’m a small business owner, what can I do??

Good Cashflow Management needs a few things (I go into this in more detail on the “Hold Back The River Blog Post), but if you missed it, in Summary;

  1. Processes – Do you have good Accounts Payable, Accounts Receivable, Stock Control & Bookkeeping in Place?
  2. Overheads – Review them regularly – quarterly is good. Cancel down any old subscriptions not in use. Do you have an Expense Budget that you can stick to?
  3. Profit – Is your Margin correct? Are your sales high enough to cover overheads?

But the main thing is ALWAYS LOOK FORWARD… or as Dory says “Just keep swimming” (Disney example again?!)

Why should I bother though?

Forecasting is Important. Period.

It will help you plan future decisions carefully (such as taking on a new team member, launching a new product, opening another office etc), but will also highlight any areas where you may struggle in the future and enable you to prepare for the potential issues.

If you forecast correctly, you will have a better idea of when to invest in new equipment, stock or services, rather than ploughing ahead as if blindfolded like Sandra Bullock in Birdbox… (okay, I’ll stop with the film analogies!).

With this information to hand, you can make decisions. For instance, shortening payment terms to get paid quicker, reviewing credit control, inventory and purchasing processes and potentially looking at your debt structure (is refinancing an option?)

If Forecasting sounds like a plan… and it should!!! give me a call and I’ll talk you through the options.

Lets ride this Hurricane into calmer waters and have a Lookout in that Bird’s Nest, keeping an eye out for Storms and Pirates…

0 In Stories from an Accountant

Profit!! Now What?!

Profit & What Now? - Account-ant

There’s something I pride myself on above all else…

And that is bringing clarity to small business owners!

“Scary Accountant Speak”, well I don’t think there’s anyone out there that actually “likes” talking to Accountants about Accounts…

The weather? Tick!

Dogs? Tick!

Cats? Tick!

Kids? Tick!

But Accounts… there’s a topic that has even Iron Maiden running to the hills!

So today we’re going to talk plainly about Profit….and Loss… and a story about dogs!

The Profit & Loss (or P&L for short) is a summary of all incomes and expenses for an accounting period.

Income minus expenses is calculated to give a Profit or Loss number.

We use the P&L to calculate the tax you owe to HMRC, but it can also help work out what your business is actually doing…

Which is a kinda cool and unexpected little bonus for you!

Rachel Account-ant


How much does it cost to make a sale?

How much income is my advertising spend generating?

“How much revenue is my advertising campaign generating per £1 of expense?!”

It’s important to understand your P&L as it will help you understand where you can reduce expenditure to increase your gross or net profit.


Where you can INCREASE expenditure (such as advertising) in order to INCREASE revenue.

And here’s my token Dog story…

I was playing in the local park with our son Xander and he loves doggies! So much so that he is a regular drill sergeant with the doggies of the park for the catching of sticks… which he throws, of course!

On one particular occasion the weather was turning and the sky was growing quite angry looking. I felt we needed to get our skates on to get back home before the deluge!

But Xander had other plans… he had taken up his regular sojourn of stick throwing with 2 particular doggies who were having a whale of a time catching his airborne sticks!

The more he threw, the more excited they got.

And why do you think that was?

Easy! It’s because when someone (or a dog) gets a positive response from something, they want more of it… more and more and more.

And that’s exactly what YOU want in your Business – more results from the activities that actually DO generate you profit in order to increase your wealth, health and happiness!

It’s a simple science really!!

This is the precise way we work that out!

Example of a very Basic P&L below

Sales 1000
Cost of Sales  
 Carriage Inwards100
Gross Profit 400
 Staff Costs50
 Energy Costs50
Net Profit 250

Sales: Your income for an accounting period.

Purchases: These are goods bought for resale or the raw materials it took to make the item you sold.

Carriage Inwards: Delivery costs on items that are bought for resale (direct cost / cost of goods sold)

Gross Profit: This is the sales minus the direct costs.

Overheads: Overheads are indirect costs (not directly associated with the cost of sales).

Net Profit: This is the gross profit minus the overheads.

Your tax liability is calculated using this information fo’ sure…

BUT we also have allowable expenses to consider…

and that…

Well that’s a post for another time!

Still a little confused?

Honestly, whilst I’ve done my level best here to break it down, it’s still a frog in a bag and no one would blame you.

Throw me a bell and let’s chat about what this means for YOUR Business!

0 In Stories from an Accountant


DIY SOS! - Account-ant

Meet Annabelle. She’s a mobile beautician and reflexologist!

Annabelle had set up her Business a year before the dreaded pandemic hit and didn’t have enough accounting history to claim the support from self employed grants offered by the Government.

Annabelle didn’t earn much at all in the year 2020/21 – barely scraping the £1,000 threshold required to complete a self assessment form.

As if this wasn’t hard enough, shockingly for Annabelle, her Accountant’s fees were almost half her earnings!!!

Rachel Account-ant

“Don’t get too stressed, Annabelle” said Rachel.

If you need to complete your self assessment by yourself there’s a few key bits you need to know.

• First you will need a government gateway login.
• Apply for this and wait for the code & password to arrive.
• A list of your incomings and outgoings.
• A P60 if you are also employed.

The Government Gateway login can take a while to receive, so don’t leave it until the last minute.

The Deadline is 5th October for registration… but why not just get onto it today…

Go on, it’s one less thing to think about!


Assuming you’re set up for online, you have until 31st January to submit your return and pay your tax.

But beware!

The website is extremely busy on the run up to the 31st January, and it has been known to crash.

Why stress yourself out with that potential headache when you could start compiling your income and expenses now?

The added bonus to at least making a start on your tax return now is that you will know exactly how much you tax bill is now and not on the day that you need to pay it.

Record Keeping

As a Sole Trader you need to keep your records for 5 years!

So try not to keep your receipts screwed up in a bag – they’ll take up too much space, you’ll inevitably lose some… possibly even losing a few bags full!

It is also a pain in the bum when compiling your costs if all your receipts are in a muddle.

OK OK, it’s not a pain in the bum…


Quick Tip: If you are not using software such as Xero or Quickbooks, here’s some things that will make your life easier. If you could do just;

ONE THING get an envelope for each month and start putting your receipts in each envelope.

TWO THINGS before you put your receipt in your envelope write a category on the top.

THREE THINGS get those envelopes out once a quarter and enter them on my handy Self Assessment Entry Template.

Do all three and you’re literally making your life a thousand times easier!!


There’s a few categories to look at: –

• Office, property and equipment
• Car, van and travel expenses
• Clothing expenses
Costume (Entertainer)
or PPE
• Staff expenses
• Reselling goods
• Legal and financial costs
• Marketing, entertainment and subscriptions
Website costs
Giving away samples
Trade journals
Professional Memberships
• Training courses – i.e. refresher NOT learning to play the ukulele

Bung it in a spreadsheet

I’m talking to the people that don’t use receipt logging apps!!

And by the way, they are cool and would save you time!

The easiest way to compile the costs is in a spreadsheet – luckily for you I have created a template that will easily tell you what numbers to put in the boxes on your self assessment.

Compile this information for the tax year 6th April – 5th April each year. Keep this record saved AND backed up.

Time to enter the Gateway

HMRC, good or bad experience, their self assessment system is actually pretty good now.
You’ll need your Government Gateway login which is usually 16 digits long and your password.

You have two types of self assessment, one is where you have another income (but not a business), such as a rental property, the other one is self employment.

The website is fairly intuitive and will ask you the question “did you earn more than £1,000 from self employment”. When you tick yes, it asks you to fill in your company details and take it from there.

Use my handy spreadsheet to pop the numbers in the boxes and hurrah, boom! whammy bash!

Congrats!!! You have a completed tax return!


Payment for your taxes is due on 31st January each year at the very latest.
HMRC give you several different options for paying.

  1. If you are employed and this is your side hustle, you can request your tax code to be updated.

This is my least favourite option as you are handing control of tax deductions over to HMRC and you may end up with a significant effect to your tax code for which you are unprepared.

  1. Payment on Account.
    Again I am not a massive fan of this method. If your tax is estimated to be over £1,000 then you have no option BUT this option. You’ll be paying estimated tax for your current tax year.
  2. Payment by DD around 31st January
    This is the option I use with my own self assessment when the tax is estimated to be under £1,000.

Preparation for next year

Now that I have convinced you to record your income and payments regularly, you should be able to see how much profit (or loss) you are making at any point in time.

Plus, you’ll also be able to also see how much tax you expect to be charged at any given point.

“I’m still a bit worried Rachel, please help!” says Annabelle

Call me or drop me a line for a no obligation chat and we will see how I can help you. Even if it’s just registering you for the Gateway to take a bit of pressure off.