The magazine of International Association of Bookkeepers

BOOKKEEPERTHE

July / August / September 2019

HOW TO GET GREAT RESULTS

FROM YOUR BOOKKEEPING

BUSINESS

News from The Pensions Regulator Tax relief

How to keep staff motivated

Profit First

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International Association of BookkeepersSuite 5, 20 Churchill Square, Kings Hill, West Malling, Kent, ME19 4YU

Phone: +44 (0)1732 897750Email: membership@iab.org.ukWebsite: www.iab.org.uk

Twitter: @IABinfoFacebook: IABBookkeepers

Contents

3 Janet’s welcome A message from the chief executive and an update from

the AGM which took place.

4 How to get great results from your bookkeeping business

Jane Aylwin gives her tips for successfully running a bookkeeping business in the following areas: price, customer service, delivery and confidence.

5 Share your views! Share your issues and requirements as a bookkeeper in a

survey being carried out by Easy As 123.

5 Word from Sarah: Adding value to your client’s experience.

In her regular feature, Sarah Palmer tackles the issues that matter.

6 News items A selection of news items including data breach reports

on the rise, updates from HMRC and government cracks down on money laundering.

10 News from The Pensions Regulator Updates from The Pensions Regulator (TPR) including

about tax relief and TPR’s online bulk declaration feature for automatic enrolment.

11 How to keep staff motivated In any new business, building a loyal workforce is crucial

to the long-term success of your firm. The Federation of Small Businesses (FSB) provide their tips to ensuring your staff are driven and motivated.

12 Profit first Article by IAB member Gary Martin FIAB AIAAP on how to

make your business more profitable.

14 Rosemary Bookkeeping

15 Expand your client base at new Women in Business event

Find out more about the Women in Business event taking place on 16 and 17 October which the IAB are exhibiting at.

16 Refresh your knowledge or upskill with IAB CPD bookkeeping modules

Learn more about the Continuing Professional Development (CPD) units available for you to study which are taken from the IAB Level 2 Certificate in Bookkeeping and Level 3 Certificate in Bookkeeping qualifications.

2 | The Bookkeeper

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Sue Renaut FIAB was elected as the Chair of Council and Juan Carlos Venegas MIAB FIAAP was named Vice Chair.

At the AGM the revised Articles of Association were also accepted.

The IAB’s AGM, which took place on 20 June, saw Nicky Davies FIAB being elected to Council. Congratulations to Nicky and

also to Sarah Palmer FIAB and Frauke Golding FIAB who were re-elected to stay on the Council.

Welcome to another issue of The Bookkeeper. The IAB held its AGM on the 20 June. The changes in the

articles were approved and we welcomed Nicky Davies onto the IAB Council. Sarah Palmer and Frauke Golding were re-elected to Council. I look forward to working with them all.

We have another variety of articles in this edition, from keeping your staff motivated, getting better results from your bookkeeping business to an update from The Pensions Regulator. There is also an article about our CPD modules.

Our May seminar was a success, but if you didn’t make it we will be arranging further seminars in London and Bristol in the autumn. Keep a look out at your emails, Twitter, Facebook & LinkedIn for the announcement of the dates.

I hope you enjoy all the topics covered.

Janet JackChief Executive

If you are interested in standing for Council next year then please look out for information that will be released later this year in future editions of The Bookkeeper and the monthly e-newsletters.

Welcome

AGM update: the election results

Sarah Palmer FIAB

Frauke Golding FIAB

Sue Renaut FIAB

Juan Carlos Venegas MIAB FIAAP

Nicky Davies FIAB

The Bookkeeper | 3

Running a bookkeeping business is HARD!I know that many of you must be working an extraordinary number of

hours to make a living – I know I did, before I figured it out.

It took me a long time – 11 years actually. But once I finally understood what I was doing wrong, and what I needed to do to put it right, the transformation was swift and absolute.

Within 3 years of the proverbial light-bulb switching on above my head I had turned my business around from a loss making burden to a profitable, enjoyable business with great clients.

So what is the secret? Well, there are actually four critical success

factors to getting this right – they are:1) Price2) Customer Service3) Delivery4) Confidence

I learned that it is a journey of continuous improvement and you have to have balance across these four areas in order for the business to work properly.

Once you get everything operating at a level that is working you can then increase your proficiency in all areas, together, so that they complement each other and add value and authenticity to your business.

This article is an introduction to some of the things you can be doing to help move your business, and your life, in the direction you want it to go.

PriceBeing too cheap means you work too hard, for too many clients. Something has to give and it’s usually either your standards, or your health.

There are three things I want you to remember:1) There is no such thing as ‘too expensive’,

there is definitely such a thing as not delivering value for money.

2) You deserve to be fairly remunerated for the valuable work you do.

3) You do not have to be ‘Premium’, but if you are not charging premium prices, and you deliver a premium service, you will burn out! If you are charging premium prices, but delivering an average service, your clients will leave. You have to get the balance right, for you.

DeliveryThere has never been a time like this, an opportunity to serve your customers in ways you have never been able to before, in places you have never been able to reach.

Here are the three things that you can do now to improve your delivery systems:1) Harness the power of technology to augment

your offering, to differentiate your service from everyone else.

2) Streamline your processes until you are delivering at optimum efficiency and value. Make sure everything is done in the same way, and that your processes are written down.

3) The best solution: Do not be afraid to ask your clients to work on

the platforms you choose to work with – you will deliver a much better product if you can become a master of the software and replicate the same systems and processes over and over.

YOU are the expert, YOU are the trusted advisor so why would you let the client choose the best solution?

Customer ServiceOne of the best ways to become less busy, more productive, better off financially and enjoy what you do more, is to do more, for less customers. How can we achieve that? By achieving outstanding levels of customer service!

Here are the three key things to remember:1) Customer service, where you are delivering

retained, regular support is first and foremost about relationships. Make sure you get to

How to get great results from your bookkeeping business

4 | The Bookkeeper

We would like 10 minutes of your time to take a survey at www.ea123.co.uk

telling us about your issues & requirements as a bookkeeper.

We are developing a bespoke bookkeeping cloud-based software which includes OCR conversion of paperwork to digital files alongside hosting.

We have been UK bookkeepers for 23 years and we want to work with you to build something really great, so that you can either grow your

client numbers or speed up your core processes. You will be entered into our prize-draw where

we have some really valuable prizes including:• a free digital marketing diagnostic from

www.dnasix.com• a 90-second promotional film at a heavily

discounted rate• a free Tax Return service

Easy As 123, working with you to deliver the best service to clients.

know your clients well and build strong relationships with trust and mutual respect.

2) Create automated processes to stay on top of the day-to-day so you can focus on everything that is extraordinary. For example, create automatic email reminders that contact your client when you need something from them – end of month paperwork or payroll details.

3) Be bold enough to have a conversation if you are unhappy with communication or the treatment of yourself or your team. Do not be afraid to walk away from difficult, rude or high-risk people.

ConfidenceConfidence is something that some people seem to have in abundance whereas others struggle badly with it.

Confidence IS something that you can learn – it is a skill like any other and with the right techniques and practice you can become

confident, certainly in your ability to deliver the product that your customer wants, confident in how to sell it, how to price it and confident in the advice and support you give your client.

Here are my three top confidence boosters:1) With competence comes confidence!

Get qualified! The IAB provide a great suite of

qualifications covering everything you need. Go on courses, learn to love learning, make time for advanced CPD. Make CPD about more than ticking a box at the end of the year for the governing body!

2) Know your systems inside out, be confident that you can deliver what is needed, at the standard that is required. Process everything you possibly can in your business so you know that everything is being performed exactly the way you want it done.

3) Don’t be overconfident! Overconfidence leads to mistakes, the wrong advice being given,

quality controls slipping and can be extremely dangerous when you are so key to supporting clients with important decisions.

As with the other three critical success factors you have to measure your confidence in line with the other areas of your business.

I was asked to write around 700 words for you and I can write 10’s of thousands on these topics so please visit the links below to find out more.

Find out more about Jane’s mentoring group and get your copy of ‘How to build a successful bookkeeping business’ (Co-written with Mark Wickersham), for the cost of postage only here: futurebookkeeper.mykajabi.com/

Sign up for the SmartVault educational series that covers all four of the critical success factors in depth at www.smartvault.com/better-bookkeeping

Thank you to Jane Aylwin for providing this article.

This article has been provided by Easy As 123.

We want you to join in a conversation with us!

I am always keen to explore new ways to make my services stand out from the crowd and

improve the client’s experience when working with us. I have recently introduced Receipt Bank to Women Who Count (late to the party I know!) and have been overwhelmed by the positive feedback from clients. I have been exploring OCR software for a while now and have delayed the decision because I know there is a period of disruption when learning and implementing new software. As always, now I am on the other side of the decision I wish I had done this earlier.

You can read a blog from Receipt Bank here: https://blog.receipt-bank.com/pre-accounting- why-small-businesses-cant-ignore-it

Love to know your thoughts. Sarah Palmer, FIAB, owner of Women Who Count

Sarah Palmer

Word from Sarah

Adding value to your client’s experience

The Bookkeeper | 5

HMRC’s Agent Update 72 is available now and contains a variety of articles and

updates.There is an update on Making Tax Digital and

information on income requirements for tax credit renewals.

Other highlights include articles about:

• student/postgraduate loan notices• VAT: building and construction services

reverse charge• disguised remuneration loan charge

To view Agent Update 72 please visit: www.gov.uk/government/publications/agent-update-issue-72.

HMRC updates advisory fuel rates for company car users

When is a van not a van?

HMRC Agent Update – Issue 72

HMRC has published the latest advisory fuel rates (AFR) for company car users,

effective from 1 June 2019. It has increased most mileage rates by 1p per mile to reflect higher fuel costs. The previous rates, effective March 2019, can be used for up to one month from the date the new rates apply.

The rates only apply in the following circumstances:• reimburse employees for business travel in

their company cars; or• require employees to repay the cost of fuel

used for private travel.These rates cannot be used in any other

circumstances. If the rates are used, it is not necessary to apply for a dispensation to cover the payments made.

The advisory electricity rate for fully electric cars is 4p per mile. Electricity is not a fuel for car fuel benefit purposes.

When employees are reimbursed for business travel in their company cars, HMRC will accept there is no taxable profit and no Class 1A National Insurance to pay.

Advisory fuel rates from 1 June 2019Petrol – engine size/amount per mile- 1400cc or less – 12p- 1401cc to 2000cc – 15p- Over 2000cc – 22pDiesel – engine size/amount per mile- 1600cc or less – 10p- 1601cc to 2000cc – 12p- Over 2000cc – 14pLPG– engine size/amount per mile- 1400cc or less – 8p- 1401cc to 2000cc – 8p- Over 2000cc – 14p

Hybrid cars are treated as either petrol or diesel cars for this purpose.

HMRC reviews rates quarterly on 1 March, 1 June, 1 September and 1 December.

A recent ruling that not all vans are vans for tax purposes and are actually cars could

give thousands of van drivers and their employers higher tax bills, according to accounting and tax advisory firm Blick Rothenberg.

In a recent tax case involving Coca-Cola, the Upper Tribunal (UT) has held that not all ‘vans’ (in the common sense use of the word) are vans for tax purposes. Specifically, vans such as the VW Transporter Kombi T5 were held to be ‘multi-purpose vehicles’ rather than vans.

Robert Salter, a specialist in expatriate and employment taxes at the firm, said: “Any ‘van’ that is not held to be primarily a ‘vehicle for the transport of goods becomes classified as a multi-purpose vehicle (aka a car), and results in a car benefit charge arising for the employee, where there is any ‘private element’ to the vehicle’s use.”

He added: “This will apply even where private use is very insignificant compared to the wider use of the vehicle. For example, occasional commuting in the vehicle.”

Salter said: “The annual taxable benefit charge that accrues for employees in this

regard can be substantial, as it is based on the core (list price) of the vehicle when new and the vehicle’s CO2 emissions level. For example, if a vehicle impacted by this case had an official list price (cost) of £25,000 and had a CO2 charge of 25%, that could create an annual benefit-in-kind charge for the employee of £6,250 – which would create a tax charge for a 20% taxpayer of £1,250.

“Additionally, if the fuel costs of private motoring are also paid for by the employer (even inadvertently), employees can also face a fuel benefit charge based on the car fuel rules rather than the (much cheaper) van fuel benefit rates.”

Salter added: “While HM Revenue & Customs haven’t formally, altered their guidance in this area following the UT’s ruling, it is probable that the Revenue will regard this as a major opportunity to gain additional Revenue from the ‘white van man’.

“In addition, their employers will face an additional NIC (employer only) liability of 13.8% on the value of the car scale and car fuel scale tax benefit charges that arise for their affected employees.”

6 | The Bookkeeper

NEWS ITEMS

Child benefit tax penalties refunded by HMRC

Money laundering fines soar as government cracks down

Fines imposed by HMRC for failing to comply with anti-money laundering

obligations increased by 91% last year. The financial services regulatory consultancy, fscom, says the value of fines imposed on businesses rose to £2.3m last year. The average size of fine went up from £1,310 in 2016/17 to £3,450 last year.

Recent Home Office figures suggest that as much as £90bn is laundered through the UK every year. HMRC and other regulatory bodies

Almost 5,000 UK taxpayers have received refunds totalling £1.8m after HMRC opted to

cancel ‘failure to notify’ penalties among those within the higher rate income tax threshold.

Since 2013, small business owners and employed individuals earning more than £50,000 a year have been given the choice to opt out of receiving child benefit or risk facing a tax charge known as the High Income Child Benefit Charge (HICBC).

are under mounting pressure to crack down on money laundering, fscom says. As such, businesses can expect fines to continue to rise.

Jamie Cooke, managing director at fscom, said: “Cracking down on money laundering is at the top of the government’s agenda and HMRC is responding by increasing the value of fines it hits businesses with.”

HMRC made over 1,340 interventions into businesses suspected of money laundering failures in the past year.

In 2018, HMRC was tasked with assessing thousands of cases where the tax authority had issued ‘failure to notify’ penalties to parents for the 2013/14, 2014/15 and 2015/16 tax years as they had not registered for the HICBC.

Because of these reassessments, HMRC sought to review what it deemed a ‘reasonable excuse’ for taxpayers failing to register for the HICBC.

John Binns, partner at BCL Solicitors and a specialist in business crime, commented: “This is part of an increasingly hostile environment for those who breach money laundering regulations. It’s to be hoped though that it doesn’t reflect an arbitrary hike in fine levels, but more detection and targeting of the serious breaches.”

A total of 101 individuals have been convicted of money laundering since April 2010 as a result of HMRC investigations.

Following a review of some 35,000 cases, HMRC has confirmed it has annulled more than 6,000 HICBC penalties issued to taxpayers, with parents receiving a refund of £370 on average.

Families who claimed child benefit prior to the introduction of HICBC have been refunded. Meanwhile families where one parent’s income rose above the £50,000 threshold and families where the HICBC liability arose due to new relationships between 2013-2016 have also been refunded.

Although HMRC states there is no need for taxpayers to contact them regarding these refunds, which have already been issued, the lack of clarity and awareness of HICBC remains a serious issue for the UK tax authority.

Samantha Skyring, Senior Training & Communications Manager, TaxAssist Accountants, said: “Due to the lack of information available when the charge was introduced and over the subsequent years, it’s no wonder parents may not have been aware of this charge or how it works. It is an unprecedented move by HMRC to acknowledge this and issue these bulk refunds.”

Even if you choose not to claim child benefit payments, it is still important to submit the child benefit claim form to HMRC for your child.

This will ensure that you receive the National Insurance credits you are owed towards your own state pension. Meanwhile those who do claim child benefit will ensure their child automatically receives a National Insurance number shortly after they turn 16.

If you want to calculate whether your personal income is over the £50,000 threshold for child benefit, you need to work out your ‘adjusted net income’.

This is your overall taxable income, before any personal allowances and the payment of things such as Gift Aid.

The Bookkeeper | 7

Organisations operating in the UK are reporting data breaches in greater

numbers than in many other parts of the EU, according to law firm Pinsent Masons.

Figures provided to the firm show that, since the General Data Protection Regulation (GDPR) took effect in May 2018, the UK’s Information Commissioner’s Office (ICO) has received a monthly average of 1,276 data breach notifications – 43 notifications per day. Three of the EU’s other largest economies reported breach notification figures significantly lower than in the UK. The monthly average in France, Italy and Spain is 307, 170 and 94 respectively.

The report, based on data gathered from the ICO, Action Fraud and data protection authorities across Europe, highlighted the issue and flagged the impact it is having on the caseload of the regulators.

Under the GDPR, organisations are obliged to disclose certain personal data breaches to data protection authorities and affected individuals. A personal data breach is defined under the Regulation as “a breach of security leading to the accidental or unlawful

destruction, loss, alteration, unauthorised disclosure of, or access to, personal data transmitted, stored or otherwise processed”.

Organisations must notify local data protection authorities of personal data breaches they have experienced “without undue delay and, where feasible, not later than 72 hours after having become aware of it… unless the personal data breach is unlikely to result in a risk to the rights and freedoms of natural persons”. In addition, where there is a high risk of damage arising to the data subject then the data subjects must be informed directly without undue delay.

A separate recent report issued by the ICO revealed that it had received around 14,000 personal data breach reports from organisations between 25 May 2018, the date the GDPR became effective, and 1 May 2019. By way of comparison, the ICO said it had received approximately 3,300 personal data breach reports during the year ending 31 March 2018.

The ICO said that more than 82% of the personal data breaches reported to it since the

GDPR has taken effect “required no action from the organisation”. The watchdog highlighted the problem of ‘over-reporting’ last year.

Stuart Davey of Pinsent Masons said: “The spike seen in the incidents reported to the ICO can, in part, be attributed to the greater awareness of the new 72-hour timeframe under GDPR. There is a lack of detailed regulatory guidance to help the assessment of whether the reporting threshold has been met, which means that it is often very difficult for data controllers to make a finding at such an early stage. As a result, many are understandably choosing to notify on a precautionary basis to avoid falling foul of the new requirements, or receiving a significant GDPR fine.

“However, as our report explores, not all security incidents require notification to the regulator. We are only one year into GDPR and it will be interesting to see reporting figures this time next year and the impact that another twelve months will have on levels of reporting. Things may settle down, but a large GDPR fine in the meantime may add a new dynamic.”

Data breach reports on rise after GDPR

OTS wants to simplify tax for smaller businesses

A new Office of Tax Simplification (OTS) report calls on the government to

prioritise action to address long-standing concerns about the experience of smaller businesses.

The report explores for the first time the tax challenges faced by businesses, referencing the stages a developing small business might go through in its engagement with the tax system. What has emerged are several long-standing concerns which now, as the economy and the world of work continue to evolve, it is especially important that the government prioritises, according to the OTS.

The report contains major recommendations in a number of areas for improving HMRC processes.

Bill Dodwell, OTS Tax Director, said: “Many new businesses are formed without

sufficient help and guidance. This can lead to mistakes being made, resulting in substantial costs or penalties as their tax compliance affairs are put in order. We recommend that government offer better and more readily accessible guidance, joined-up across government and communicated through multiple channels, to help people starting small businesses.”

PAYE system problems lead to significant costs for businesses, agents, employees, and indeed HMRC itself. For example, there are around 350,000 duplicate employment records, and around 5% of returns are received late. The current system does not handle the fluidity of the modern workplace very well, for example in relation to changes of job mid-month or individuals holding multiple jobs or concurrent employment and self-employment.

Dodwell added: “It is time for a new review of PAYE, to look at areas where the inputs from employers do not work well and how they are processed by HMRC to update tax codes and the new personal tax accounts. The review needs to update PAYE for modern working patterns.”

HMRC’s data shows that over 70% of small businesses use a tax agent to help them with their tax compliance. However, HMRC does not – as yet – provide tax agents with access to the same information as their clients or enable them to carry out a very wide range of tax transactions for them. This costs everyone time and money, the report says.

“HMRC could do much more to leverage the support agents can bring in making the tax system work for millions of taxpayers. Ensuring that the valuable role of agents is built in to all new or redesigned systems, would go a long way to support small businesses – and support HMRC, too,” Dodwell said.

Other recommendations look at simplifying corporation tax reporting in the first period when a company is incorporated and setting a more strategic approach to tax administration and system change.

Small businesses make up over 99% of all the 5.7 million businesses in the UK, employ 12.9 million people and pay over £205 billion in tax.

8 | The Bookkeeper

NEWS ITEMS

Companies will be better protected from fraud under new Companies House

reforms that will do more to safeguard the personal data of business owners and ensure the accuracy of the company register, the government has said.

Business Minister Kelly Tolhurst last month unveiled a substantial package of reforms to Companies House, with the aim of minimising the burden on law abiding companies. The reforms will contribute to UK efforts to tackle economic crime by increasing the traceability of company ownership and management, while offering business owners and businesses greater protection from fraud.

The proposed reforms will help increase the accuracy and usefulness of the information available on the companies register, which last year was accessed 6.5 billion times and, as of March 2018, included over four million limited companies.

In the past three years almost 10,000 complaints have been made to Companies House from people concerned about their personal details, with worries including fraud and use of personal details topping the list.

The package of proposed reforms include:• Knowing who is setting up, managing and

controlling companies: those who have a key role in companies will have their identity verified.

• Improving the accuracy and usability of data on the register: Companies House will now be able to query and corroborate information before it is entered on the register. This will also mean it is easier and quicker to remove inaccurate information from the register.

• Protecting personal information on the register: in a minority of cases the register can be misused to identify personal information, which can then be used for criminal purposes. Under these proposals, directors will be given additional rights over their information; for example personal home addresses, while ensuring this information is still available in a transparent manner to public authorities where appropriate.

• Improving the detection of possible criminal behaviour: better information sharing by Companies House, other government bodies and financial institutions will better protect businesses and ensure faster and more sophisticated identification of possible criminal activity – benefitting businesses and consumers.

Business Minister Kelly Tolhurst said: “The UK already has some of the strongest protections in the world against money laundering. We are ranked as one of the top countries worldwide for cracking down on

economic crime – protecting businesses and consumers.

“The reforms… will support the fight against the use of dirty money in the UK and enhance the protections for entrepreneurs and directors from criminal activity.

“Knowing that a company’s information is accurate and transparent is a fundamental part of a leading business environment – giving entrepreneurs and businesses the confidence they need to do business in the UK.”

Louise Smyth, Chief Executive of Companies House, said: “The register already plays a vital role in contributing to the UK’s economy through the investment decisions that rely on our data. This package of reforms represent a significant milestone for Companies House as they will enable us to play a greater part in tackling economic crime, protect directors from identity theft and fraud and improve the accuracy of the register.

“The UK has one of the highest ratings for cracking down on anonymous companies, and the government’s proposed measures build on Britain’s world-leading anti-corruption activity. In 2016, the UK became the first country in the G20 to introduce a public register of company ownership, while new protections against identity fraud for company directors were introduced in 2018.”

Businesses to be given increased protections from crime

Breakthrough in fight against HMRC phone fraudsters

New defensive controls deployed by HMRC have put an end to criminals spoofing the

tax authority’s most recognisable helpline numbers.

The fraudsters have increasingly mimicked legitimate HMRC helpline numbers (often beginning with 0300) in order to dupe taxpayers and steal money. There has been a huge increase in the number of reported phone scams. In 2018/19 there were 104,774 reports, a huge jump on the previous 12-month period (7,778 reports). In 2017/18 there were just 407 such reports.

The ‘spoofing’ scam worked as taxpayers would receive calls and, on checking the numbers online, would find they appeared to belong to HMRC. This often led people to believe fake calls were real and enabled fraud.

The new controls, created in partnership with the telecommunications industry and Ofcom, will prevent spoofing of HMRC’s most-used inbound helpline numbers and are the first to be used by a government department in the United Kingdom.

Criminals may still try and use less credible numbers to deploy their scams – but that means they will be easier to spot.

Head of Action Fraud, Pauline Smith, said: “Phone calls are one of the top ways for fraudsters to make contact with their victims. Between April 2018 and March 2019, one in four phishing reports made to Action Fraud were about fraudulent phone calls.

“It is encouraging to see that these newly developed controls by HMRC have already achieved a reduction in the number of calls spoofing genuine HMRC numbers. If you believe you have fallen victim to a fraudster, please report it to Action Fraud.”

Since the controls were introduced in April this year, HMRC has reduced to zero the number of phone scams spoofing genuine inbound HMRC numbers. This has resulted in the tax authority already receiving 25% fewer scam reports compared with the previous month.

The Bookkeeper | 9

For new employers Tax relief - do your clients know what to consider when choosing a pension scheme?New employers have a number of things to consider when choosing a pension scheme for their workplace pension. These include the need to check the costs, whether it meets certain criteria, works with their payroll, and what method of tax relief it uses. Depending on the type of scheme, there are two methods where staff can get tax relief from the government on what they pay into their scheme: • Relief at source (RAS): pension provider claims tax relief from HMRC• Net pay arrangement (NPA): employer calculates the tax on the pay

after the employee’s contribution has been deducted.

Your client’s workplace pension scheme can only use one method and this will affect their lower and higher paid staff in different ways. It’s important for your new employer clients to understand what method may be appropriate for their staff.

For more information, visit The Pensions Regulator website for online guidance on tax relief: www.tpr.gov.uk/adviser-scheme-summary.

For employers who have already enrolled staffAre your clients familiar with the two tax relief arrangements? Find out more today. If your clients have already chosen a workplace pension scheme and enrolled staff, it’s important that they understand what tax relief method it uses. There are two ways that your client’s staff can get tax relief from the government on what they pay into their scheme.

The two arrangements are commonly known as ‘relief at source (RAS)’ and ‘net pay arrangement (NPA)’. Relief at source is when the scheme provider claims tax relief from HMRC. Net pay arrangements will require the employer to calculate tax on the pay after the employee’s contribution has been deducted.

Your client’s scheme can only use one method of tax relief and it’s important that your clients are familiar with the two different arrangements, as they affect lower/higher paid staff in different ways. For more information, visit The Pensions Regulator website for online guidance on tax relief: www.tpr.gov.uk/adviser-scheme-summary.

Employers who flout their automatic enrolment pension duties are being targeted with short-notice inspections by The

Pensions Regulator (TPR).TPR is using data to pinpoint specific employers up and down the

country who are suspected of breaking the law, including those who fail to put staff into a pension scheme or who make no, or incorrect, pension contributions.

It is mandatory for employers to take part in the inspections – obstruction of an inspector and failing to provide information when required to do so are criminal offences. Non-compliance could also result in fines or court action.

TPR’s Director of Automatic Enrolment, Darren Ryder, said: “TPR is increasingly led by our data and intelligence streams which enable us to detect potential non-compliance and take swift action against individual employers. This allows us to target our resources in a very focused way as part of our role to protect pension savers.

“We know the vast majority of employers are doing the right thing for their staff, however there are a small minority who persistently ignore their responsibilities. They can expect a knock at the door from us and enforcement action.”

The inspections began in May and continue over the summer across the UK. Previous rounds of spot checks targeted employers by region, from at-risk business sectors and from random test samples – as well as employers where there was evidence of non-compliance.

TPR will also be directly contacting other employers suspected of non-compliance by phone to validate the information held related to them meeting their duties, to ensure they are complying fully.

The Pensions Regulator (TPR) has an online bulk declaration feature that may be able to help to save you time if you are an adviser. Instead of submitting your client declarations file-by-file, this online feature allows you to submit multiple declarations within one single file upload only.

For full details on how to use the bulk declaration feature, visit TPR’s submit bulk declarations webpage, which includes a user guide: www.thepensionsregulator.gov.uk/en/business-advisers/automatic-enrolment-guide-for-business-advisers/10-completing-the-declaration-of-compliance/how-to-complete-mutliple-declarations-in-bulk.

Advisers, do you have multiple client declarations / re-declarations you need to submit for automatic enrolment?

News from The Pensions Regulator Tax Relief

Law-breaking employers targeted in new round of pension compliance checks

In any new business, building a loyal workforce is crucial to the long-term success of your firm. One way to do this is by ensuring your staff are

driven and motivated.We explain the different ways in which you can help keep your staff focused and driven to do their best for your business.

Help to feel valuedYou should communicate with your staff frequently, review their progress and identify the steps you could take as a business to help your teams feel more valued.

This could include:• Extra holiday allowance• Better pay• Staff perks such as gym memberships or childcare vouchers• Development plans• Tracked progression within the business

Staff will be motivated in different ways, so if you are going to put together a package for employees, the key is to talk to or survey your staff and find the options that would engage the broadest range of people.

This could evolve over time or as the business reaches certain levels of profit and turnover, incentivising working towards a goal as a team.

TrainingOne way to motivate your staff is to take an active role in their training and development.

This will benefit you as a business in two ways.Firstly, you build the skills that your business needs to grow and thrive.Secondly, you are providing staff with the development they need to feel

like a valued member of the team.Focusing on development can help your staff to feel that, as a business,

you’re investing in their long-term career progression, especially if training is tied into long-term goals and aspirations.

IncentivesAnother way to motivate staff is through employee incentives. Essentially, these are ways of acknowledging and rewarding good performance.

Incentives can take a number of forms, from competitions between staff, to rewards based on reaching specific goals.

For example, if you run a retail business, you could choose to reward the best performing sales person with vouchers, or a weekend away — something that rewards and acknowledges their level of performance,

holding it up as an example to other staff. You could also offer smaller rewards to all your staff when they reach predefined sales goals.

Highlighting and rewarding performance, and providing help to staff that are struggling, can improve motivation, as you are constantly acknowledging and assisting your team, which in turn helps to make them feel valued.

BonusesAnother way to motivate your staff is to operate a bonus structure. This could be a case of putting a financial incentive in place, so that when your business reaches financial targets, a portion of that profit is paid back to staff.

How can FSB help develop my business?Finding ways to motivate your staff is a great way to build loyalty and drive the level of performance you need to help your business grow and expand. Whether you’re a first-time business owner looking for ways to improve performance, or you’re expanding into a new market and need to find new ways to train your team, FSB can help.

We provide a range of services designed to make the day-to-day operation of your business easier to handle, which will benefit both you and your staff. This includes:• Advice for new businesses• Employment protection services• Health and safety advice

Federation of Small Businesses (FSB) – For IAB members that wish to join FSB a £30 discount is available (terms and conditions apply). The £30 registration fee will be waived for all IAB members (quote code IAB915). This promotion is provided by FSB. FSB Business Essentials membership will assist you to grow your business via networking opportunities, access to funding and much more. It will also help to protect your business by giving you access to legal advice, employment and tax protection, insurance advice and could also help to save your business money with discounts on a variety of essential business services. For more information or to join now, please call 0808 20 20 888 quoting IAB915.* * FSB Business Essentials Membership starts from £147 per annum with a £30 registration fee in

the first year. Please see the website for full details of subscription rate bands. Until 5.00pm on the 01/09/2020 the registration fee will be waived for all full business essentials members joining over the telephone or online and quoting the code IAB915. Code must be quoted during the telephone joining process or inputted during the online joining process. Calls are normally free of charge from UK landlines but charges may apply from mobile phones. Lines open 8am – 6pm Monday to Friday, excluding Bank Holidays. Registered Office: National Federation of Self Employed and Small Businesses Limited, Sir Frank Whittle Way, Blackpool Business Park, Blackpool, FY4 2FE.

Visit: www.fsb.org.uk.

This article has been provided by the Federation of Small Businesses (FSB).

How to keep staff motivated

The Bookkeeper | 11

How are you dealing with the incessant question “If I’ve made so much profit on my financial reports how come there’s nothing in the bank?” If you are like me you have probably been looking for a

way to explain Profit VS Cash in the bank. You may have also been asked: “How do I pay myself?”, “How do I become

profitable?”, “How do I pay my debt?”, and “How the hell do I pay the tax man?”

I’ve been asked all of these questions and I have found the answer. The answer to these questions and many more came to me via a book called ‘Profit First’ by Mike Michalowicz.

Let me briefly interpret the book for you and why I am and my customers are living the Profit First lifestyle.

GAAPI’m an addict, and I suspect you all are too, I know modern society is. I’m addicted to AXIOMS, and if you are anything like me you are probably thinking what are you on about? I had the same feeling when I first heard about them! An Axiom is a statement that everyone believes is true or is widely accepted on its own merits, such as “supply equals demand” or “the only constant is change”.. Here’s another axiom that as bookkeepers we should all be aware of:

Sales – Expenses = ProfitWhile its logically true, and has been taught this way since the 13th

century, from a human behavioural standpoint it’s fundamentally wrong. In the GAAP formula profit is a left over, telling us that profit comes last, its insignificant and something that is hopefully a nice surprise at the end of the year. But when we use the Profit First formula we flip it on its head:

Sales – Profit = Expenses

Logically the math is the same, but from our point of view as business owners it is radically different. With Profit First, you take a predetermined percentage of profit from every sale first, and only the remainder is available for expenses.

Toothpaste and Parkinson’s lawAuthor and historian C. Northcote Parkinson theorised that our demand for a resource increases to meet the supply of it. That is why when we are given two weeks to do a project it takes two weeks, and when we are given eight weeks to do the same project it takes eight weeks! Take for example a tube of toothpaste, when it’s new and full of minty goodness we don’t care how much we use, some of it falls into the sink, phah! You have a new tube, just put more on! However when that tube is on its way out, boy you get inventive! But it’s not just toothpaste it applies to, the same goes for pretty much everything in life, paper towels, oil supplies, time and even money.

Bank balance accountingAs bookkeepers and maybe business owners we should check our Income statements, balance sheets and cash flow forecasts but we don’t, who has time for that! What do we do instead? We get our phones out, log into our banking app and make important financial decisions based upon what we see (or not see as the case may be). And as Parkinson’s law dictates, as our income increases so does our spending and we are rarely left with anything else for ourselves! Profit First encourages us to continue “bank balance accounting” by first allocating money to profit (and other accounts) so that all we see is the actual portion of deposits that are available for expenses and we can automatically adjust our spending accordingly.

So how do we break this cycle?

Going on a dietWhen we turn this old outdated equation around and are forced to take our Profit First, Parkinsons law becomes a powerful ally, why? Because we don’t have to change any of our bad behavioral habits, we can still behave the way we have always done, we can carry on bank balance accounting, in fact it becomes a highly effective method of managing your finances!

In the past profit was an afterthought, now our expenses are forced to adjust and come in line with what remains. At Sunday dinner do you put the roast in the center of the table and shout ‘dig in’ then hide behind the

Profit First

12 | The Bookkeeper

This article has been provided by IAB member Gary Martin FIAB AIAAP.

door for fear of ‘taking a drumstick to the eye?’, no? No you carefully carve up the meat and dish it out one slice to the kids, 2 for your partner and 3 for you! The same applies to our bank accounts, having separate accounts helps us on this path, so we start with foundational 5 accounts.1) Income2) Profit3) Operating Expenses (Opex)4) Taxes5) Owners Pay

We then share out any received income amongst the accounts accordingly. For example the below table states that businesses in the £0 – £200k annual turnover bracket should allocate 5% to Profit, 15% to Tax, 50% to themselves as pay, then the rest, 30%, is for the business to spend as it sees fit.

Removing temptationNext we remove temptation. Because of good old human nature you’ll use will power to resist as much as you can but at some point you’ll cave. If money stays in the one bank, your primary bank, then the temptation to just ‘move a little to cover payroll’ is there, no one will notice as you say to yourself, ‘I’ll put it back when the next bill gets paid’… you know you shouldn’t do it! SO DON’T! Your robbing Peter to pay Paul. The only way we can stop ourselves from touching this is remove it altogether, find another bank, move that money into that account. Don’t make it easy to get to either, make it branch only banking, no bank cards, no cheque books, and definitely no online banking! If it’s out of sight, it’s out of harm’s way, YOU!

RhythmLastly we set up a rhythm, the 10/25 rule! The idea behind this is money builds up in the income account then on the 10th it gets allocated out, then it builds up again, and on the 25th you do the same again. Why is it so important that we do this? So we can continue our normal behavior! If always looking at your bank balance on a regular basis resonated with you GREAT, now it’s a good thing, now money is pre-allocated we know exactly how much we have to play with… you don’t need to change!!! It also helps you watch your cash flow without looking at complicated statements, and we all have clients who hate those! YOU DON’T NEED TO CHANGE!

Now it’s time for our quarterly profit distribution, as a business owner we work VERY hard, so why shouldn’t we reward ourselves? With Profit First we can! When the time comes, once a quarter, we take half of what’s in our Profit account and move the rest to a no temptation account for a rainy day. That money is then yours to do what you want with, take the kids to Disney, or a spa day for yourself!

Your turnSo now we’ve talked about how it works let’s do a quick simple assessment on YOUR business today. Grab a pencil and use the table to fill in your figures and see how they compare to Mike’s research. You will need your income statement, tax return and balance sheet.

First take your gross revenue for the year, put that in ‘Top line revenue’. Then did you subcontract any work out in that year? If so put that amount in ‘Materials and subs’. Subtract one from the other to give you your ‘Real revenue’.

Profit Tax Pay OPEX

0-200K 5% 15% 50% 30%

2001k-400k 10% 15% 35% 40%

401k - 800k 15% 15% 20% 50%

Next start with ‘OPEX’, how much were your expenses last year LESS your pay or distributions? Put this figure in the bottom and we’ll work our way up. Next tax, how much did you pay? If none just leave it blank.

Now we put our pay in, if you’re salaried then put it in here, if you just took money in the form of drawings then we’ll split it 50/50 with the profit.

Our next job is to work out our actual percentages; divide each row with the ‘Real revenue’ to find out your percentage, then with the previous chart write in the ‘PF%’ column the percentages that fit with your income level (£0-£200K etc). In the ‘PF£’ column times your actual figures with the ‘PF%’ figures to give you monetary amounts.

Lastly subtract your actual figures from the ‘PF£’ amounts to see your results. If your actuals are more than the PF£ amounts then you need to address the issue, if it’s less then you’re on track.

If you want to know more about Profit First then Mike’s book is freely available from most good book stores and Amazon, along with the audio version on Audible. There is so much more to this life changing method of looking after your business than what’s written here, so I urge you, try it out, even if you start saving 2% Tax, 2% Profit, and 2% to yourself you will see a difference!

Actual Actual %’s

PF% PF£ The Bleed(excess)

Top Line Revenue

Material & Subs

Real Revenue

Profit

Owners Pay

Tax

Operating Expenses

The Bookkeeper | 13

… make it branch only banking, no bank cards, no cheque books, and definitely no online banking! If it’s out of sight, it’s out of harm’s way, YOU!

‘‘

‘‘

Our franchise. Your business.We recognise the need for freedom from employment but the fear of the ‘what ifs’ associated with starting your own business. Whether you are a quali� ed or an experienced bookkeeper we have a route to suit you. Our proven business model and distinctive brand identity in Rosemary BookkeepingTM offer a winning formula for people just like you.

Rosemary Bookkeepers deliver an intelligent bookkeeping service to SMEs and Accountants ensuring a consistency of delivery and high quality work and with over 4 million businesses in the UK that need this service the demand for quality bookkeeping is huge.

Just 34 clients can give a turnover of £100,000!*

• Recurring income with average 50% net pro� t margins

• Excellent growth opportunities to build into a management style business

• Flexible hours – work from home – keeping costs down

• Dedicated support in Bookkeeping, Operations, Sales & Marketing

With our unrivalled network support, we know what it takes. We should, we’ve been successfully supporting UK franchisees since 1959.

Our business is built for the success of our franchisees, that’s why we provide a comprehensive range of support resources throughout the whole franchise journey.

Your business in a box.Support for Rosemary franchisees includes the guidance and coaching of the Rosemary Bookkeeping Brand Leader, available to the network and on a one-to-one basis.

In addition, our in-house franchisee support team, and selected strategic partners, provide further resources and guidance covering all the relevant modern skills and disciplines required by franchisees to thrive for the entire life of the franchise journey with Rosemary Bookkeeping.

What you’ll get:

• Your own de� ned trading territory• An intensive initial business training academy• A starter pack of equipment and products to kick

start your business• A Marketing launch for your new business includes

digital and traditional media• Ongoing training and support for the life of your

franchise in marketing, sales, business planning, technical/service.

£18,370+VAT initial investment with up to 70% � nance available, subject to status.

Contact our team0116 275 9005www.rosemaryfranchise.co.ukfranchisesales@servicemaster.co.uk

*Based on average client values from across the franchise network

Be inbusiness for yourselfnot byyourself.Build a scaleable and � exible bookkeeping franchise business.

iab_ad_230419_v1.indd 1 02/05/2019 09:28

Advertorial

No matter what stage your bookkeeping business is at attracting new clients is never easy. You might be in the early

days of starting up or looking to steer your firm into a new area of expertise, finding the time and budget to market your services can be a constant struggle. Developing a strategy and selecting the best channels takes time and effort so imagine if you could present your business to thousands of target customers in just 48 hours?

That is precisely what the augural Women in Business event, WIB Expo, offers to exhibitors. In the region of 5,000 visitors are expected to attend the event, professional women of which a vast proportion will be existing or potential business owners looking for a wide range of support services, from accountants and legal advice, to help with finance and marketing campaigns.

Taking place in Farnborough, Hants, the event is being marketed nationally and will attract female business owners and women searching for enterprise opportunities from across London, the South of England and the Surrey/Hampshire commuter belt. Core visitors are professional, ambitious women actively seeking help and support for their business ideas so this could provide an ideal platform to promote your bookkeeping company.

When budgets are tight, these human interactions present the most powerful way to attract new clients. Face to face opportunities play an invaluable role in marketing campaigns and offer a significantly higher ROI compared to email and online communications. Exhibiting at events like this enables you to reinforce your brand and pitch your employees as credible, trustworthy experts in their field.

Aside from meeting new prospects, another benefit of business exhibitions for bookkeepers is the peer to peer networking potential. Establishing or improving business alliances with other firms can be a smart tactic to build up mutual referrals. Most firms will have specific areas of expertise and may offer professional services that differ from your own. Developing a network of contacts from legal representation and investment advisors to technology consultants and recruitment agencies could help you serve your clients better and result in further reciprocal referrals.

WIB Expo takes place on 16-17 October at the brand new exhibition centre in Farnborough. www.wibexpo.co.uk

The IAB will be exhibiting at the event. To register for the event please visit: wibexpo.

reg.buzz/international-assoc-of-book-keepers.

Expand your client base at new Women in Business event

Our franchise. Your business.We recognise the need for freedom from employment but the fear of the ‘what ifs’ associated with starting your own business. Whether you are a quali� ed or an experienced bookkeeper we have a route to suit you. Our proven business model and distinctive brand identity in Rosemary BookkeepingTM offer a winning formula for people just like you.

Rosemary Bookkeepers deliver an intelligent bookkeeping service to SMEs and Accountants ensuring a consistency of delivery and high quality work and with over 4 million businesses in the UK that need this service the demand for quality bookkeeping is huge.

Just 34 clients can give a turnover of £100,000!*

• Recurring income with average 50% net pro� t margins

• Excellent growth opportunities to build into a management style business

• Flexible hours – work from home – keeping costs down

• Dedicated support in Bookkeeping, Operations, Sales & Marketing

With our unrivalled network support, we know what it takes. We should, we’ve been successfully supporting UK franchisees since 1959.

Our business is built for the success of our franchisees, that’s why we provide a comprehensive range of support resources throughout the whole franchise journey.

Your business in a box.Support for Rosemary franchisees includes the guidance and coaching of the Rosemary Bookkeeping Brand Leader, available to the network and on a one-to-one basis.

In addition, our in-house franchisee support team, and selected strategic partners, provide further resources and guidance covering all the relevant modern skills and disciplines required by franchisees to thrive for the entire life of the franchise journey with Rosemary Bookkeeping.

What you’ll get:

• Your own de� ned trading territory• An intensive initial business training academy• A starter pack of equipment and products to kick

start your business• A Marketing launch for your new business includes

digital and traditional media• Ongoing training and support for the life of your

franchise in marketing, sales, business planning, technical/service.

£18,370+VAT initial investment with up to 70% � nance available, subject to status.

Contact our team0116 275 9005www.rosemaryfranchise.co.ukfranchisesales@servicemaster.co.uk

*Based on average client values from across the franchise network

Be inbusiness for yourselfnot byyourself.Build a scaleable and � exible bookkeeping franchise business.

iab_ad_230419_v1.indd 1 02/05/2019 09:28

The Bookkeeper | 15

Would you like to recap your bookkeeping knowledge without having to complete a whole

qualification?Would you like to gain new skills via a CPD

module instead of completing a qualification?We have Continuing Professional Development

(CPD) units available for you to study which are taken from our Level 2 Certificate in Bookkeeping and Level 3 Certificate in Bookkeeping qualifications.

You’re able to study the CPD units as a self-study student meaning you can study flexibly around your home or work commitments and learn while you earn. The units enable you to learn in-demand and highly sought after skills, to use either within your own business or improve your job prospects and open the door to a range of career opportunities.

There are IAB study text books available to purchase from our online shop for an additional cost should you need further support with your studies and the units are assessed on our online portal, IABOnline. Upon successful completion you will receive a PDF certificate sent to you by email and will also be awarded CPD points, plus you’ll be adding to your skillset!

The units cover a range of topics, depending on which you choose to study including:• The use of a sub-divided bookkeeping system• The basics of the VAT system• Understand HMRC VAT rules• Understand the purpose of the VAT control

account and the VAT return• How to account for a stock valuation, fixed

assets, prepayments and accruals and bad and doubtful debts

• How to prepare financial statements from incomplete records

• And much more!

The units are short courses and excellent value for money with prices ranging between £35 and £55 per unit. As an IAB member you can receive a discount of £10 on each course by entering IABMEMCPD2019 at the checkout.

To register or view further information, including how many CPD points you will receive upon successful completion and the terms and conditions, please follow the links below:

Level 2 Certificate in Bookkeeping CPD units:• Financial services and payment methods:

www.iab.org.uk/product/financial-services-and-payment-methods-cpd-unit/

• Prepare and check business documents: www.iab.org.uk/product/prepare-and-check-business-documents-cpd-unit/

• Principles of bookkeeping and VAT: www.iab.org.uk/product/principles-of-bookkeeping-and-vat-cpd-unit/

• Prepare a trial balance and reconciliations: www.iab.org.uk/product/prepare-a-trial-balance-and-reconciliations-cpd-unit/

Level 3 Certificate in Bookkeeping CPD units:• Make accounting adjustments:

www.iab.org.uk/product/make-accounting-adjustments-cpd-unit/

• Principles of accounting: www.iab.org.uk/product/principles-of-accounting-cpd-unit/

• Prepare financial statements from incomplete records for sole traders and not for profit organisations: www.iab.org.uk/product/prepare-financial-statements-from-incomplete-records-for-sole-traders-and-not-for-profit-organisations-cpd-unit/

If you have any questions you can contact us on education@iab.org.uk or +44 (0)1732 897750.

Refresh your knowledge or upskill with IAB CPD bookkeeping modules

16 | The Bookkeeper