Why the Cloud for Accounting?
A strategic advantage for SMEs
At Price & Accountants, we have heavily invested in the Cloud because we can see how Cloud-
based accounting systems add value to our clients. In today’s market, businesses need to be
scalable in order to succeed and cloud accounting platforms provide enterprises with variety of
services which traditional and non- cloud accounting systems just couldn’t offer. Statistics
published in 2013 reveal that exclusively adopting the cloud for your accounting will be a
fundamental game changer for your enterprise.
The adoption of cloud accounting systems by businesses in the UK is growing rapidly.
Historically, accountancy firms in the UK have been too risk-averse to buy into a fully integrated
Cloud. With a document delivery service boosting a revolutionary combination for facilitating
cross-departmental and departmental teamwork the cloud gives enterprises a cost effective,
secure and flexible foundation for organic growth.
In the start of 2013 something changed, A survey by Fasthosts recorded that there was an
estimated 4.9 million business (in 2019 there was 5.9 million) in the UK which employed 24.3
million, and had a combined turnover of 3.300 billion. In fact, SME’s accounted for 99.9 per cent
of private sector turnover. With 841,000 private sector business, London had more firms than
any other region in the UK. The south east had the second largest number of business with
719,000. The business landscape was changing and many new players were beginning to take
advantage of how the digital revolution could change the way of doing business and create
measurable value in a fundamentally new way. Almost a year later, in 2014 more than two thirds
(70%) of small businesses and medium-sized enterprises (SMEs) in the UK have stated that an
early adoption of the cloud will be an important factor to contribute to the growth of their
business in the next 12 months.
We understand that for many SMEs, shifting into the cloud is giant leap but for this particular
group this leap has been proved to be extremely beneficial. The scalability of the Cloud allows
your business to upscale and downscale your business requirements to accommodate your
needs or changes. This in turn allows you to support your business growth organically without
the highly expensive changes with other more traditional accounting systems.
Today’s cloud offers business more than just Mobility, scalability, real-time info, visualisation
and cost effectiveness, It is revolutionising the way in which we do business. Leaping into the
cloud isn’t merely a technology shift it’s a cultural shift. Cloud computing brings forth a wave of
closer collaboration by bringing the business together in one central, accessible location. One of
the many key benefits of the cloud is the scope of information it provides on where a business is
exhaling, thus enabling owners to make the right decision on how to make significant
improvements for more efficient systems and closer collaboration.
Using a best-of-breed cloud accounting system, like Xero has enabled us to provide our clients
with real-time accounts and cash flow information, and an enterprise mobility strategy which is
changing the way they do business dramatically. Management can harness the power of real
time bank data thus saving time and enhancing their ability to make fast and informed business
decisions. Data visualisation for finance is changing the way SMEs work by making complex
finance data simple and accessible. Armed with the right insights business Xero allows owners
can explore and understand the relationship between a global market, investors and their
current clients.
Traditionally, it was only large corporates that had vast databases on their customers, with
Xero’s engineering SMEs have cloud databases with a secure and safe API which can connect
in real time to systems and other databases around the world. Xero gives business owners a
platform to refine their internal date and make informed strategic decisions to boost
performance.
We have noticed that a lack of education with regards to the cloud is having massive impact on
the amount of small and medium sized enterprises that are considering making the leap. At
Price & Accountants, we are committed to providing our clients with a quality service in an
efficient manner. We have helped and continue to educate our clients through our top-notch
educational consulting services and free online resource materials.
So in conclusion, moving your infrastructure into the cloud will enable you exploit saving
opportunities and make better business decisions based on credible data. So if you want to
minimise risk and maximise your ROI with an accurate, actionable and transparent business
intelligence then migrating into the cloud with our cloud accountancy tool is most probably your
best bet.
Want to know more?
If you would like more in-depth guidance regarding your current finance system, a business
accounting consultation, or tax advisory, please contact 02037 355 119, email
info@priceandaccountants.com or visit www.priceandaccountants.com
7 Key Mistakes SMEs Should Avoid To Improve Business Performance
At Price & Accountants, we have worked to overhaul and streamline the financial direction of many SMEs, and over many years of experience we have identified key mistakes that affect businesses more than they realise. This could have a negative impact further down the line on their businesses. Here are the key things that could be preventing your performance:
1. Lack of planning and analysis
Without a strategy in place and a method of analysing what you have done in the past, you are essentially planning to fail. Having a plan for your financial operations and goals is crucial in order to achieve them, and to avoid later complications.
2. Relying solely on year-end accounts
Many businesses use their year-end accounts only to analyse the historic data, however this can also be one of the most beneficial insights into your business, not only telling you what has occurred, but what you need to do next.
3. Oblivious to the metrics in the business
Most businesses we have come across do not know or understand key metrics within their organisation, such as KPIs and ratios. Understanding how to use these information could be vital to your future success.
4. Lack of a cash flow model
Not having or utilising a cash flow model is one of the biggest mistakes we see SMEs make. If you are experiencing cash flow problems (or think that you could be, but are not sure) then we urge you not only to make this a priority, but to reach out to us for a free consultation.
5. Avoiding cloud-based accounting
This is by far the most efficient way to manage your finances, and without it you are undoubtedly wasting time and money, and will often be left searching for answers.
6. Lack of customer analysis
Knowing your target customer and the key financials surrounding their interactions with your business, is not only advised, but could be the difference between your success or failure further down the line.
7. Poor financial productivity
Productivity and performance improvement applies not only to the everyday running of your business, but is also highly relevant to your financial goals. Many businesses waste money on poor productivity and low performance, and this is an area we have helped many clients refine and streamline.
If you feel that your business is suffering from any of the above, feel free to reach out to Price & Accountants for a free coffee and consultation on how we can help:
Email info@priceandaccountants.com
Call 020 3735 5119
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SELL, DON’T GIFT: HOW TO SIGNIFICANTLY REDUCE YOUR TAX BILL BY SELLING SHARES TO YOUR PARTNER
Looking to become more tax efficient this year? Gifting shares of your business to your
spouse is often recommended by small business accountants and tax advisors. This is to
make use of both yours and your partner’s tax-free allowances, and ultimately minimise the tax
on dividends the company pays. This is a great move to be tax efficient, however if you’re looking for
ways to save even more and you also happen to have a mortgage, your accounting firm may
not have told you to consider selling shares instead of gifting them. Here’s what you need to
know:
- Firstly, why is joint ownership best?
Instead of owning your business alone, it is widely considered good practice to own it jointly
with your spouse whenever one of you is paying a higher rate of tax than the other. When
you both own shares in the company, you are both entitled to use your tax-free allowances,
dividend nil rate band, and other rate bands, in order to reduce the tax paid on your
company dividends. Owning with your partner is a great way to become more tax efficient.
- Should I have made my spouse a shareholder when I formed the company?
If you’re thinking it’s too late to make your spouse a shareholder in your company, it’s
definitely not. Even if your spouse was not made a shareholder in the beginning, HMRC will
still allow you to transfer ordinary shares to them as a gift in order to reduce your tax bill. No
matter how long ago you have incorporated your company, you can still make your spouse
a shareholder at any time.
- How does this help reduce my tax bill?
Here’s an example of this tax-saving plan in action:
Joe started his company (Joe Bloggs Ltd.) over ten years ago. It has grown considerably
since then, and is now being valued at around £600,000. Joe Bloggs Ltd. pays Joe £100,000
per year in dividends, of which almost £50,000 is taxed at the higher rate, and naturally, Joe
would like to save on tax wherever possible.
Joe’s wife, Jane, brings in less income, and so Joe’s accountant suggests that he gift half of
the shares of Joe Bloggs Ltd. to Jane, in order to utilise the most of her tax-free allowances
and basic rate band.
- So why is it better to sell and not gift the shares?
Here’s where it gets interesting. Typically, tax experts will advise you to gift the shares to
your spouse to save, which is acceptable. However, if you are currently paying off a
mortgage on your home, it may be more tax efficient for you to sell the shares to them at a
reduced rate instead. Selling the shares allows you to structure the transaction in such a way
that you receive tax relief on the interest you pay.
- How does this work?
Let’s say Joe and Jane have a mortgage of £200,000 on their home, and the interest they
pay on this loan is around £11,000 each year. Tax relief does not apply to loans used to buy
your home, but it often does when you are buying shares in a company (note: conditions
often apply).
If Joe sells shares to Jane for a discounted rate (we’ll use £100,000 as an example) instead
of gifting them to her, the loan that Jane takes out to make this purchase will then qualify for
tax relief. They can then use this money to pay back £100,000 of their mortgage.
In doing so, Joe and Jane have effectively switched the £100,000 payment to pay towards
their home mortgage instead of the sale of shares in the company. The interest from the
money that goes towards the sale of shares qualifies for tax relief, meaning the interest paid
is around £5,500 per year, and around £1,100 of this gets knocked off their tax bill.
If you believe you could qualify for tax relief by implementing the plan above, you can discover the savings you could make in your business by getting in touch by emailing us to info@priceandaccountants.com or call us 020 3735 5119 at Price & Accountants to discuss how we can help you save on your tax this year.
We are committed to helping small businesses in London and around the UK with their accounting needs, using Xero online accounting software and our expert team of advisors, all dedicated to helping your business flourish.