The Happy Accountant

From Monday 1 December 2008, the VAT rate will drop to 15% and remain at this level until 31 December 2009, when it will revert back to 17.5%

The new VAT fraction is 3/23.

What do accountants actually do?  Well, accountants are everywhere.  Even on YouTube!
This is for any student who may be reading this - although, caution is needed, as the clip is American some content is not relevent to the UK.

Some common invoice payment terms:

• Net 7 Payment seven days after invoice
• Net 30 Payment 30 days after invoice
• Net 60 Payment 60 days after invoice
• Net 90 Payment 90 days after invoice
• Net monthly account Payment due on last day of the month following the one in which the invoice is dated
• EOM End of month
• COD Cash on delivery
• Cash account Account no credit given
• CND Cash next delivery
• CBS Cash before shipment
• CIA Cash in advance
• CWO Cash with order
• 1MD Monthly credit payment of a full month’s supply
• Contra Payment offset against the value of supplies purchased from the customer
• Stage payment Payment of agreed amounts at stages
• PIA Payment in Advance

Before giving your customer credit, it is advisable to do some checks.  Below, in no particular order are some of the checks that could be made:

• request a bank reference
• request trade references
• check the limited company’s details against Companies House
• credit reference check
• analysis of customer’s year-end accounts

You can ask for bank references, trade references (from your prospective customer’s other suppliers), you

Hopefully, you will have already made your customer aware of your standard terms and conditions at the start of business relationship.  Many businesses consult a solicitor for help in setting these out clearly.

Having clear standard terms and conditions can help protect your rights in the event of a dispute.  Having them printed on the back of your sales invoice can serve as a timely reminder to your customer.

Your terms and conditions can cover such items as:

• payment terms
• credit limits and credit period
• interest charges on late payments

If you give your customers credit (and most businesses do), it’s important to get your invoicing and customer payments systems in order.  The obvious benefit is to aid cash flow and it is the first step to good credit control and fewer bad debts.

Some while ago, I posted about some basic details that need to be included on a sales invoice.  In addition, if the business is a limited company, the sales invoice must include:

• the correct full company name (as written on the certificate of incorporation)
• any “trading as” name or business name.
• the names of the directors may also be included - but it is a case of naming all the directors or none at all.

Sole traders must give:

• the business name, if the surname is not being used.
• an address.

If the business is VAT registered, the VAT number must also be given.

It’s also important to send the invoices out as promptly as possible, particularly at month-end when many companies have a “cut-off” point and invoices received later are processed in the following month, resulting in later payment.

As soon as you list your business in directories and telephone books, register a limited company or otherwise publicise your business, it can generate an overwhelming amount of unsolicited mail and cold-calling.

It has been possible for some time, to register a residential address and telephone number for the mail preference service and telephone preference service.  Companies must check that the addresses/telephone numbers are not registered in these databases before making contact.  Therefore, registering for MPS and TPS can drastically cut down on the amount of unsolicited mail and telephone calls.  Both services are completely free, so don’t pay anyone who says they will do it for you!

It is also now possible to make a corporate registration for the telephone preference service (although, if you work from home and your home number is already registered, you cannot register it again for the corporate service)

Occasionally, a new employee will start without a P45.  An Employer must then use an emergency tax code.

The emergency tax code is currently: 543L, although, from 7 September 2008 it will be 603L.

Using this code usually means that the employee gets their basic personal allowance, but does not take into account any other circumstances that may apply to them.

Sometimes a tax code may have two letters and no numbers or be another combination:

BR Code
This code is commonly used where it is an employee’s second job and the all their personal allowances are used in the first/main job.  All income earned under a BR tax code will be taxed at basic rate.

D0 Code
An employee with this code has all their income taxed at the higher rate of tax.  This is also commonly used with a second employment, where the first job uses up all the personal allowances and income taxable at the basic rate of tax.

NT Code
An employee with this code has no tax deducted at all from their pay.

T Code
T at the end of a tax code indicates “temporary”, specifically that there may be items under review by HMRC.

L Codes
Used for employees who are eligible for the basic personal tax allowance and also as an “emergency tax code”.  This is the usual code for employee’s main (or only) job with straightforward tax affairs.

P Codes
Used for people aged 65-74 who are eligible for the full Personal Allowance.

V Codes
Used for people aged 65-74 who are eligible for the full Personal Allowance, the full Married Couple’s Allowance and are estimated to be basic-rate taxpayers.

Y Codes
Used for people aged over 75 and who are eligible for the full Personal Allowance.