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What Is Compliance Reporting? What You Need To Know

Every industry has its best practices and standards. While many of these can be to stay up-to-date with competitors, others are to maintain regulatory compliance. As such, your business could be fined or face other penalties if you don’t follow them. One of these is compliance reporting.

If you’re wondering what this is, you’re not alone. Many new or potential entrepreneurs are still getting through the legal aspects of their company. That doesn’t mean that you should dawdle with getting around to your compliance reporting.

Instead, it’s something that you’ll need to get to grips with relatively quickly. It’s something that your business will need to be involved in almost constantly, even if you’re not aware of it. If you’re curious about what this is, then there are a few things that you should know.

Does your company need to engage in compliance reporting? Is it actually important? What even is compliance reporting? These are questions that every business owner should have answers to.

What Is Compliance Reporting?

As you might have guessed from its name, compliance reporting is working alongside auditors and proving that you’re adhering to regulations. These reports will highlight exactly how your company is following industry standards and all relevant laws.

You will have to include a lot of information in these reports. However, this will typically revolve around how your customer and company information is dealt with. You’ll need to outline how this data is controlled, stored, secured, and distributed.

To what standard you’ll have to collect and present this information can vary from place to place. In many cases, such as the United States and the United Kingdom, guidelines are relatively easy to follow. That doesn’t mean that your compliance reports will be done and dusted quickly, though.

Instead, it will be an ongoing process. Standards continue to improve and change over time. As a result, you’ll need to continually update your compliance reporting standards. Thankfully, there are many tools that can be used for this, many of which can be automated.

Compliance reports will typically be created by the IT department. Many companies have a compliance department, however, in which case it will be their job. Others will outsource this to a specialist.

Why Is It Important?

You might be wondering why compliance reporting is important. To some entrepreneurs, the answer to this would be obvious, though it won’t be to others. One of the most notable, and perhaps vital, is that you’ll be meeting legal standards.

Failing to do this can result in fines or penalties, both of which can get more severe over time. It could even result in the closure of your business, if issues are allowed to get bad enough. Avoiding this completely might be the largest reason to engage in compliance reporting.

There could be several other benefits to your business, however. For instance, it could help you identify where your data collection and storage can be improved. That’s especially true for security, which is one of the more crucial aspects of your company.

If your business is involved in any kind of online transactions, then security is paramount. The compliance reporting process ensures that you’re not only secure, but can identify areas of improvement. That will help protect your firm and its customers from any potential hacks.

What’s Included In A Compliance Report?

Almost every industry is required to be involved in compliance reporting. These can be regulated by different laws and agencies, however. What standards your company needs to follow with the practice can be different from that of another sector.

Since you’ll need to be engaged in the practice, it’s worth knowing exactly what you’ll need to include in a report. These are:

  • A statement outlining the relevant legislation;
  • A summary of what’s included in your report;
  • A review of your process, and;
  • A conclusion with the findings and analysis of your compliance review.

These should help compliance reporting go much easier for you. Since you’ll have to be engaged with it almost constantly, that could be a welcome advantage.

Wrapping Up

While being compliant with regulations may seem like a pain, it’s there for a reason. Your company’s and customers’ information should be secure. Ensuring that you’re making this a priority and running your business effectively should be vital.

While that means taking the time to review and improve your process, this will reap dividends in the long term. That doesn’t mean that compliance reporting needs to be difficult, however. Instead, there are multiple tools and resources, alongside experts, that you can utilize.

What’s stopping you from making things much easier for your company?

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What are Finance Transformation Best Practices?

Business owners will hear quite a few buzzwords throughout their careers. While many of these will come and go, some will stick around. That’s primarily thanks to the processes, systems, or other things they refer to being effective.

Much of that can be seen with marketing efforts, which have shifted significantly in recent years. Not all of these are public-facing, however. Instead, many of them can look inward are your business. One of the largest of these is finance transformation.

If you don’t know what this is, you’re not alone. While this has been gaining popularity in recent years, it’s yet to gain mainstream appeal. It has shown multiple benefits, however, which is why it’s been gaining interest among entrepreneurs.

If you’re unaware of what the practice is, then you might want to know more about it. It can have quite a few benefits for your company. To properly take advantage of this, though, you’ll need to make sure you follow financial reporting services transformation best practices.

Like anything else that’s worth your time, there are a few things you’ll need to know before you dive in.

What Is Finance Transformation?

If you’ve never heard the term ‘finance transformation’ before, then you’ll naturally be curious as to what it is. You might assume that it would be complicated, although you’ll only be half right. In essence, this is a shift in mentality within your organization.

In many companies, finance seems to be a matter of keeping score; you know what’s coming in and what’s coming out. Finance transformation is the process of turning from that into a forward-looking business.

The key to this is focusing on operational and financial processes. These aren’t the only divisions that you’ll need involved, however, as your IT department will also play a large role.

In bringing each of these together, you can align your operational processes with your financial goals and processes. Once achieved, you can find that your company will start seeing many long-term benefits.

7 Finance Reporting Best Practices

As effective as the practice could be for your company, that’s only if you follow finance reporting best practices. If you’re still learning about what the process is, then you mightn’t be aware of what these are.

Thankfully, there are seven best practices that have emerged. These have been the case regardless of industry. As such, they’re worth implementing in your company. These are:

  1. Standardize your enterprise resource planning software. This will make transaction processing more efficient.
  2. Reduce, or preferably eliminate, your reliance on emails and spreadsheets for financial reporting and planning.
  3. Make your budgeting process as streamlined as possible.
  4. Use rolling forecasts to update and adjust your budgets when needed.
  5. Automate your financial reporting. This will also help to speed it up.
  6. Give your managers more power to report on their teams.
  7. Spend more time on analysis rather than data collection.

By implementing each of these practices, then you should see the many benefits associated with finance reporting. The largest of these include better business agility, reduced costs, and an overall improved company performance.

While this will take a certain amount of work upfront, you’ll start seeing the benefits over time.

Benefits Of Finance Transformation

You might think that that’s a lot of work. What would be the point of it? As it turns out, there can be multiple benefits of finance transformation, especially long-term. The largest of these are:

  • Processes can be done much faster, as you’ll identify areas of improvement.
  • Your financial data will be more accurate and reliable.
  • Financial information is much more detailed and can be accessed instantly.

With those benefits, it’s easy to see why more companies are taking advantage of the process. You can also improve multiple processes and projects because of the information you’re able to gather.

That should allow your company to be more efficient while also cutting down on any unnecessary costs.

Wrapping Up

Ensuring effective finance transformation isn’t going to be easy. There are multiple stakeholders who’ll need to be involved. You’ll also need to make sure that you have the right people running things, such as managers, alongside the right resources.

While you’ll typically have a detailed plan when you first start, you should also be flexible. One of the goals of finance transformation is to make your company more fiscally and operationally agile. The transformation process itself should reflect that.

It’s always worth speaking to an expert when you’re going on your finance transformation journey. Though your employees may be up for a job, they can often need a little help throughout the process. There’s no reason not to accept this help, so what’s preventing you?

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How Do I Complete A Company Tax Return?

As an entrepreneur, you’ll have a lot of things to take care of. While the majority of these are focused on making your company run effectively, not all of them are. Instead, you’ll have to make sure that you’re compliant with local, state, and federal regulations.

Naturally, taxes will be a large part of this. When it comes to completing a company tax return, however, you mightn’t know what you’re doing. While you could hire an accountant or another financial professional, that mightn’t be within your budget.

Regardless, Her Majesty’s Revenue and Customs will still need to be paid. So, what are you to do? If you have to take care of your business’ tax return yourself, then there are several things you’ll need to know.

What Is A Company Tax Return?

You’re more than likely wondering what a company tax return is. Related to your corporation tax, this is a document that you submit to the HMRC as you file your taxes. These will relate to your company’s most recent fiscal year and shouldn’t be confused with your corporation tax.

Instead, the company tax return will be submitted well before paying any corporation tax return services. You’ll typically submit this document, called the CT 600 at the year-end, or at the end of your fiscal year. You’ll then pay your due taxes within several months of filing.

How Do I Complete A Company Tax Return?

With how vital your company tax return is to running your business, you’ll naturally want to know how to file it. Thankfully, this may not be as difficult as you might have expected. While you’ll need to be careful filling out the forms, the rest is much simpler.

The steps to filing a company tax return are:

  • You must first register with the HMRC online, which will give you an ID and password to login with. The rest of the process will be done online.
  • Your company tax return should be filed online alongside fully completed calculations, accounts, and CT600.
  • Alongside filing your documents with the HMRC, you’ll need to submit them to Companies House. To do so, you’ll need to make sure that you’re registered and have an authentication number. You can file with Companies House either online or in the post.

You can do all of this itself. Many entrepreneurs, however, might not have the skills or time needed to complete this process. That could lead to mistakes being made, which could cause you some issues.

If you’re worried about this happening, then it could be recommended that you hire an accountant or other expert.

When Do I Need To Complete It By?

Since you’ll need to submit your company tax return every year, you’ll want to know when you should have it in by. This can vary depending on your company itself. Specifically, it depends on when your business’ fiscal year ends.

Your tax returns will have to be submitted no later than 12 months after this. That’s just your company tax return, however. When it comes to corporation tax, you’ll have to pay this no later than nine months and one day after the accounting period is finished.

If your fiscal year ends on December 31, 2021, for example, you’ll have to pay your corporation tax by October 1, 2022. Your company tax return, however, can be submitted by December 31, 2022.

What Happens If It’s Wrong?

With how complicated a company tax return can be, you might be worried about getting it wrong. Could there be some significant legal implications for you? Thankfully, you should be able to fix any mistakes within a year of your tax return being filed.

It’s worth noting, however, that you could be fined for any mistakes. As such, it’s worth checking and fixing them as soon as you think you made a mistake. You should also know that the figures you submit may be checked at any time.

As a result, submitting any false information will be discovered, and you may be due fines or penalties.

Wrapping Up

Completing and sending in your company tax return can be difficult, especially if you’re not good with numbers. That can often lead to mistakes. While that doesn’t have to be too large of an issue, it could lead to more stress than it’s worth. That’s why it’s worth hiring a professional to take care of it.

Not only will the tax return be taken care of, but you can spend the time you save on other aspects of your company. That could be a double win for you, as not only is everything done, but you can focus on improving other business areas.

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Why is Cash Flow Management Important to a Business?

A modern proverb states that money makes the world go around, and while this is open for philosophical debate, money absolutely makes a business go around. Business to business or bank to bank transfers are known as cash flow, and while the concepts of cash flow and all that it entails can become somewhat complicated, in a nutshell, it relates to payment coming in against money going out.

The whole point of any business is to be paid for a product or service that has been provided as agreed upon by contract and law. When a service has been provided then payment for that service is transferred from someone else’s bank account to yours. This type of transaction allows you to continue to provide services to others by paying for materials, staff, and leases.

What is Cash Flow?

The principles of cash flow are a little more than simple bank to bank transfers, however, and can be expressed in formulaic terms as time (t), nominal amount (N), currency (CCY), and account (A):

CF = CF(t, N, CCY, A)[1]

However, cash flow is also used to represent such things as project income and expenditure, return on investment (RoI), and net present value.

In simple terms, cash flow is used to determine if a company has sufficient monetary income in order to continue its daily and regular operations by covering expenses such as payroll, utilities and land rental or other costs involved with a particular sector. Of course, the concept of cash flow gets more complicated than this when other fiduciary responsibilities are taken into accounts such as taxes, equity, dividends and debt.

How Cash Flow Affects Business

Without sufficient cash flow, you cannot hope to achieve continued business, even with the best creditor arrangements who need to be paid back at some point and continued credit is measured against cash flow analysis anyway, therefore without positive cash flow your business will be unable to grow.

Positive Cash Flow

Sustaining a positive cash flow should be the primary focus of your business from a financial perspective as it allows your business to continue to operate and avoid unsavory actions. While in positive cash flow, your business can pay all of its bills, guarantee employee wages, return dividends to investors and accrue a liquid bank balance for insuring against future issues where extra monies might need to be depended upon.

Negative Cash Flow

With the absence of positive cash flow, i.e. income lower than total expenditure, your business will become stagnant and begin to suffer. New equipment cannot be purchased, license fees could expire, rental arrangements could be defaulted on and staff may have to be let go. But even in times of hardship there are tried and tested cash flow techniques that can achieve positive cash flow such as increasing prices, coming to arrangements with suppliers, and canceling inefficient projects.

The Reasons for Negative Cash Flow

Negative cash flow is generally unexpected and can become a gradual problem that occurs over time or instantly as a result of external processes and events. Some of the most common reasons for negative cash flow are the result of client problems rather than a poorly managed business and can include revenue loss related to such things as late client payments, lower than expected profits, overexpansion or overstocking of product and creditor issues.

An uncommon yet concerning issue that can severely affect cash flow is that of too much stock; not product stock but stock in other companies. Using liquid assets to invest in stock or other capital assets is a risky venture more akin to gambling than doing business, yet many companies do this on a regular basis. While the rewards can be substantial, there remains the potential for huge losses of real money if and/or when any invested stock loses value or even crashes, essentially meaning money down the drain.

How to Stimulate Positive Cash Flow

Maintaining a positive cash flow isn’t easy as even the best-managed business can suffer depending on external factors such as the state of the market, advancements in the sector and global pandemics that require everyone to stay indoors and isolated. Having said that, managing cash flow is like managing anything else: it has to be done properly and there are methods of managing cash flow in order to maximise potential and decrease the chance of a negative impact or cushion the effects of temporary inversion.

As a business owner, you should know exactly what your business has coming in and going out. To achieve this you should consider a full audit of all financial items concerning your company, from the cost of pens to the salary of your most senior manager and everything in between. Once you have identified all expenditure then this can be compared to income, making cuts where necessary. Internal audits are recommended to be assessed annually

Final Thoughts

All businesses require adequate cash flow management in order to survive since a negative cash flow means that expenses are in the position of outweighing income. This results in less money being available for use in expanding your business, ordering new supplies, paying any creditors or even covering staff wages. Essentially, cash flow needs to be positive for sustained operations or your business will eventually have to cease trading.

While there are many reasons for a mismanaged cash flow such as unforeseen circumstances, shifting markets and late or non-existent client payments, other factors like investing liquid assets into volatile capital assets can result in massive losses for a company, but all is not lost and recovery can begin if you are willing.

While you can make cuts here and there and lay off some staff in order to resolve debt and shift from negative to positive cash flow, one of the best methods of recovery or prevention is that of internal audits. An internal audit should be performed at least once per year as they allow you to identify items of expenditure that can be removed such as too much ordering of office supplies or an overpaid employee who underperforms.

As to why cash flow is important to a business, the answer is simple: a business cannot survive without readily available cash to cover expenses. Creditors will only go so far as to lend you money and the more money you owe, the less will become available to you.

References

  1. Wikipedia. Cash Flow. https://en.wikipedia.org/wiki/Cash_flow
  2. RG&Co. What is Cash Flow and How Does it Affect Your Business. https://www.rgcocpa.com/news/what-is-cash-flow-and-how-does-it-affect-your-business/#:~:text=Cash%20flow%20also%20affects%20your,freedom%20you%20have%20to%20reinvest.
  3. Investopedia. Trading or Gambling. https://www.investopedia.com/articles/basics/10/investing-or-gambling.asp
  4. Synergos Consultancy LTD. How Often Should I Do Internal Audits? https://synergosconsultancy.co.uk/how-often-should-i-do-internal-audits/#:~:text=At%20the%20least%2C%20internal%20audits,over%20a%20number%20of%20months.
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What is Credit Control and Why is it Important?

Having a bad credit score can be exceptionally frustrating. You may feel irritated that a mistake you made in the past is having a negative impact on your future. In fact, there are many reasons why people end up with a negative credit rating. Of course, there are those who have gotten themselves into debt and failed to make payments on previous credit they were given. Nevertheless, there are also those that have harmed their credit score without even realizing it through a lack of education, as well as individuals who don’t have a credit history because they have never had a credit card or borrowed money. No matter what applies to you, there are some steps you can take to repair the damage.

Understand credit and your credit score

As mentioned, one of the main reasons why people have a bad credit score is a lack of education. Read this post on ‘all you need to know about credit’ before you dive right into the other tips below. It is imperative that you know what credit is, what a credit score is, how credit scores are determined, whether they change, and how your score is used. By educating yourself, you will be best placed for managing your credit score effectively.

Pay off your debt

If you have any outstanding debts, now would be a good time to pay them off. Lenders are often hesitant about giving money to individuals that already have a lot of existing debt. Put a plan in place for paying off your debts. Most people start with the biggest and work their way down. Others prefer to pay off a bit of each debt every month.

Borrow money

This may sound odd! Surely borrowing money was what got you into this mess? Plus, how are you supposed to borrow money if you have a bad Credit Control? Well, nowadays there are credit cards, loans, and other financial lending products for those with bad credit. By taking out one of these products and paying your repayments on time, you can show that you are less of a risk to lenders, and this will benefit your credit rating. It is a good idea to start off with a small commitment. By doing this, you don’t put too much pressure or temptation on your shoulders, as monthly payments will be small and you won’t be tempted to splurge on other items, which could be the case with a credit card.

Check to see if you are linked to another person

It is wise to find out whether you are financially linked to another person, for example, your partner, a friend, or a family member. If you are, and they have a bad credit rating, this could have a negative impact on your credit score. If you have any joint accounts with people, it is a good idea to close them, so you have sole responsibility for your own credit rating.

Some of the mistakes you must avoid

Some of the mistakes you must avoid

A bad credit score is a problem that a lot of people face. From naïve mistakes made when younger to financial troubles caused through redundancy, there are many different reasons why people fall into the trap of a poor credit rating. However, the good news is that this score does not need to stick with you forever. There are ways to rectify it. Nonetheless, the last thing you want to do is cause even more damage, so let’s take a look at the credit repair mistakes you need to avoid.

  • Filing for bankruptcy – A lot of people file for bankruptcy because they see it as a quick fix. This is not something you should use as a credit repair tactic. While it can be beneficial in some cases, it can also make your credit score a lot worse. Plus, bankruptcy will remain on your credit check for around ten years, which will make it extremely difficult for you to get a loan or a credit card over the next decade. Even worse bankruptcy comes off your credit report; it can still haunt you, as a lot of lenders will ask whether you have ever filed for bankruptcy.
  • Not repairing your credit at all – One of the biggest errors you can make is simply forgetting about your credit score and putting it to the back of your mind. It will come back to haunt you when you want to buy a house or start your own business.
  • Not borrowing money – Many people feel the only way to fix their credit rating is by stopping borrowing money altogether. While this will stop your credit rating from getting worse, it won’t necessarily make it get any better. Borrowing money the right way can boost your rating, however. By taking out a loan and paying it back on time, you show that you are a credible person to lend to, and this can improve your score. Taking out a bad credit rating mobile phone contract is a good place to start. This is likely an item that you need, and the monthly repayments won’t be too substantial, so it’s a great way of showing you can make repayments.
  • Cutting up your credit cards – There seems to be this common misconception that cutting up your credit cards is a great way to improve your credit score. In fact, cutting up your credit cards won’t make a difference. You will need to call up the credit card company and cancel your account if you want to clean up your credit rating. Don’t be so hasty to cut them all up, as using a credit card correctly is a good way to repair the damage on your rating.
  • Playing the balance transfer game – Last but not least, you are only postponing the inevitable if you transfer credit card balances to avoid making a payment. This tactic is only going to get you so far, as interest fees will be added every month. This means that the amount of money you owe is going to get bigger and bigger each month, which will make your credit issue so much more difficult to rectify.
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Do You Need an Accountant to Do Self-Assessment?

They say that there are only two certainties in life: death and taxes. While we can’t help you with staving off the cold and bony hand of the Grim Reaper, we can provide tax information. As you know, all British citizens are required to pay taxes on any income over a particular threshold, income that exceeds £12,571 in fact, and this includes self-employment or extra income.

If you work or have ever worked then you are probably aware that your employer automatically deducts your taxes from your wages and then passes them on to HMRC on your behalf and you don’t need to worry about it. In short, unless you are self-employed, your tax deductions are automatically paid.

What is Self-Assessment?

If you are self-employed as a sole trader or have any other means of income then you need to complete a self-assessment each year so HMRC knows how much tax you are required to pay based on the previous year’s income vs. expenditure. This includes income from any source minus any tax-deductible expenses that can be relieved from your final tax bill, although all expenses need to be declared.

Tax-deductible expenses include many things but usually cover any expense that is incurred solely as part of your business such as fuel, utilities (gas, electricity, etc.), internet costs, clothing required for work and software licenses. Should you work from home then you will need to prove that these expenses are related to your business only and not used privately in your daily life.

All your income and expenses should be declared on your self-assessment each year and income can include:

  • Income from property rental
  • Tip donations and commissions earned
  • Bonuses from investments and dividends

Your final tax bill is calculated as total income minus applicable deductions and if the sum is greater than the personal allowance of £12,570 for the previous year then you will need to pay any taxes owed. However, the sum is dependent upon your income and is likely to be nominal if it is close to the personal allowance figure. However, if you earn over £6,515 annually, you will be required to pay National Insurance contributions.

What an Accountant Can Do for You

Self-assessment can be tedious and if you are required to complete the necessary information then you must keep good records of all your income and expenditure where your business and anything else is concerned. While it’s easy to keep a record of money coming in and money going out, it is not so easy to identify the things that you can deduct from your tax bill, which is where an accountant from companies like Zuizz can come in handy.

As well as being very happy to complete your self-assessment, an accountant is able to identify anything that can be deducted from your tax bill. This can result in much lower taxes being paid on your behalf and should the deduction take your tax bill to an amount equal to or lower than the personal allowance figure then you might pay no tax at all.

What You Can Do for Yourself

Of course, you can do your own taxes if you so wish. While it might be tedious and require off-hand information, if you have kept good records then you will have little to no trouble completing a self-assessment, however, unless you have an excellent understanding of what you can deduct then you might end up paying more tax than you should.

Luckily, there are apps such as QuickBooks that can help with managing your finances, and while apps like this can’t replace the services of a professional accountant, they can assist with calculations and deductions. QuickBooks, for example, allows you to input all invoices or income sources as well as any deductions such as wages, tax deductibles and payroll. In addition, any taxes owed are automatically calculated and QuickBooks can be linked to bank accounts and HMRC directly.

Penalties for Incorrect Tax Information

No matter what method you choose to use, you should always try to have your taxes calculated and paid on time since the penalties for not what might be considered tax evasion are serious. Late or unpaid tax penalties under current UK law range from a £100 fine to up to 7 years in prison and an unlimited fine in the worst instance. Providing false tax documentation to either HMRC or the magistrate’s court is punishable by up to 6 months in prison and/or a £20,000 fine.

Given that you are self-employed and are therefore probably very busy, in order to be safe it is probably in your best interest to enlist the services of a qualified accountant from Zuizz who can not only complete the documentation properly but have it sent to the correct office in a timely manner. Then you can rest assured with the peace of mind knowing that you won’t be liable to a severe penalty, provided you have given your accountant the correct information, of course.

The Answer to the Question

A self-assessment accountant isn’t necessarily required for filing tax information and you have the option to complete a self-assessment yourself. However, the details of a self-assessment are rather specific and any and all income and expenditure needs to be declared. Unless you have kept meticulous records of your own accounts this can be tedious which could be a reason why approximately 5 million people per year either file their taxes late or don’t complete the forms at all.

This might be because filing a self-assessment can be a tedious process, especially if you haven’t kept a good record of income and expenditure, but this process is now made easier by modern-day apps such as QuickBooks that can calculate any taxes owed based on the income and expenditure information that you have provided. However, apps like these cannot do as good a job as a qualified accountant.

Incorrect, late or illegitimate tax information can land you with severe punishment including high amounts of monetary fines and prison sentences, which will of course be classed as a conviction on a criminal record that could hamper your ability to get a job in the future or secure loans and/or a mortgage.

So, do you need an accountant to do self-assessment? No, you do not, but you could be doing yourself a disservice by not fully utilising the skills of one, which means you might end up paying more tax than you should.

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