Payroll outsourcing: What every accountant should know

It is becoming more common than ever for companies to have a global workforce, especially now that many people work remotely. It is the responsibility of businesses to make sure everyone on their team is paid on time and in a manner fully compliant with local regulations.

As an accountant, you will agree companies of all sizes, types, niches, and locations can benefit from a complete payroll outsourcing service. That is why they have hired you! However, the payroll function is far from simple.

From tax calculation and wage policy implementation to HMRC liaison, there is a lot to do even for accountants. Moreover, your client businesses may not necessarily have their own branch offices in every country.

That means you will have to figure out how to process payments in different locations and currencies seamlessly. Sounds tedious, right? That is where payroll outsourcing for accountants enters the picture.

But what does it mean?

Simply put, payroll outsourcing refers to using a third-party service provider to manage the task of processing payslips, paying employees, including admin work and compliance. It allows workers in domestic and foreign locations to be paid on time and consistently.

It is important to note that a payroll service provider in a different country will not provide local employment records on behalf of the company. The company still has to handle local incorporation in its foreign locations as well as all the non-payroll aspects of hiring foreign-based employees.

Given the complexity of the function, you might end up stalling your accounting firm’s growth if your staff spends more time and energy managing your clients’ payroll than offering advisory services such as forecasting or tax planning. It makes sense to outsource payroll processing to industry specialists such as Stellaripe.

What payroll functions can be outsourced?

Depending on the requirements, an accounting firm can choose which of its clients’ payroll and related functions to outsource to a third party. Typically, a payroll outsourcing firm might handle the following tasks for accountants:

  • Administering employee benefits
  • Filing the necessary government forms
  • Calculating and withholding relevant taxes
  • Withholding pension and social security contributions
  • Managing payroll and calculating employee pay amounts
  • Depositing salaries into employee bank accounts or issuing checks

How does an accountant know when to outsource payroll?

In many cases, the time and cost of setting up an in-house team for handling the clients’ payroll function are not feasible, especially for a small accountancy practice.

There are other factors to consider, too, such as the number of employees on every client’s payroll, whether the company has its local entity in the foreign country, how complex the foreign country’s laws are, and so on.

Large companies can also benefit from payroll outsourcing, especially in cases where their employees are being sent abroad on international assignments. That demands a higher level of expertise, and if you are handling such accounts, you can outsource parts of the job.

Advantages of payroll outsourcing for accountants

There are numerous benefits to outsourcing payroll for accounting firms. It is a simple, cost-effective way to manage a necessary but often cumbersome administrative task, for starters. The advantages of working with a payroll service provider include:

  • The time and energy of the staff reserved for more strategic tasks
  • Reduced administrative burden on your team related to personnel changes, alterations to compensation structure, or government report filing
  • No need to worry about late payments, filing mistakes, or tax compliance penalties
  • Satisfied clients around the world as a result of timely, accurate payments to employees

How to choose a good payroll service provider

Payroll is a critical part of any business, and you do not want to disappoint your clients by handing over their accounts to an outsourced partner that does not do a good job. Here are a few points to consider when choosing a payroll provider:

  • Make sure your provider offers the right level of service. Understand what you are paying for and how you will need to support them to do their job. Stellaripe, for instance, takes care of end-to-end payroll processing, auto-enrolment, CIS, client liaison, HMRC correspondence, and reporting – all under the same roof.
  • Your provider must have proficiency in commonly used payroll software such as FreeAgent, Xero, QuickBooks, and so on. Stellaripe is tech-savvy, and with a little bit of training, we can work with most unique payroll tools.
  • If you want to migrate to a new payroll software, your service provider must have the capability to do so.
  • Ask what processes the service provider has for checking and updating employee information. Do they have a proper reporting system?
  • Data security is a big deal, and ever since GDPR entered the picture, its significance has doubled. Ensure your service provider has all the safeguards to ensure your client data is secure.
  • Find out how adept the outsourced partner is in handling pension portals. Can they help gain real-time financial visibility with tools like Smart Pension and True Potential?

Questions to ask when outsourcing your payroll to a third-party vendor

Payroll outsourcing can provide manifold benefits that outweigh the cons. For it to work, however, your accounting firm needs to do its homework and select the most experienced and reliable payroll outsourcing service provider available. Some of the questions to ask up front when choosing among various options are:

  • Do you help with generating and filing tax forms?
  • Do you calculate tax, pension, and social security withholdings?
  • What are the essential services you offer? What add-ons are available?
  • What measures do you take to secure employee and compensation data?
  • How many payroll clients do you have, and how long have you served them?
  • What are your rates per employee for running payroll? Do you offer discounts for higher volumes?

Over to you

In conclusion, outsourcing payroll tasks offers significant advantages to any accounting firm regarding time saved, laws complied with, and processes accurately handled.

Assess your needs, work out a reasonable budget and explore the various engagement models within which you can outsource. Choose a service provider most aligned with your needs. You will take a breath of relief with the proper support!

If you are looking to change how you do payroll for your clients, the time is now. Ring us at 020 3475 3537 or drop your details here to book a free consultation around how we can keep all your payroll woes at bay.

5 tips to help your practice prepare for the new financial year

Who says it isn’t fun being an accounting firm owner? You are on your toes 24/7, helping clients efficiently sort out their accounts, taxes, and payroll. Besides managing clients and practice staff, you have to keep up with the changes from a tax and legislative perspective.

One cannot say the past few years have not been busier; the transition to Making Tax Digital, the added burden of Coronavirus financial support measures, and of course, Brexit red tape has led accountants to nudge their clients to make considerable business adjustments.

It has been a stressful time and you have no doubt had your share of highs and lows, ups and downs; we hope the experiences have only made you a stronger accountant!

Now that the financial year 2021-22 is almost over, you should consider a myriad of things if you want 2022 to take you places.

Simply waiting for April to arrive and depart while going with the flow is unlikely to get you where you need to be, but a strategic approach definitely will! Hence, it is time to pull up your socks and start preparing for what is to come. Here is what you should do:

1. Analyse your performance in the previous financial year

Just like doing a SWOT analysis, accounting firms must resort to reviewing their entire financial year. That is because when you reflect on the year gone by, you can see what has worked well for you and what has posed challenges for your practice.

Therefore, assess your financial statements, internal processes, staff performances, staff training and other parameters like how much time did you take to turn around a specific project, and so on.

As a result, you will have a clear picture of what your accounting firm needs to improve upon and which business practices need urgent reconsideration. Put a plan of action for those opportunities and get ready to capitalise on the same.

2. Leverage your target customer’s outlook

As theoretical as this may sound, leveraging a third person’s perspective for business evaluation is not a bad idea, and what is better than your target audience! Get their viewpoint on what their accounting challenges are. Is there any specific legislation they are particularly dreading?

What do they expect from their accountant? This exercise helps you identify which financial decisions, lead generation strategies, and project management cycles should or should not have been a part of your business model in the year gone by.

Moreover, applying your newly planned business initiatives is essential to delivering fantastic customer service. It is easier to determine what is lacking in your accounting services, support services, and other vital factors from their outlook.

3. Review your existing clientele

Now that your target customer has spoken, it is also essential to review your existing clientele. Of course, client retention strategies are here to stay, and one must prioritise them to enhance your client acquisition strategies further.

Prepare diligently for 2022 by listening to the people and businesses you work with as it can bring a totally different perspective, including:

  • Should you explore new client segments?
  • Should you start focussing on upselling strategies?
  • Do you have the strategic cushion to drive greater sales?
  • Is your clientele too limited to award significant returns in 2022?

If the answer to these questions is a ‘yes,’ you have successfully unlocked a new business objective for 2022! All in all, reviewing your client-oriented practices will open doors of innovation and growth for you.

4. Elevate your decision-making process with data analytics

With technology facilitating a plethora of accounting work, the entire industry has started to give attention to data analytics.

Moreover, accountants are happily embracing new roles such as financial advisors and financial analysts — roles that go beyond the usual accounting parameters and dive deep into high-end areas like investments, estate planning, tax advisory, and so on. So, how does this work?

Accountants use data analytics to help their clients uncover valuable insights within their financials, in addition to identifying process improvements that can increase efficiency and reduce overall risk.

The data is used to understand trends that can help enhance business operations, processes, and risk management functions. So, if data analytics is not what your accounting firm focuses on going forward, now is the time to get started!

5. Benefit from the power of outsourcing

Accounting firms across the UK and globally have started to outsource their functions. The benefit of accounting outsourcing is that you can get access to a trained professional who has a deep understanding of routine and specialised tasks and more.

Through modern accounting outsourcing, you relieve your in-house practice staff of functions that they would earlier perform themselves. That frees up their time and lets them focus on other critical activities that they are better qualified to do and will likely enjoy more than those routine and repetitive tasks. 

Your accounting firm can thus be assured that your clients’ work will be completed accurately (as long as you supply all the correct information to the outsourced accountant).

Outsourced accountants are highly professional about deadlines and ensure that they return completed work to you on time — without you having to chase them.

Outsourcing helps your accounting firm better manage the workload and cut down on its costs that come in the guise of employee wages and training expenses.

Over to you

Simply jotting down your strategies, goals, and objectives will not help you move an inch; you must have a proper framework for growth in place, starting with outsourcing. Let Stellaripe take many menial and time-consuming accounting tasks from your hands so that you can focus on scaling heights in the new financial year.

At Stellaripe, we leave no stone unturned in delivering flawless accounting services, from conventional to tech-focused ones. Get in touch with us today!

 

MTD for VAT: How to guide your clients today

Starting from April 1, 2022, MTD for VAT will start applying to voluntary VAT registrations by organisations earning taxable income up to £85,000. HMRC has stated one of the objectives behind this amendment is to address the tax gap caused by errors and careless mistakes.

Even though that means stringent digital record-keeping for businesses, it does have positive implications for keeping returns accurate and boosting productivity. It also means that accountants need to take extra care when handling their clients’ books.

Once you are done filing Self Assessment tax returns for your clients by Feb-end, help them prepare for MTD for VAT. This article discusses practical tips to help out with all the nitty-gritties related to the new VAT requirements:

1. Make sure your client is signed up

Existing businesses falling into the criteria will need to visit the UK government page ‘Sign up for Making Tax Digital for VAT’ to sign up for the new requirements. As the accountant and the agent of the company’s finances, you have the option of registering on their behalf too. Any new businesses setting up operations after April 1 will automatically be signed up if eligible.

2. Check if they can be exempted

The HMRC has laid out certain conditions under which businesses can be exempted from MTD for VAT, such as remoteness of the location where broadband access is not available, people who are digitally excluded for other reasons, or disability. These are extremely exceptional reasons.

Remember to check with the HMRC in advance whether your client is eligible. However, please note that factors like the time and cost of compliance are unlikely to be viewed as good reasons for an exemption.

3. Check which period MTD applies from

The new rules will come into effect on or after April 1, 2022. For a voluntarily registered business with periods ends of February, May, August, and November, the start date will be June 1, 2022.

For instance, if a business is registered for quarterly VAT and that period runs from June 1 to August 31, the August end data, due to be submitted by Oct 7, 2022, should be maintained and submitted digitally to HMRC.

Therefore, do the calculations accordingly for your clients and make sure everything is ready in time for them.

4. Consider VAT deregistration, if necessary

If your clients are reasonably confident that their taxable income will be less than £83,000 over the next twelve months, you can discuss deregistering them from VAT.

However, it does not necessarily exempt them from MTD as the requirement to maintain digital business records for income tax will be introduced from April 2024.

MTD for income tax applies to all businesses with gross income of more than £10,000 per annum. Lay down the pros and cons and help your client make an informed decision.

5. Keep retailer records accurate, including cash transactions

Make sure that all your retailer clients digitally record their daily gross intake of money, even if they transact in cash. They need not upload each individual transaction, just the overall totals for the day.

If the client is worried about non-compliance this way, reassure them that the HMRC will only have access to the figures recorded in the nine checkboxes of each period’s electronic VAT return and would not be looking into individual transactions.

6. Check that tax points are mentioned for non-retailer clients

According to VAT notice 700/22, all sales records for your non-retailer clients need to include the tax point for sale, VAT rate charged, and the net figure excluding the VAT amount.

All purchase invoices must mention the tax point, net expense value, and claimed input tax figure. For non-retailer clients, too, the HMRC can only access the figures mentioned in the nine checkboxes, so reassure them on that point.

7. Have bridge software for your spreadsheets

Spreadsheet accounting will be allowed under the new regulations, but make sure you have appropriate bridging software. The relevant VAT totals can be automatically linked to the figures on the electronic VAT return. There would not be any copy-pasting allowed, so give this high priority so that your clients’ spreadsheets are in order.

8. Have API-enabled software

The accounting system that your client makes use of needs to be able to digitally send and receive information to and from the HMRC through its API. If your client uses spreadsheets to manage their accounts, ensure that their bridging software is API-enabled.

9. Be ready well in time

The HMRC has clearly specified that there will be no grace period of any kind to allow clients to copy-paste figures between spreadsheets and VAT totals. So, make sure your client’s digital audit trail is complete and in place from the get-go when the laws come into force.

Over to you

With less than three months left for MTD for VAT to come into effect, we advise all accountants to have a discussion with their clients to understand how much they know about MTD in the first place. Before implementation comes education in MTD.

Getting your clients’ records sorted digitally is an added workload for you for which you may not have time as the tax deadline for filing Self Assessment has been pushed to February 28. Fret not; Stellaripe’s MTD experts can help.

We will do it all for you and more, from doing end-to-end digital record-keeping to compiling and submitting monthly/quarterly VAT returns to providing periodic business summaries and reporting.

Categories MTD

What accountants should do to market themselves in 2022

It is safe to say that it is an exciting time to be in accounting. Now that the worst of the COVID-19 pandemic is behind us (*fingers crossed*), it is time to make more long-term plans about your business and where you want it to go.

Moreover, with several new changes coming in, such as MTD for ITSA and the growing popularity of cryptocurrency, you will have many more potential clients who need guidance with their finances and whatnot.

To be their go-to accountant, you will need to win them over with how good you are, and a big part of this involves marketing yourself and your practice.

If you are new to marketing, no worries — it is not that hard. Just like how you advise your clients to keep planning for more efficiency and control, you will need to take out the time to craft a marketing plan that takes you to the top of search results.

With the new year around the corner, now is the time to take a hard look at your marketing strategy. Here is an actionable, step-by-step guide to getting you started:

1. Set your marketing vision and goals

You have almost certainly heard this before, but every significant business change needs a vision. Where do you see your marketing plan taking you in a year? Five years? Fifteen years? Set down the dream vision in clear terms that everyone on the team understands and is on board with.

Then, list out goals that take you closer to that vision. When we say goals, we do not mean vague statements like ‘increase client base’.

We are talking about specific, actionable and time-bound goals. This gives you points of reference that you can come back to at intervals to check whether things are moving according to plan.

2. Know who your clients are

You may think you know your clients. After all, you have the list of their names right there with you. However, we are talking about detailed insights that let you see who your clients are — in terms of their characteristics, wants and expectations — versus who you think they are.

So, go out there and conduct some quick interviews and supplement it with general market research on your industry.

3. Chalk up your buyer personas

These include both the ‘ideal client’ whom you would love to work with, as well as the ‘not-so-ideal client’. Typically, as an accounting business, you are likely to be excited by clients who want a variety of services from you, are happy to pay for those services and are personally pleasant to work with.

On the other hand, you may currently have several clients with whom the work is less intellectually stimulating and who are bad-tempered or otherwise unpleasant. With this clarity, you can start thinking about how best to cater to the ideal client and market your services accordingly.

4. Choose a business niche

Even within your ‘ideal client’ vision, you would not necessarily be able to fulfil all their needs. You could theoretically opt for a generalist business.

But then you will be competing with thousands of other companies like yours, many of which may have more resources and more extensive networks.

Therefore, it makes more sense to choose a niche and market yourself to clients in that niche. Choose something based on your expertise as well as what you are interested in, and tailor your content and keywords to appeal to that niche.

5. Set clear objectives

Objectives are more granular than your business goals. These involve periodic deliverables (weekly, monthly, quarterly, etc.) to get your marketing plan going. An easy way to start is by just brainstorming all the possible deliverables you could have.

Then, in collaboration with the team, assign priorities to each member to whittle the list down. Finally, fix deadlines for all the most critical deliverables and assign ownership for them to someone. There — you have your objectives.

6. Have a marketing plan

Your goals and objectives are for you and your team. However, your marketing plan is a crisp yet detailed statement that shows your investors, stakeholders, and colleagues what you are up to.

It should highlight your vision st
atement, marketing objectives, notes on campaigns, SWOT and PESTLE analysis and so on, along with dates and timelines for everything.

If the plan seems too extensive, consider having sub-plans to deal with each part. Moreover, when setting timelines, be sure to factor in enough time for reviews and any delays.

7. Draw up a content plan

A significant part of marketing is putting out the right content at the right time. Based on your deliverables, you need to have a calendar for a regular content flow on the channels you are active on. Try and keep it as uniform as possible, such as a set of two Instagram posts, two LinkedIn posts and one blog post for a week, with more to mark special occasions.

8. Build your brand

When most people think of brand-building, they picture a fancy logo. And while there is nothing wrong with a nice logo, real brand-building goes far beyond that. When clients think of your brand, they should instantly be able to recall the values and principles you promoteas a firm.

It could be clarity of thought and precision of insights. It could be the warmth and mutual trust of your relationships. It could be the lighthearted cheer you bring to meetings, even in the face of difficulties. Whatever marketing material you put out needs to embody these values.

In conclusion: Always measure your performance

As with any business venture, your marketing requires periodic analysis to ensure that you are on target. Decide in advance what metrics you want to focus on: customer lifetime value, cost per acquisition, marketing/sales qualified leads, website conversions, or a combination.

Then, invest in an analytics tool that draws up detailed reports for you. This gives you the visibility you need to do course correction wherever things are not working as per plan.

With January 31 around the corner, it can be challenging to balance priorities. If you want to increase your capacity to think about scaling your practice but are drowning in client paperwork for Self Assessments, shave off your workload by outsourcing to us. Book a free consultation.

 

Let us tackle MTD for ITSA together: Top accounting tips

After several delays over the last few years, HMRC’s MTD for ITSA project is finally set to have a go-live date in April 2024.

One of the most significant changes to tax law, it affects all businesses and landlords with an annual turnover greater than £10,000. It will require them to make the necessary preparations well before its launch.

Essentially, MTD for ITSA means that all affected business owners and landlords need to share quarterly summaries of their income and expenditure to HMRC by means of MTD-compliant accounting software.

In addition, they will need to submit an End Of Period Statement or EOPS after every fourth quarter with a complete account of all their income sources and a declaration of all other sources of taxable income, such as investment returns.

With this new change coming, accountants and bookkeepers will be in high demand to navigate it and ensure that businesses are compliant from the get-go. Here, we share our top tips to prepare your accounting practice for MTD for ITSA and manage the workload efficiently:

1. Get your mindset ready for digital record keeping

Unlike what many might believe, your practice does not have to have a digital copy of literally every receipt and invoice you work with. You simply need to maintain a digital summary of all business transactions.

Many opt to do this on a spreadsheet tool such as Excel and use a bridging tool thereby, and you can take help from an accounts outsourcing company to do the same. While this is an improvement over paper records, maintaining a spreadsheet requires great human effort and leaves room for errors when manually recording transactions.

By contrast, efficient accounting software will allow you to periodically import bank statements and directly upload all expenses and incomes in one go in the appropriate format.

This will take much of the stress out of quarterly reporting and ensure that everything is accurate. There are several accounting software options in the market — if your practice does not already use one, evaluate your options and pick the one most suitable for your needs and budget.

2. Prepare your clients for the same

By April 2024, you will need to move all of your clients to the use of accounting software in order to be compliant with MTD for ITSA.

Therefore, now is the time to segment your client list as per those who already maintain complete digital records, those who maintain partial or incomplete records, and those who still do things the old-fashioned way on paper.

This will help you identify in advance which of your clients need extra help and training with digital migration so that you can budget your hours optimally.

3. Prepare to benefit from the opportunities offered by MTD

It is natural to view MTD for ITSA as something of an annoyance. It does, after all, mean a lot of extra work for you and your clients over the next couple of years. However, try to think of it as a chance to modernise your practice and offer extra value to your clients.

For instance, quarterly reporting makes filing tax returns much easier, as you already have a lot of the information and can avoid the last-minute January rush to fetch records from your clients.

As an accounting practice, you know the trouble of following up with clients about their records all too well. This way, you need not wait on them to get back to you.

Plus, with up-to-date business records on hand, you can make timely recommendations to your clients about new ways to save on taxes or be eligible for grants or relief.

And there is no denying that every business, large or small, likes to reduce its tax bill. Your clients would like that as well.

4. Encourage your clients for early registration

There will likely be many accountants signing their clients up for MTD for ITSA in April 2024. This could lead to system delays and failures and be unnecessarily stressful for your practice regarding administrative burden.

There is also the headache of rounding up your clients at the last minute and following up with those who will inevitably delay. Instead, consider registering your clients early so that everyone has enough time for their registration to be confirmed.

You can even incentivise early sign-up by offering a competitive package deal for the service for the first few clients to do so.

Over to you

Education plays a crucial role in MTD’s implementation, and without consulting for your good, you would not be able to help your clients properly. Therefore, it is wise for you and your practice staff to speak to an MTD expert and get all the doubts out of the way.

Our team can also create a blueprint for you regarding approaching your clients for MTD registration and what steps you need to take first.

Besides, we can do it all for you and more, from doing end-to-end digital record-keeping to compiling and filing monthly/quarterly VAT returns to delivering periodic business summary and reporting. Click the  CTA below to get in touch with us!

Categories MTD

Modern outsourcing: Your answer to talent crunch and building the firm of the future

As accounting takes on more of a specialised role focusing on strategic decisions and overall capital optimisation, the case for outsourcing part of the client accounts to a third party rather than managing them in-house has become stronger in the past decade.

Here are five myths in outsourcing that previously pushed away many accountants from the option:

1. Knowledge about UK accounting

Since the function was outsourced to countries like India, Thailand and the Philippines, there was a concern about their proficiency in UK accounting. Outsourcing does not mean having to take the trouble of walking the third party accountant through how the function works.

There was a time when many accountancy practices still hesitated (some still do) to outsource their workload. Naturally, several myths circulated about its alleged risks.

The thing is, outsourcing has evolved a great deal and is by far the most efficient option for accountancy practices alike that wish to focus on their core business rather than spend hours doing their clients’ books or payroll.

Experts in their field have extensive experience in how accounting works across different countries and industries and can take over with very little hand-holding. Much of the time, the handover takes only a few days.

2. Control over the quality of output

Many accountants have shown their reluctance to outsource as they fear that they will no longer have control over the output of their client’s accounts. That is simply not true.

Outsourced accountants receive continuous training on the latest tax laws and topical industry-related issues and best practices to deliver the best possible service to accountancy practices. They understand the implications of accessing sensitive information remotely.

However, despite the geographical gap, they regularly share financial statements and provide real-time glimpses whenever the accountant wishes it.

Besides, modern outsourcing firms all have cloud presences. Stellaripe has a team of cloud accountants, for instance. That means, if you and your staff are not adept at using the cloud, Stellaripe can step in and pick up any accounting task for you — anytime, anywhere, from any cloud-enabled software.

That also means that with a little bit of training, you can also access the data on the software as and when you like. Moreover, the ownership of all data remains with you, and you can request alterations or new operational modes whenever necessary.

3. Data security

One of the biggest deterrents to outsourcing is fear about data security when accounting and financial data goes to a third party.

The truth is that outsourcing firms invest considerable amounts of money in top-notch accounting technology with the most secure encryptions.

They can even work remotely, so the data never leaves your servers. You, therefore, can rest assured that their client data is as safe as it can be. Stellaripe, for instance, logs in to your system using remote desktop software.

We access your clients’ files on your system without having to transfer them to our servers. Once the job is complete, we notify you so that you can review it. Simple.

In addition, we have taken various data security measures such as IP address restrictions, firewall defenses, 256-bit bank-level encryption for data transfer and management, biometric scanners and access card-based security, VPNs, and disabled USB ports to ensure the data always stays protected — no matter what!

4. Deadline management

It is wrongly believed that outsourcing to a third party means losing control of when deliverables come in. Just like you, outsourced accountants are aware of all relevant due dates for filing compliances and will complete and prioritise tasks accordingly.

Moreover, modes of online communication and access to direct UK phone lines enable prompt follow-ups, and outsourced accountants can quickly convey any specifications about deadlines.

5. Cost-effectiveness

Perhaps the most common myth that circulates about outsourcing is that the third party will charge exorbitant fees.

However, most such services are competitively priced. They will bring about overall cost savings for you and your client by accessing efficient, trained and qualified offshore talent resulting in a cost effective solution. For instance, Stellaripe doesn’t charge any set-up fee, unlike many other outsourcing firms.

Moreover, the accountancy practice can scale down the number of outsourced people at any time and pay for only the resources used. It is thus a much cheaper option than hiring a full-time team of expert accountants.

Accounting outsourcing today

Recent advances in technology have enabled outsourced accounting to grow considerably from the early days of offshore outsourcing. While the original principle of cost-effective operations has remained the same, technology enables it to happen faster and with stronger results. Here is how third-party accounting today can support your clients:

1. The shift to the cloud

The cloud enables accountants to log in from anywhere and complete a wide variety of tasks. Anyone with an internet connection can do it, from data entry to balancing books to accounts and tax return production to even personal assistant tasks. This technology has made real-time accounting and accessibility a possibility.

2. Automation

AI and machine learning have brought about prodigious improvements in the speed at which routine tasks can be completed. In addition, AI and Robotic Process Automation (RPA) have also been applied successfully to speeding up problem-solving tasks and predictive data processing.

Efficiency is always touted as one of the primary benefits of automation and its integration into financial systems. For instance, various receipt management tools like Dext, Autoentry and similar apps save your practice valuable hours every week and free up your best people to concentrate on what really matters.

Similarly, accountancy practice management cloud based software like Accountancy manager, Senta, and Pixie and many more like these supports automated onboarding, reminders, workflows and chasing, and help you drive excellent service delivery and focus on adding value to your clients instead of just providing compliance services.

3. Process improvement

With their expertise in accounting processes, outsourcing firms such as Stellaripe can assist your clients with process improvements in functions across the board.

Particularly for legacy accountancy practices that may rely mostly on traditional processes, outsourcing firms can use their experience to analyse their current operating model and provide an appropriate roadmap for process automation and the removal of redundancies.

And for digital-first clients, such assistance can help them become even more operationally nimble because of outsourcing.

In a nutshell, outsourcing firms work with all types of accountancy practices — small and big, fast-growing and established.

Hence, they can share their opinions and expertise in implementing the industry best practices and suggest what may work well and what may not for your practice and clients.

4. Advisory

Advisory accounting involves providing accounting support to practices and other value-added services such as strategy, consulting, automation and use of suitable tech and app advice.

It can help widen the revenue stream and start a forward-facing conversation for the accountants as it allows their clients to make smarter and more profitable decisions than if the practice provided simple compliance accounting services. Today, most accountants aim to deliver advisory support to serve their clients better.

Over to you

It is projected that employment for accountants will go up in the coming years, with a focus on advisory roles and the application of sensitive information.

There is already a sustained need for data-focused smart professionals who can quickly gather and process business intelligence from a range of sources and communicate strategic insights.

Moreover, technological advancement is no longer an option but the surest way forward for business success.

With accounting outsourcing and the judicious use of automation, accountancy practices can help businesses stay on top of their finances and be free to focus on core activities and strategic decisions. A systematic, goal-oriented partnership between people, resources and technology is important.

Why your clients should file Self Assessment tax returns early

Self Assessment is one of the crucial obligations lots of people have to complete by the end of January, but it is astonishing how many end up missing the deadline.

A big part of this is procrastination — people simply do not want to think about taxes, and thus put it off until the last minute when they frequently find that it takes longer than expected or that the HMRC website is acting up.

As an accountant, you must work with your clients to encourage early Self Assessment filing. Here are some compelling reasons you can put forth to convince them:

2. Filing Self Assessments take time

The HMRC needs to be informed ahead of time that they can expect returns from someone, which means that your client needs to register online well in advance of the deadline if they have not already. Completing the registration can take up to two weeks during slack times but much longer during the January last-minute rush.

When your client signs up, they will get a Unique Taxpayer Reference (UTR) that they need to register for HMRC Online Services, and HMRC will also send them a PIN / Access code which will help them access the Self Assessment portal online. Both the UTR and the PIN / Access code come only by post, making it all the more imperative to start early.

2. Real-time business KPIs

It is no secret that filing Self Assessment tax returns calls for a lot of paperwork. Gathering all of it takes its own time, particularly if some of those documents are only provided in hard-copy format. Many documents may not even be available if sought too close to the 31st January deadline.

Even for those of your clients who download and maintain monthly records, last-minute mistakes and omissions are bound to happen. Filing early thus allows them to collect all the documents and records they need in a timely fashion without having to stress at the last minute.

3. HMRC call centres are always busy in January

Given the vast number of taxpayers submitting their Self Assessment returns in January, your client will be lucky to even get through to anyone on the HMRC customer service number.

In January 2021, the average waiting time for a caller was about 14 minutes, while around one in five callers could not even get through. If your client needs help with their Self Assessment, therefore, it is all the more crucial to file early.

4. Create extra time to save on tax bill

Your client’s tax bill is not due until January 31st. Therefore, if they choose to file early, they will have extra time to budget for whatever tax they owe. A late filing, by contrast, could lead to your client not having enough money to pay the taxes, which could attract hefty HMRC fines.

5. Your clients can avoid penalties

HMRC is hard on people who fail to file their Self Assessment tax returns on time. You know that better than anyone else. Even if they have no tax bill, your client can face the following penalties:

1 day late — £100 fine

3 months late — £10 a day fine up to a maximum of £900 (90 days) for every day it is late 

6 months late — £300 fine or 5% of the tax owing, whichever is greater

12 months late — Further £300 fine or 5% of the tax owing, whichever is greater

Filing early helps to address any issues in advance and avoid these penalties.

6. Your client may be in line for benefits

Some of your clients, especially those who have a business of their own in addition to a salary, might be in line for a tax refund. By filing early, HMRC can notify them straight away and start the refund process, after which your client will get the money in a few weeks. The extra cash can help them plan expenses for the next few months more efficiently.

7. Starting early can save Christmas

The past 1.5 years have been nothing short of a roller coaster ride. Most people are looking to catch a break in December. Many of your clients may postpone taxes until after the holiday season so that they can enjoy Christmas properly.

However, even the prospect of filing a Self Assessment is daunting for many, especially those who are self-employed or run their businesses. Therefore, your clients may exacerbate their stress by putting it off, which will, in any case, mar the Christmas festivities.

Plus, let us not forget the amount of paperwork that will pile up for you at the last minute. Therefore, convince your client to do it in advance and get it over with. That way, both of you can rest easy and enjoy the holidays.

Get in touch with your clients today!

A lot of people have to file their Self Assessment, so you might as well start reminding your clients. The sooner they provide you with the necessary details, the faster you will file the returns.

And if you are concerned about the increased workload on your team, you can always rely on our expert accountants who will prepare and file the returns for you. Have any questions? Contact us!

 

How to price your accounting services effectively

You’re the expert in your line of accounting; you have a dedicated team that’s as experienced as it is friendly, your website’s a cinch to navigate. What’s left? That’s right, pricing your services.

Being able to sell yourself at a price that conveys the value you provide without unduly breaking the bank is critical to winning clients. If you don’t price your services correctly, you may be forced to scrape by and keep hustling — even if you’re the best among the competition.

When setting prices, it helps to have a good understanding of pricing psychology and a handle on what your competitors are charging. It can be a daunting process, but in reality it isn’t. This article will help you out but first, let’s go back to the basics.

Five pricing strategies frequently used by accountancy practices

If you’ve been setting your prices ad hoc so far or simply want a change from your current strategy, it makes sense to look at what your competitors are doing. Typically, accountancy practices follow one of five time-tested pricing strategies:

1. Flat-fee pricing

This is perhaps the simplest pricing strategy of all — you charge your clients a flat fee for your services, declared upfront, regardless of the time and effort spent on delivering services. It’s ideal for repetitive services like general tax returns.

Pros:

  • Both you and the client know exactly what to expect
  • Easy to implement, as you don’t need to do complicated calculations for the bill

Cons:

  • Inflexible, which means extra effort or value goes unnoticed
  • Not ideal for complex projects that may evolve over time

2. Cost-plus pricing

This is another essential and easy-to-implement strategy that’s exactly what it sounds like — the cost of offering a service, plus a certain percentage that you choose as your profit margin.

It differs from flat-fee pricing in that the actual amount will go up or down depending on what your final expenses look like.

Pros:

  • Allows for a decent amount of profit even if your expenses are variable
  • Easy for your clients to understand

Cons:

  • Often fails to capture the real value of the services you are offering
  • Doesn’t take competitor pricing into account

3. Time-based pricing

This is a strategy used commonly by accounting firms around the world. It’s a traditional approach that involves billing clients for the firm’s number of hours for services rendered at a specific hourly rate.

Pros:

  • Easy to implement
  • Gives the firm greater clarity on the effort they have put in

Cons:

  • Doesn’t always reflect the total value of the services rendered
  • Can lead to an unexpected bill for the client at the end that may lead to a dispute

4. Value-based pricing

This pricing strategy is based on charging for the kind of value that clients perceive in your services. It’s based on market research, customer segmentation and competitor analysis, and an understanding of what differentiates you from the rest, which will then help you put a monetary value on that differentiation.

Pros:

  • Helps attract the right clients who value your services the way they should be valued
  • Can boost client loyalty

Cons:

  • Challenging to implement on a repeated basis
  • Requires extensive market research

5. Competition-based pricing

Many firms like to set their final prices depending on what their competitors are doing and how they can differentiate themselves. As such, there are three options:

  • Offer the same level of services as the competitors, at a lower price
  • Provide better services, at the same price
  • Deliver truly superior and unique benefits, and charge a higher price

Even if your practice doesn’t ultimately go for competition-based pricing, it helps to do this evaluation to know precisely where you stand vis-a-vis the competition in terms of pricing and service quality.

Pros:

  • Enables marketing services in a compelling way
  • Helps avoid losing clients to competitors

Cons:

  • Can create a reactive mindset to pricing and selling rather than a proactive mindset
  • Could lead to prices being set too low for the kind of services the firm is offering

Best practices of designing a smart pricing strategy

1. Take organic changes into account

When setting your prices, you naturally want to make a profit. However, for long-term stability, you need also to consider how your target audience values your services (as opposed to how you value them yourself) and whether that might change seasonally or over time.

During tax season, for instance, your clients might be willing to pay an increased amount for you to do their tax returns. However, during the rest of the year, they may be less ready to shell out a lot for routine tax work. Apart from profitability, therefore, you’ll also need to consider stability and organic growth.

2. Give your customers options

Particularly if you offer a variety of services, a menu of pricing package options makes a lot of sense, as customers can examine the options and choose the one that best fits their needs, wants, and budget.

A set of smartly designed packages, plus an option for custom add-ons, will give your customers control over their choice and make it likelier that they’ll sign up with you.

3. Try price anchoring

This time-tested pricing strategy taps into customer psychology, where people buy based on the comparison.

It involves juxtaposing a product subsequent to something much more expensive or by prominently showing the MRP versus the discounted price so that people feel like they are getting a bargain.

For your accountancy practice, this involves coming up with a set of packages at different price ranges, from basic to premium, and clearly defining the benefits of each. This way, customers can pick the package that gives them the most value.

4. Set prices based on your firm's beliefs

This is a point that many firms tend to overlook. Your pricing strategy can’t be an afterthought. It needs to be baked into the kinds of values and beliefs that you uphold to your clients.

If you market yourself as a simple, no-hassle type of firm, a flat-fee or cost-plus strategy will fit well. A value-based pricing strategy with higher price tags will be better if you’re more about exceptional service for premium clients.

By choosing your strategy well, your clients will view your prices as part of what makes you unique and be happy to pay.

Over to you

The success of your accountancy practice depends on how you implement a pricing strategy that drives high profitability and ensures business longevity.

Sure, it is essential to play safe, but you have to develop purposeful prices if you want to take your practice to greater heights. So take the first step and reassess your pricing. If you need help evaluating your current structure, hop on a call with an expert from Stellaripe today!

 

Advisory accounting is more than just about numbers

The word ‘accountant’ might conjure up a vision of someone poring over sheets of accounts with a fine-tooth comb in hand. While things have moved on for accountants, the truth is, that is only part of the accounting process.

Financial spreadsheets, tax returns and general accounting services all come under the heading of compliance accounting, which is indeed all about the numbers.

However, another type of accounting that has gained popularity and significance in the last few years is strategic accounting. By virtue of the access to a company’s financial data, accountants like yourself are among their most trusted advisors.

And now, thanks to advancements in technology that enable better analytics, your accountancy practice can use the data to provide predictive insights on how a client business of yours can grow and pivot for success.

What is advisory accounting?

People actually use the term ‘advisory services’ quite often, but they do not always understand its implications.

Essentially, advisory accounting is about providing accounting services along with other value-add services like consulting, strategy, automation and tech-related advice, and so on.

This helps an accountancy firm’s client to make more intelligent and more profitable decisions than if the firm were to provide simple compliance accounting services. Today, most accountants engage in some level of advisory accounting to serve their clients better.

The role advisory services play in the accountancy industry

Conduct your research, and you will realise that a little more than half of small business owners feel completely satisfied with their accountant’s services, while more than half of them felt that their accountants are not proactive enough.

At the same time, however, most business owners regard their accountant as a trusted advisor. Clearly, there is demand for accountants to extend their services beyond the traditional scope and move to an advisory mode.

If you are not offering advisory support to your clients, you are stalling your practice’s growth. Let us take a closer look at what this means:

1. Ongoing client-accountant relationship

A lot of businesses feel like their accountants do not truly understand how their business works. However, advisory accounting becomes a year-round relationship rather than just reaching out when taxes need to be done.

You do not just interact with them during the tax season! In fact, the more conversations you have with the business, the greater the mutual understanding will be, which will lead to more fruitful communications and a willingness on the business’s part to seek the accountant out more often.

2. Accounting assistance beyond the black and white (and red)

If businesses run into the occasional snag with their finances beyond the periodic financial statement, accountants can help them out. Matters such as how to classify expenses or what tax benefits a business is eligible for can be effectively resolved by an accountant who offers advisory services. Are you ready to offer a lending hand?

3. A “big picture” approach to accounting and business

Typically, businesses would approach accountants to ask about a single aspect of their finances and how it could impact them and leave the more important strategic questions to management consultants.

However, as accountants take on more of an advisory role and rely on automated software to handle the day-to-day financial work, they might just become the new go-to.

The visibility that they have into a business’s finances, in fact, positions them ideally to take on a strategic role. For instance, by analysing the patterns of cost and cash flow, you can identify ways to reduce waste and optimise resource usage for your clients.

4. Accounting for all scenarios to make success a certainty

Merely focusing on compliance accounting is not enough for crucial business decisions, such as mergers or acquisitions.

Accountants, with their keen insight into cash flows and performance insights, can do the scenario-planning and provide the long-term insights needed to verify that the strategic move is, in fact, a good idea.

By going beyond the regular compliance audits, you can become critical partners in business strategy and steer their clients to success.

5. Curiosity and innovation are a must for accounting advisors

You tend to know a great deal about your clients’ field of specialisation, but what about their clients? To be successful at advisory accounting, you must keep an open mind about what is going on in their client’s industries and constantly update yourself about the latest innovations, technologies, legal mandates and so on.

In addition, you must know about what is happening in any allied industries that could affect the client’s business. This is a full-time commitment and may be hard to replicate across too many sectors.

There is thus a case for advisory accountants to specialise in a single industry and provide in-depth tailored services there. What is your speciality?

6. Technology is a reality and should be embraced by advisory accountants

Today, technology is in a constant state of flux. New innovations are coming out with increasing regularity and supplanting the old ways of working.

Therefore, accountants should stay abreast of emerging technologies and acquire expertise in the ones most relevant for their business to deliver truly exceptional service.

For instance, blockchain has gained increasing importance to share information securely, and many clients are likely to have questions about how it can help them.

In addition, advisory accountants should become conversant with the latest accounting platforms and analytics tools to deliver the most efficient service.

Stellaripe accountants at your service

If you have trouble offering advisory support to your clients, you have us. We will help you create a plan of action and identify specialisms to provide strategic assistance and see your clients grow. To discuss more, do not hesitate to get in touch with us here.

MTD for income tax: What you need to know

The Making Tax Digital (MTD) move is widely regarded as an excellent decision that allows HMRC to audit businesses better while also reducing administrative costs.

As of 1st April 2019, businesses with taxable supplies higher than £85000 were to join MTD for VAT. It is also required for them to have digital links within their accounting records for VAT, a new rule that came into force on 1st April 2021.

As an accounting firm, you will likely get multiple questions about MTD from clients anxious to be on the right side of the law. Here is all you need to know.

Which businesses does the MTD rule apply to?

According to the new rules, all VAT-registered businesses need to join MTD for their first VAT return after April 2022. Exceptions include companies that:

  • Are currently subject to insolvency
  • Are run entirely by people whose beliefs or religious practices forbid them from keeping electronic records or using electronic communications
  • Are not practically able to use digital records owing to age, disability, remote location, or other valid reasons

These exclusions will also apply to MTD for income tax.

What are the rules on MTD for income tax?

It has been announced that the MTD rollout will affect income tax from 6th April 2023. All businesses and landlords with a gross income of more than £10,000 will be affected by this, which means that from 6th April 2023, they will all need to keep digital records.

The exception is for businesses with a year-end on 31st March, who will not come within MTD until the new accounting period on 1st April 2024. This will be a significant change for businesses and landlords, many of whom might not have been in the habit of keeping digital records.

It also implies that they will have to regularly update their books of account, rather than keeping everything until the last minute, just before tax return season. However, paper copies of receipts will still be acceptable.

It is expected that the regulations with all the detailed requirements will be finalised by summer 2021. Accountants should keep the new regulations in mind and start migrating their clients to digital records to avoid extra work piling up in 2023.

Plus, with the help of real-time accounting, even the smallest of changes in tax information or books of accounts can instantly reflect everywhere, thus making your job easier.

How to get started on moving your clients to MTD

For each of your clients eligible for MTD, you will need to consider the kind of software most appropriate for you and them. Factors to take into account include:

  • What the client’s current bookkeeping arrangements look like
  • How comfortable your client is with technology
  • The monthly cost of the technology to your client and you
  • The complexity of the client’s business
  • How much of the work you will be doing in-house, and what you plan to charge for it
  • Whether you plan to use a photo capture software for paper documents along with your bookkeeping software

For clients who are already using spreadsheets for their books of accounts, you might want to continue that way for a while before moving them to more advanced options.

You will also need a bridging software option for quarterly submissions if your client’s records are on spreadsheets. Even if you are outsourcing MTD support, technology will play a key role.

How much minimum detail will the HMRC be looking for?

HMRC will likely expect at least a quarterly updation of books of accounts, with a preference for updating them as much in real-time as possible. They are likely to expect records in as much detail as it takes to correctly identify sales invoices and expenditure receipts.

For retailers, as an example, this will likely translate into daily till totals rather than every individual transaction.

Businesses are likely to have their books assessed based on the categories mentioned on the self-assessment return, such as cost of goods bought for resale, wages and salaries, irrecoverable debts written off, rent and rates, office costs, and entertainment expenses.

Landlords will be required to do so in line with current tax return entries, such as rent income, rates, and insurance, property repairs, loan interest, legal and management fees, and so on.

If you are using spreadsheets, you need to keep the requisite amount of detail in mind. Current accounting software primarily does not cater to landlords, which means that we are likely to see the development of landlord-specific software over the next year or so.

Prepare your clients for MTD

In this context, it is essential to mention the role of bank feeds and open banking. Setting up your client’s bank feed into the accounting software means that data gets updated regularly, helping you perform accurate analysis without the trouble of having to track down each entry.

If your client uses spreadsheets, you can ask them to periodically down their bank transaction records for their analysis. But before you jump into things, we would advise you to sit with your clients and understand how much they know about MTD. Education plays a key role in MTD’s implementation.

But working with clients to get their records recorded digitally and updated periodically comes with its unique challenges. It brings an extra workload you simply might not have the time for. In that case, do reach out to MTD experts at Stellaripe.

From doing end-to-end digital record-keeping to compiling and submitting monthly/quarterly VAT returns to providing periodic business summary and reporting, we will do it all for you and more. Please arrange for a consultation with us to know more.

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