Business mileage expenses – why, what, how?

Posted on By dc_admin

Business mileage expenses explained

It’s very simple to record, can save you tax, and contributes to an accurate set of accounts and tax return.  So why do I meet so many people who don’t do it?

What is business mileage?

Any journey you make solely for the purpose of business. Examples include travelling to visit customers, suppliers, to attend work-related training events and business banking.   It does not include commuting to your normal place of work.  If you drop off the business post on the way home from your office, you can’t count that as a business trip.

Why record business mileage?

Keeping sufficient financial records is a legal obligation. The benefit to you is in claiming this tax free expense.  Say you travel an average of 20 business miles per day, 4 days per week, 48 weeks per year.  At 45p per mile that could save you £345 per year in tax at the current basic rate.  So what’s stopping you?

It’s a choreBusiness mileage

Well, I can’t argue with that.  It’s not much fun, but it really doesn’t take long and quickly becomes a habit you’ll barely notice.  All you need to do is keep a notebook and pen in the vehicle you use for business, or use your smartphone.

I haven’t got time

10 seconds spent jotting down the details at the end of the trip and it’s done.  You can link several business trips together. So if you start at your business premises one day and travel to a customer’s premises, then go to a 2nd customer, then onto the stationers to pick up some flyers you’ve had printed, and drop off the flyers at the distribution company, that can all be recorded as one trip.

I forget

I believe you.  I also know you’re doing your best to run a successful business, often under very difficult circumstances.  So find a way to integrate the recording of business mileage into your daily or weekly routine.

Give me an easy solution

There are 2 options for tracking mileage.  You can use the old paper and pen method, or use one of the many apps that are available now.

For each trip your paper record needs to show:

  • The date

    business mileage
    Mileage record made simple
  • details of where you’re going to and from
  • the reason for the trip and
  • the business mileage.

There are mobile apps which are appropriate for UK taxpayers Most will deal with more than just mileage. Try Concur,  Eclipsecs, Webexpenses or search for an app that will record mileage.

A note on the value of your business mileage expense claims: there is more than one method of calculating mileage expenses, although there are certain restrictions.  Have a chat with your accountant or contact us to find out which is best for you.

 

 

 

Bookkeeping Terms and Definitions

Posted on By dc_admin

Bookkeeping terms and definitions can be confusing.  Especially the debits and credits.  Accountants and bookkeepers, like many tradespeople and professionals use jargon. Sometimes we get so used to it that, again like other business people, we forget it’s jargon.  So if you’re wondering what it all means, maybe this will help.

Bookkeeping is done (or should be) by any type of business, charity, company and organisation. The words organisation, company and business are used interchangeably in this post, just because I get bored typing the same word repeatedly.

List of Bookkeeping Terms

Amortisation Similar to depreciation, but applied to intangible assets
Balance Sheet A financial snapshot of your organisation’s assets (things you own and money owed to you)and liabilities (money you owe to others), at a   particular date, prepared under UK accounting rules.
Bookkeeping recording, organising and filing financial documents. Does not include preparing accounts, tax computations or tax returns.
Capital This can have several meanings. Capital expenditure is money spent on fixed assets. Capital introduced is money input to a business by owners, investors, or shareholders etc. Working capital is the excess of current assets minus   current liabilities, or the amount of cash available to run your business.
Credit A credit is the opposite of a debit.
Creditors People and organisations you need to pay in the future.
Current Assets Stock, bank balances, amounts due to your company within one year. Assets  that are not long-term features of your business, and can be coverted to cash relatively quickly.
Debit A debit decreases your profit/surplus, or increases the assets on your balance sheet (statement of financial position).
Debits and credits The 2 sides of double-entry bookkeeping.  In   your accounts, think of it as the opposite of what you see on your bank  statement (ie. A credit in your bank account, will be a debit in your accounts). This is because the bank statement shows debits and credits from the bank’s point of view, not yours.
Debtors People and organisations that owe your company money. These are assets to your company.
Depreciation A proportion of the cost of a tangible asset, deducted from profit over a  number of years. The idea is to spread the cost of the asset over the period that it is used in running the business. Eg. A machine expected to last 5 years would be recorded as an asset, then written off to the P& account (deducted from profit) over 5 years.
Double-entry bookkeeping Recording the full nature of a transaction. For example, if you buy pens   for £5.00 cash, the first bookkeeping entry is to increase your costs by £5.00 (the debit entry), the second is to decrease your petty cash balance by £5.00 (the credit entry).
Fixed Assets Tangible or intangible property belonging to the business, and used to run the business activities.
Goods Items bought and sold.
Goodwill A value in incorporated companies that represents the value of the   company over and above the net value of assets minus liabilites, ususally   arising when a company is bought by another.
Income statement Equivalent to a P&L account, but compiled under different accounting   rules.
Intangible asset Something the organisation owns, but is not a physical item eg. A patent,   goodwill.
Liabilities Amounts owing to third parties, current liabilities are due within 12   months of the balance sheet date.
National Insurance Let’s face it, it’s just another tax.
Profit and loss account AKA P&L account. A statement of your income (sales, grants received   etc.), less costs and expenses, showing your profit for a particular period of time. Prepared under UK accounting rules.
Statement of Financial Position Equivalent to a balance sheet, but compiled under different accounting   rules.
Stock Items bought for resale, but not yet sold.
Tangible asset An asset with physical substance, eg. Stock for resale, money in a bank   account, buildings, machinery, equipment etc.
Tax Money you, and/or your company, have to pay even though you don’t want to.
Third party A person or organisation not connected to your own organisation.
Transaction An exchange of goods, services, money etc. with a third party, eg selling   a chair for cash is one transaction, selling a chair on credit is one   transaction, receiving a cheque for the credit sale is another transaction.
UTR Unique taxpayer reference.  A 10   figure number used by HM Revenue and Customs to identify the tax record of an individual (self-assessment tax system) or business.
Working capital The amount of money available to your business. Current assets less   current liabilities.
Written off Deducted from profit

 

Easy Business Record Keeping

Posted on By dc_admin

Easy business record keeping.  Possible, or an oxymoron?  Are you running a business on the go?   If you’re using a smartpone, iPod Touch or iPad, there could be an easy way to record your business expenses.

Several companies have recognised that keeping paper records is a chore you don’t want to face at the end of a busy day, and developed apps to help.  Some of these have been around for a while, some are free, and some are simpler than others. You can choose which is best for you.

So, if your business is not VAT registered and you want a simple solution for recording income and expenses, why not try them out?

HMRC lists a few on their website here:  http://www.hmrc.gov.uk/softwaredevelopers/mobile-apps/record-keeping.htm

There are many others including https://www.expensify.com/, which can be used by employees to record expenses and submit claims.

Whichever you use, remember to download, back-up or save your data regularly.