Tax Tips

Income Tax Returns for 2009 must be filed by 31 October 2010. Failure to file on time will lead to surcharges.

The way our system works, we pay a preliminary Income Tax for 2010 on 31 Oct 2010 and we file the actual return for 2010 in 2011 and at that time, we balance up for any over/underpayments. 31 Oct 2010 is the latest date for filing for 2009- if you had an overpayment for 2009 you could file early in order to get the repayment earlier.

Note that if you are filing on ROS you get an extension until 16 November. To avail of this deadline, both the Return and the Payment must be made online. Where only one of these actions is completed through ROS, the extension will not apply.

The preliminary tax paid must be 90% of the actual liability for 2010 or 100% of the tax bill of the 2009’s tax bill (excluding some items).

Any balance of tax due for 2010 must be paid by 31 October 2011 (2009 balance falling due by 31 October 2010).

Tip: If profits are down in 2010 on 2009, as they are for many, it may be worth while paying on the estimated 2010 profits. You would want to be confident of your estimates.

Tip: You can make pension contributions for 2009 up to 31 October 2010. In this way pension contributions made up to31 October 2010 will reduce your tax liability for 2009. The maximum tax effective contribution ranges from 15% of net relevant earnings for persons under 30 years of age to 40% of earnings for persons aged 60 or over. This is subject to an overall deemed earnings cap of €150,000 in 2009.

Tip: Check that you are utilising all available credits. These include medical insurance credits, local authority service charges, employment specific (employees only), certain charitable contributions, certain school payments, certain college fees. You would be surprised at how many tax payers ignore these

Tip: Make sure also that, where possible, you utilise the low tax band as effectively as possible.

Tip: Note in particular that taxpayers are entitled to make a back year claim for up to 4 years for reliefs due but not claimed.

This is very much summary information. It should not be used as a definitive guideline. You should take advice from a qualified advisor before making any significant decisions.

As always, if you have any comments or questions please email me – jim (at) accountsplus (dot) ie.

Is Technology making accountants redundant?

A recent post on Accountingweb.co.uk pressed one of my buttons.

It was from a business owner who asked if technology was making his accountant redundant. He pointed out that much of what his accountant offered to do for him was now handled quite well by software. He finished up by asking does he need his accountant and does his accountant need him.

I have been thinking about this lately. A lot depends on what the client wants the accountant to do for him. There’s a range of activities that accountants offer from doing the whole book-keeping work to finalising annual accounts and providing business and taxation advice. In my view, the amount of clients who will want basic book-keeping, the number crunching work, will fall off and the accountants will find themselves providing analysis and advice.

It’s more than likely, that once the clients start to take control of their own accounting records, they will start to look for more help with analysis and advice. Their accounting systems will generate information that they simply didn’t have in the past. This information will prompt questions that they will want answers to. So I think that rather than make the accountant redundant, they will simply change the type of work accountants do.

And, I know which work I get most satisfaction from. It’s helping the business owner by providing analysis and advice.

As always, feel free to leave a comment and if you have any questions, email me at jim (at) accountsplus (dot) ie.

Bizcamp Galway

Yesterday, I attended Bizcamp Galway. I had been asked by Paul Killoran of Starlight Solutions to be one of the speakers. I spoke later on in the day on the topic “Your accounts – a chore or an asset.”

I attended as many other talks as I could and found it very useful and motivational.

For me the day started with a PR Masterclass by Carmel Dooley and Elaine Divilly. I thought this excellent. The content was good but, more importantly, = the masterclass was a very good example of modelling the beliefs, attitudes and behaviours that you you want to communicate to your listeners.

From there I went ot a talk on Business in the Cloud given by Keith Killilea. Given that I already use a Cloud Based Accounting application, I was very interested in what Keith had to say.

Toireasa Rock gave an inspiring talk on the importance of self-belief. The interest in this topic was demonstrated by the amount of questions and the number of attendees gathered around Toireasa at the end of the talk looking for further information.

Caelen King of Whatclinic.com gave a very interesting and thought provoking talk on pricing, which amongst other things, highlighted the psychological elements of pricing.

Immediately after lunch, Alan Duggan of Tribal City, gave a very clear presentation on the lessons that he and his company have learned form launching their recent iPhone game in the Appstore. Alan is a very good speaker, having a well structured talk and effective slides.

The final session was a chaired session where Pat Phelan of Cubic Telephone, John Concannon of JFC and Aidan Daly of NUIG’s Marketing Department spoke about how early failures helped to develop their business skills and their motivation. This was followed by a lively question and answer session.

So overall, it was a very enjoyable day, listening to some very interesting business people and meeting some new friends.

Well done to the organising team. I hope it happens again.

Working with VAT on Kashflow

I have had a couple of questions recently about how Kashflow handles VAT. Users do not seem to fully understand the use of the “submit VAT” button. So here is a brief overview of what needs to be done to have accurate VAT reporting.

When you first submit a VAT report, it is important that you make sure that your submission agrees with the relevant VAT management report in Kashflow. If your VAT submission for Jan Feb 10 says VAT on sales 5000, VAT on purchases 3000 then these numbers should agree to the relevant figures on the VAT Management Report for the same period. If they don’t agree, you need to understand why. Either the VAT submission is wrong or Kashflow is wrong. I recommend that you check the Kashflow report, making any amendments necessary, and make a submission that ties back to Kashflow.

Once you have the submission made you run the VAT management report which agrees with the submission and hit “Submit VAT” button. This does not actually submit anything. It effectively tells Kashflow that all the transactions on the report have been reported to the VAT authorities.

When you run the VAT Management report for the following period, it will pick up all transactions for that period but it will also pick up any transactions in earlier periods that have not been reported (submitted) to the VAT authorities. For example, if in late April, a Purchase invoice dated February comes in with VAT of € 1000, we cannot add it to the Jan Feb return which was already submitted. Kashflow knows that it was not submitted because it was not on the report which you marked submitted. Therefore, it will be brought forward and added to the Mar Apr report. When you download the detail for the report you will see a transaction in there with a February date.

It is important then that when making a vat return the return should agree with the VAT Management report for the same period and that you hit the “Submit VAT” button to let the system know that all transactions on that report have been submitted.

If you have any questions on this, or any other aspect of Kashflow, feel free to give me a call or email me on jim (at) accountsplus (dot) ie.

Kashflow Update – Video Interview with Kashflow CEO

Kashflow users will find this video interesting. On July 5 last, Dennis Howlett, who writes a blog on accounting issues at www.accmanpro.com, interviewed the Kashflow CEO Duane Jackson. The video of this short interview is below and lasts just under 5 minutes.

In the video, Duane talks about the progress the company has made, what’s happening about the design (which he readily admits isn’t the best in the business) and an indication of where the company is going.

One thing he did reveal: KashFlow is working on a version that will make fast data input a reality for book-keepers.

He also said that longer term, he doesn’t want the company to be stuck as a single product business but expects to expand the range of solutions in the next year.

Recent Changes to Kashflow

Our online Accounting Software, Kashflow, is constantly being improved.

Sometimes the improvements are obvious like the recent changes to the entry screens for sales and purchase invoices. Other times the changes are in the background and you may not realise that there’s a new option that might be useful for you.

Kashflow publish the changelog here – http://www.kashflow.co.uk/changelog.asp. You can also sign up to receive notifications of changes via email, rss feeds or twitter.

For today, I have copied the change notices from the Kashflow changelog for some of the most recent changes.

Recent Changes

Improvements to Customer and Supplier pages 2nd August, 2010

General Look and Feel Improvements 2nd August, 2010

Defaulting Purchases to Paid 2nd August, 2010

Custom Fields for Customers 2nd August, 2010

Email Templates for Statements 2nd August, 2010

Lesser Known Kashflow Features

As I work with clients who are using Kashflow, I realise that there are several features in Kashflow that clients often don’t know about. I am going to highlight some of these in posts over the next period. Some of them may be useful to you.

Repeat Invoicing.

If you have a customer where you have an agreement to invoice regularly over a period, you can set up a repeat invoice. For example, I have a client where I provide a monthly management accounting service. I have a repeat invoice set up that is created monthly. The system sends me a reminder to let me know that it has created the invoice and I just hit the email button to send the invoice out.

To set up a repeat invoice, go into Sales, then into repeat billing – one of the four buttons above the list of sales invoices.

Projects

Kashflow has a projects feature that allows you to assign sales invoices and costs to projects. Some businesses are project based and this allows them to track profitability by project. Even if you are not project based you could use this for departments or you could use it to track costs by vehicle or by individual.

I have a client who produces tv programmes and uses this feature to track costs by programme. I have another client who carries out consultancy projects for clients and uses the feature to track outlay costs (eg. travel) by project for reinvoicing.

Bulk Payments.

Typically, most businesses will receive a payment for each invoice they issue or they will make a payment for each bill (receipt) that they receive. However, some businesses might have a number or smaller invoices or bills (receipts) that are paid together. In this case, instead of going into each invoice and adding a payment, you can use the Kashflow Bulk Payment options. On the Sales or Purchases tab, choose the Bulk Payment button on top of the page. This lets you mark multiple invoices as being paid with one payment.

That’s enough for today. Over the next while I will highlight some other features that you may not know about. If you have any questions, be sure to let me know by emailing me at jim (at) accountsplus (dot) ie.

Own your accounts

Yesterday, emyth posted the following on twitter.

Don’t abdicate financial responsibility. Accounting and financial management systems are fundamental business controls. Own them!

For me, that is such an important attitude.

I know many business owners who are intimidated by their accounts.

Yet business success is measured by Profit. So every business owner will be more successful and will find the job of managing the business so much easier if they take the time to learn how to read and work with their accounts.

And remember, you don’t have to become an accountant. Just like you don’t have to be a motor mechanic to drive a car, you don’t have to be an accountant to work with your accounts.

Find a good accounting package that suits you. Find an accountant that will help you put it into practice. And work with it.

Remember, own your accounts!

If you have any questions about this post, email me at jim (at) accountsplus (dot) ie.

Employees or Self-Employed

In a recent tax briefing document, Revenue have promised to continue to focus on the issue of employed v self-employed across a multiplicity of sectors for the foreseeable future. Right now, they are focussing on locums in medicine, healthcare and pharmacy. The move is part of an overall strategy by the Revenue to bring more workers into the PAYE net.

The ebriefing document is here http://www.revenue.ie/en/practitioner/tax-briefing/82/.

If you have individuals working for you on a self-employed basis it is important for you to consider whether these are really self employed or employees. The Revenue could consider you liable for PAYE/PRSI on any payments to them.

Your starting point should be the Code of Practice for Determining Employment or Self-employment Status of Individuals.

From the ebrief:

“This is not a Revenue Code of Practice. It has its origins in the Employment Status Group (set up under the Programme for Prosperity and Fairness) which sought to provide clarity as to whether, in relation to an engagement, an individual is employed or self-employed. As outlined in the Code, “that group was set up because of a growing concern that there may be increasing numbers of individuals categorised as ‘self employed’ when the ‘indicators’ may be that ‘employee’ status is more appropriate”.The Code of Practice was updated in 2007.

Are you slack about IT security

Yesterday www.boards.ie was hacked and the passwords of the users may be compromised. If users use the same username and passwords on multiple sites, then the hackers may now have access to those other sites. Could they have access to online banking passwords? Possibly.

A couple of months ago I was reading a blog, and the follow-on animated exchange, about the importance of security in accounting software. While I agree with the importance of security, I felt at the time, that the dev elopers had little understanding of how careless users actually are when it comes to security, passwords and backups.

I have often commented on the amount of companies with no password protection on their accounts software, or common words as passwords, or use the pc users name as password, or have the password visible on a post-it stuck up beside the screen.

Well, recent research has shown just how loose password security is.

It seems that in Dec 09, social networking services and customized widget company, Rockyou.com, suffered a data breach. The breach included millions of people’s email addresses and passwords for Rockyou.com (and in many cases passwords and login details for associated social networking sites). The hacker responsible for the attack subsequently posted the full list of passwords on the internet.

You will end up with a lot of passwords and you will need something to help you manage them. I use a piece of software to store all of my different passwords. It’s a password manager called eWallet. Another free package is keepass. And remember you need to be careful how you use these!

So now, what passwords are you using for the various software and websites you use. Are they secure enough? Do you need to change them. Go on – do it now!

The compromised password and login data was examined by US-based security company, Imperva Application Defense Center (ADC). The data provides valuable insights into the way that users select passwords and an opportunity to evaluate the true strength of these as a security mechanism. What’s good about this is the number of real-world passwords the analysts were able to examine .

There report is available here – http://www.imperva.com/ld/password_report.asp

A full analysis of the 32 million Rockyou.com passwords show the most commonly used passwords are:
1. 123456
2. 12345
3. 123456789
4. Password
5. iloveyou
6. princess
7. rockyou
8. 1234567
9. 12345678
10. abc123

Its amazing, isn’t it. And to think of all of the effort the IT developer puts in to improve security and then see users undermine all that by careless selection of passwords.

So what should you be doing? To keep your accounts safe, NASA recommends adhering to the following steps when creating a password:

1. It should contain at least eight characters.