Outsourcing can do more more than just save you money, though. In this article we’ll look at the benefits of outsourcing tasks, and how to find freelancers to do the work.

What is outsourcing?

Outsourcing work means specific business tasks or functions are given to external service providers (usually freelancers) to handle, rather than the work being completed in-house.

It often gives you more choice and flexibility, allowing access to specialist skills if and when you need them.

Different types of outsourcing

There are actually a few different types of outsourcing to be aware of, such as:

• Outsourcing key business-related functions like marketing
• Business Process Outsourcing (BPO) (for example, payroll or customer support)
• Information Technology Outsourcing (ITO)
• Knowledge Process Outsourcing (KPO) – usually highly specialised functions such as accounting or research

Why outsource?

Like anything, there are pros and cons to outsourcing. It can be more cost-effective than hiring a full-time employee, particularly if it’s only for a short-term project.

You won’t need to worry about additional costs or responsibilities (like making pension payments and National Insurance contributions, or arranging Employer’s Liability Insurance).

It can also be faster. Outsourcing a task to someone who specialises in that specific function is likely to mean they’re highly experienced and able to be very efficient.

More broadly, outsourcing gives you access to a large range of skills, many – or even most – of which may not be available to you in-house.

Can I outsource for long-term projects?

Lots of businesses outsource tasks on a long-term basis – such as accounting or legal services, or you might have longer projects which you need help with. Just be careful around the IR35 rules if you do hire a freelancer who comes to sit in your office every day as if they were a regular employee. It can muddy the waters around disguised employment, and that can have tax implications for both of you!

How do I find freelancers?

Most online job sites will simply let you advertise for freelancers, but there’s always the option of looking on freelance marketplaces..

For example, if you’re looking for project-based services you can check out Fiverr, or if you’re looking for a few freelancers that work in a wide range of fields, you might look at Upwork.

These can be a great resource, providing access to hundreds – if not thousands – of available freelancers looking for work.

Most freelance marketplaces even allow you to filter for the exact skills and experience level you’re looking for.

How do I choose a freelancer?

Even once you’ve found some potential options, you still have to make a choice between them. Generally speaking, it’s important to consider things like cost and flexibility.

The idea of selecting the right expert to work with can be daunting if it’s not an area you’re familiar with. After all, that might be why you’re hiring them! It’s usually worth looking at their portfolio or other examples of clients and work, and asking for any testimonials.

Check their portfolio

If you’re struggling to decide whether or not to hire a particular freelancer, previous examples of their work can be very helpful, giving you a tangible idea of what they’d bring to the table.

While a more generalised approach to freelancing may work for those with a diverse set of skills, you typically want to pick someone who specialises in exactly the kind of work you’re asking them to do.

In other words, you want a specialist, not a generalist.

A solid portfolio serves as proof that a freelancer knows what they’re doing, whereas an absent one may be a sign that they’re relatively new (and therefore lack experience).

Look at their track record

In a similar way, testimonials from previous clients are a good sign a freelancer can be trusted to follow through and get the job done.

Hiring someone obviously comes with a high degree of risk, and so any reassurance you can get is vital. If a freelancer is able and willing to give you past case studies to look over, that’s an even better sign.

Get in contact with them

This is a good way to test how responsive they are. Simply shoot them an e-mail and see how long it takes for them go get back to you.

If they take a while, that could be a sign they’re either too busy or don’t see freelance work as a priority. But be fair – they might be away, or this might be a one-off! Either way, it’s a window into how your communication could go if you were to hire them.

 
Find more help in our online accounting hub, and learn more about how to find the right accountant for your business.

The post How Outsourcing Can Help Your Small Business appeared first on The Cheap Accountants.

There are lots of considerations to make, and so, naturally, it’s easy to overlook things. One thing you may have overlooked is whether or not you would benefit from hiring an accountant.

To help you decide, we’ll break down the process of becoming a sole trader, your legal responsibilities, and how an accountant might help.

What is a sole trader?

Let’s start with the basics. A sole trader is just someone who runs their own business as an individual.

There’s no legal distinction between you and the business with this type of structure, so you’re personally liable for anything that happens. This is both good and bad – depending on your circumstances.

Considerations about being a sole trader

On the one hand, your personal assets might be at risk if the business struggles because there’s no distinction beween you and your work. On the other, you get to keep any profits for yourself once you’ve paid income tax and National Insurance. But, you’ll be taxed on them even if you leave them in the business.

It’s relatively easy to get yourself set up as a sole trader, with fewer rules and paperwork than if you were to use a different business structure.

Do I need to set up as a sole trader?

It depends! If you earn less than the Trading Allowance (£1,000) in self-employed income, you might not need to tell HMRC or pay tax on this. You can claim the Trading Allowance even if you have other sources of income, too.

If you do need to set up a sole trader business, make sure you inform HMRC by 5th October in your second tax year. A tax year runs from 6th April to 5th April the following year.

How do I pay tax as a sole trader?

Right, so… You’ve set up as a sole trader and you get more than £1,000 of trading income in a tax year. Now what?

Well, you’ll need to start submitting tax returns to HMRC so you can pay income tax and National Insurance on the profit you make.

What sort of tax return do sole traders need?

This depends on how much you make in total from self-employment and/or property income in a tax year. You’ll normally start by submitting Self Assessment tax returns.

Over time, you might also need to consider Making Tax Digital (MTD) Income Tax. As it continues to roll out, MTD Income Tax will gradually replace Self Assessment for some people.

Those affected will need to keep their income tax records digitally, and share this information with HMRC on a more frequent basis using compliant software.

• You’ll use MTD to report your tax from April 2026 if you earned more than £50,000 as a sole trader and/or rental income in the 2024/25 tax year
• In April 2027, the earnings threshold to start complying reduces to £30,000 earned in the 2025/26 tax year
• From April 2028, it’s £20,000 for the previous tax year

How do I make a tax payment?

HMRC will calculate your tax bill once you submit your return. There are many methods you can use to pay, including HMRC online, Direct Debit or bank transfer. If you work for an employer and have a sole trader business on the side, you may be able to pay your self-employed tax bill through your PAYE tax code.

The deadline to pay is 31st January each year (the same as the deadline to submit your tax return for the year). If your tax bill exceeds £1,000, you’ll need to make ‘Payment on Accounts’ – which essentially splits your tax bill in two halves. The second tax payment deadline is 31st July.

What are my other responsibilities?

You want to . This will be essential in helping you fill out your tax return, and will also help you to claim tax relief without forgetting about any allowable expenses.

Do I need an accountant?

Having an accountant can be extremeley reassuring. They’ll:

• Help you set up processes for keeping clear, up-to-date financial records – known as bookkeeping
• Advise how to optimise any tax reliefs and allowances, and make sure you’re claiming any allowable expenses
• Suggest software you can use for bookkeeping, or for MTD compliance if this applies to you

There are lots of different types of accountancy services available, so take your time to understand exactly what sort of support you need, and make sure your accountant is appropriately qualified.

 
Find more help in our online accounting hub, and learn more about how to find the right accountant for your business.

The post Do Sole Traders Need an Accountant? appeared first on The Cheap Accountants.

In this article we’ll go over what an employer’s payroll responsibilities are, and some of the most common pitfalls to watch out for.

What is payroll?

In the simplest terms, your payroll is a record of all the people in your business and how they’re compensated for their work. The process of “running” payroll refers to the method by which pay is worked out, documented, and reported.

What are some common mistakes employers might make with payroll?

While running payroll may seem simple enough, it’s easy to get things wrong. There are so many things to keep track of, and you might not even be aware of everything you need to do!

Common issues can include not claiming the Employment Allowance, overlooking non-cash benefits which should be taxed (known as benefits in kind), and pension schemes. We’ll go into more detail below.

Not claiming your Employment Allowance

This is a big one. The Employment Allowance is a type of relief available to some employers which helps reduce the cost of their National Insurance contributions by up to £10,500 each year.

Once you use up the allowance, you’ll start making contributions as an employer again. You don’t even need to be paying more than £10,500 to qualify, either; you can still benefit if your bill for employer’s NI is less than this.

It’s important to note that this only applies to your contributions, not your employees’.

Not paying tax on a benefit in kind

Some employers will provide non-cash perks as part of the ‘package’ they give to employees. Company cars are the most common example of this.

The employee or director who receives the benefit will often need to pay income tax on it, just like they would if they received the equivalent value in the form of a salary instead. They might also need to pay NI on the benefit if it’s cash, or if it’s something they can sell or turn into cash, rather than keep.

Employers are also required to make Employer’s National Insurance Contributions on the value of any benefits in kind they provide.

All this means the benefit must be reported by the employer to HMRC so that it can be included in the calculations for tax and NI. Make sure you report them through payroll, and on time to avoid penalties!

No workplace pension scheme

Another responsibility you have as an employer is to set up a workplace pension scheme for your staff, automatically enrolling anyone who’s eligible. Now this isn’t optional, it’s a legal requirement if:

• You have employees aged between 22 and State Pension age
• They earn more than £10,000 per year
• Your business is in the UK, and your employees each have a contract of employment
• Your employees’ day-to-day duties are in the UK

The way it works is you as the employer deduct a pension contribution from an employee’s wages and then pay the amount into the scheme on their behalf, along with your own contribution. The minimum contribution is 8% of the employee’s pensionable earnings (and at least 3% must be from you as the employer).

Note: these contributions are in addition to National Insurance contributions, rather than instead of.

It’s also part of your obligations as an employer that you give your employees the option to opt out of the workplace pension scheme if they want to, so don’t overlook this!

You’ll need to make sure you have good systems in place to check who should be auto-enrolled, removing anyone who opts out, and setting reminders to repeat the process using the mandatory timeframes. The Pensions Regulator has a checklist of everything you need to do and when.

Hiring someone as a freelancer vs. as an employee

If you’re a business owner and haven’t come across IR35 before, it’s time to get clued up.

IR35 was introduced to minimise the risk of tax avoidance caused by someone working through their own limited company, when they would otherwise be considered employed based on the type or amount of work they’re doing.

In other words, they would simply work for their client as a regular employee if the intermediary didn’t exist.

Failing to comply with the rules can result in financial penalties, so our guide goes into more detail about who is responsible for checking IR35 status, and what to do if you employ someone inside the IR35 rules.

 
Find more help in our online accounting hub, and learn more about how to find the right accountant for your business.

The post Common Payroll Mistakes and How to Avoid Them appeared first on The Cheap Accountants.

Some businesses also use referral incentives as part of their wider marketing strategy, rewarding clients who recommend them.

What are referral incentives?

A referral incentive is something you offer to an existing customer to encourage them to recommend your product or service to their network in exchange for a reward. This strategy turns your existing customers into brand advocates. For example, you might reward them with:

• Cash
• Account credit
• Gift vouchers
• Lower fees
• Money off
• Points in a loyalty scheme

The reward you offer for recommendations depends on the type of referral programme you want to run.

Do referral incentives work?

Recommendations from friends are often touted as one of the most reliable forms of advertising, with many of us allowing this to influence our purchases.

A global marketing study carried out by Radius suggests word-of-mouth is particularly powerful amongst millennials. This group placed word-of-mouth at the top of the list of what influences them when it comes to purchasing apparel, financial products, travel, electronics, and consumer packaged goods.

Is a referral incentive an allowable marketing expense?

Yes, referral incentives do qualify as an allowable expense which you can deduct from your profits before tax.

In short, including allowable expenses on your tax return means you pay less tax. Other allowable marketing expenses might include:

• Website costs, such as development, hosting, and domain name
• Print advertising
• Mail shots
• Free samples

Just be aware that entertainment and hospitality, on the other hand, are not allowable marketing expenses because they’re not business critical.

How to record referral incentives for accounting purposes

You’ll need to document the referral incentives you issue as part of your regular bookkeeping process. Experts at The Accountancy Partnership recommend the best way to do this is by setting up a new expenses category specifically for referral fees.

That way you can clearly see what it costs you (so you can check it’s worth it!), as well as making it easier to claim everything against your tax bill later. It’s just another reason why accountants are so keen on good bookkeeping!

Advice on managing a referral programme

Not sure whether you should be considering running a referral programme to help promote your business? We’ve gathered some of our top tips on how to run a referral campaign efficiently, and successfully.

Set clear goals around what you want to achieve

Are you looking to accelerate business growth? Perhaps you want to supercharge revenue? Maybe you’re searching for ways to improve customer retention? Whatever your goal might be, keep it in mind when you’re thinking about your referral scheme. It might affect what sort of incentive you offer, and who you offer it to. Some people might not offer the sort of brand rep you want!

Regularly report and review progress

Like any aspect of running a business, it’s essential to take stock of where you’re at on a regular basis, so you can see what’s performing well and what’s not. That way, you can adjust your strategy moving forward.

Setting up some sort of tracking for your referral campaign will show you the progress and success of each referral incentive. There are lots of ways to do this, such as issuing specific people with a discount code which identifies customers they’ve referred, or getting technical with unique referral links or coded URLs on your website.

This sort of tracking will also help you understand what a new customer is worth in comparison to the referral costs you incurred to engage them in the first place.

Involve your accountant in the process

Whenever money coming in or going out is involved, it’s always a good idea to ensure your accountant is involved too. Where referral incentives are concerned, they’ll be able to advise on what kind of reward is affordable and make sure you remain tax-efficient and compliant in the process.

Show your appreciation

Okay, so, a customer might be getting a nice little reward for any recommendations they make but still, it’s polite to show your gratitude for their efforts. Contact your referees to say thank you – it’s a small gesture that will have a big impact.

Are referral incentives the same as affiliate marketing?

It’s easy to see how referrals and affiliate marketing can be confused or used interchangeably because both use incentives to drive new customer engagement. When it comes to strategy and management, the two are quite different.

The main difference is the audience who drives this new engagement. While referral incentives call upon existing customers to entice their friends, family, and contacts to purchase your product or service, affiliate marketing campaigns rely on third-party activity.

This third-party comes in the form of brand advocates who are paid a fee to drum up business for you. Normally, the brand advocate will be recommending your brand to an audience which doesn’t know them in person, but who may be influenced by their opinion.

They’re often paid in commission, which comes from a percentage of each sale they directly motivate. This commission is something that can be agreed upon between you and any affiliate you deploy. Yep, this is how influencers make money!

Although it is a different form of marketing from referral incentives, the fees attached to any affiliate campaign you run will also be classed as an allowable expense.

 
Find more help in our guides and faqs, or ask a tax question for free!

The post Are Referral Incentives a Marketing Expense? appeared first on The Cheap Accountants.

More importantly, what’s the best way to go about it if you’re on a budget?

Well, more and more people are taking the route of outsourcing their marketing (as opposed to handling it in-house with a dedicated team). This can be a great, cost-effective option for start-ups though it’s not without its downsides, too.

Let’s take a look at the pros and cons, as well as what to look out for when choosing a marketing agency. But first…

What is outsourced marketing?

Outsourced marketing basically involves using an external agency to manage your business’s marketing activities.

You can either get them to oversee all aspects of your marketing, in which case they’ll likely develop a strategy for you, or just a few select areas that may require specialist knowledge (e.g. your social media presence or SEO and website development).

What’s the difference between in-house and outsourced marketing?

It’s important to understand how the two differ so that you can make an informed choice, and ultimately one that’s right for you and your business.

In comparison to outsourced marketing, marketing which is in-house typically involves a small, dedicated team – or even a single person. It might even be you, as the business owner!

This means you’ll either need to employ someone to do the job (yes, even if you’re a sole trader), or find time to fit it into your schedule.

What are some of the pros of outsourcing marketing?

One of the main benefits is being able to work closely with an agency that has access to the latest marketing tools and technologies. Your business will benefit from all this without you needing to purchase any of it yourself.

You’ll also get access to different perspectives than if you were to simply do it yourself. This can be really beneficial, as being too close to the business can mean you lose the ability to be objective and spot potential issues.

Outsourcing to freelancers or other companies also frees you of the duties and responsibilities you would have if you chose to employ a dedicated marketing team instead. These include things like recruitment laws, registration, insurance, various health, safety and equality duties, payroll and the legalities of sick and maternity pay.

What’s more, outsourcing allows you to adopt a more flexible approach, as when you start working with an agency, you have the benefit of being able to increase or decrease the number of services you require as and when you need to.

And the cons?

First and foremost, it may be hard to find an agency that understands the unique needs of your business. You want an agency with different perspectives, but, at the same time, these could actually cause them to try and take your marketing in a direction you’re not entirely comfortable with (or ready for).

Learning to trust their direction could take time – time that you may not have if you’re hoping to grow your business quickly.

You may also notice a lack of loyalty and/or commitment when working with freelancers or other companies, and this is because they (understandably) don’t feel the same level of investment as a permanent employee would.

If you’re hiring a freelancer, one other thing to watch out for is that they don’t fall under IR35. This is when someone is working for a client (you) on a supposedly self-employed basis, but the relationship is actually more like they are an employee, or an employee-in-disguise.

Failing to comply with IR35 rules can result in financial penalties.

What to look for in a marketing agency

Broadly speaking, you want to look for one which offers a diverse range of services, from digital and social media marketing to web design and copywriting.

Whether you have an immediate need for all of these right now or not, it’s still good to have the option – just in case.

A proven track record (and the accompanying experience) is also a crucial factor, as you’re effectively placing your trust in someone you don’t know, and so you need to see evidence they’re capable of getting the job done.

Otherwise, it’s a complete shot in the dark.

Good communication is also important, so that you’re kept in the loop and can track the progress you’re making (via things like monthly reports or meetings).

And, again, you ideally want someone who just “gets” your business, as this will make the whole process much smoother, allowing you to scale at a faster rate.

 
Find more help in our online accounting hub, and learn more about how to find the right accountant for your business.

The post Should My Small Business Outsource Marketing? appeared first on The Cheap Accountants.

For some employers, the huge list of things you might want to claim could include gifts for employees. Wanting to treat your staff from time to time is a lovely quality to have as an employer, but a lot of business owners aren’t sure where this leaves them in terms of claiming the expense against tax.

We’ll explain the rules for claiming the cost of staff gifting.

Do employee gifts count as an allowable expense?

In some cases, yes, presents you give to your employees are an allowable expense and you can claim tax relief on the value before tax. The rules are quite complicated though, with the outcome depending on what the gift actually is, its value, and who you give it to.

HMRC publish a list of expenses and gifts, and what businesses must do for each.

Gifts classes as ‘trivial benefits’ are usually an allowable expense.

Does it count as a trivial benefit?

A gift or small gesture to an employee can be classed as a ‘trivial benefit’. Something qualifies as a trivial benefit when:

• It costs the business less than £50 (including VAT)
• It isn’t a direct reward for employee performance
• It isn’t included within the terms of their employment contract – i.e., not something they’re obliged to receive. This includes any salary sacrifice setups.
• It isn’t cash or a cash voucher (gift cards qualify as long as they aren’t exchangeable for cash)

Where a gift meets all of these criteria, you don’t have to let HMRC know about it, or pay any tax or National Insurance on it.

If your business is a close company (a limited company controlled by five or fewer individuals), then an overall spend on trivial benefits in any tax year is capped at £300 per employee.

What happens if you spend more than the threshold for a trivial benefit on an employee gift?

You can still gift your employee a voucher that’s worth more than £50, but it will become taxable to both you and the employee under the benefits in kind tax rules.

The rule was introduced to make sure employers aren’t tempted to swap an employee’s pay for something of the same value – because this could help them avoid the tax and National Insurance which would otherwise need to be paid on the salary. To minimise the risk of this happening, if you buy a gift that exceeds the trivial benefit threshold of £50:

• You – as the employer – will be required to pay National Insurance on it
• Your recipient – the employee – will also be required to pay Income Tax on the value of the gift

You’ll need to report the benefit using your payroll software each time you run payroll and PAYE.

Does a cash bonus count?

Cash rewarded to staff in the format of a bonus will be counted as additional earnings on top of their standard salary. That means that PAYE tax and National Insurance will need to be paid through payroll.

Ways to show staff you care without spending money

If you’re working with a shoestring budget, or you prefer to dodge the hassle of working out if a gift is going to be an allowable expense or not, consider a non-monetary gesture instead.

You don’t have to splash the cash to show employees you appreciate them and that you’re grateful for their hard work. Here are just a few great ways to treat your staff without having to spend (much) money:

• An extra day of paid leave
• Flexible working hours
• An early dart on Fridays during the summer months
• An office party in their honour
• A parking space reserved just for them
• A long lunch
• Organise a staff games day on site
• Additional training and development
• Sing their praises (recognition goes a long way)

 
Hope this article answers all of your queries on the topic of staff gifts and allowable expenses. Got some more tax-based questions on your mind? Let us know!

The post Are Staff Gifts an Allowable Expense? appeared first on The Cheap Accountants.

Now this could be for a variety of reasons. For example, people may want more freedom and control over their own schedules. Or perhaps the availability of online platforms in this day and age has simply made it easier for people to finally take the leap and go it alone.

Either way, freelance work continues to grow in popularity as more and more companies look to take advantage of the online marketplace and outsource certain tasks to those with specialised skill sets.

Before you take the plunge, it’s crucial to identify your strengths and choose a niche where you can truly shine. After all, focusing on what you do best sets you up for long-term success.
There’s never been a better time to start freelancing – so let’s get into it!

What is a freelancer?

Quite simply, a freelancer is a self-employed professional who offers their services to various clients, usually on a project-by-project basis.

It means you’re your own boss and get to decide when, where, and how you work. This increased flexibility ultimately enables you to be selective when it comes to choosing the projects you want to work on – and the people you want to work for.

Really, though, you don’t work for anyone but yourself.

You can also set your own rates, meaning you’ll potentially earn more than you would in a regular job with a fixed (or long-term) contract.

What taxes do freelancers need to pay?

This largely depends on the business structure you choose, but a freelancer’s tax obligations typically include Income Tax on the profits left over after you deduct any allowable business expenses.

The type of National Insurance self-employed people pay is separate to any NI you might pay as an employee, unlike Income Tax. Class 4 NI contributions are paid as a percentage of any self-employed profits you earn over the £12,570 NI threshold.

You might also need to think about things like Student Loans deductions and, if this is your only source of income, pensions!

How do I pay tax on my freelance income?

As a sole trader you’ll need to submit Self Assessment tax returns to report your earnings although, starting from April 2026, some sole traders will begin using Making Tax Digital (MTD) for Income Tax (which will replace Self Assessment if you’re eligible for it).

What are the top freelance jobs?

So, which freelance jobs are on the rise in 2026?

It should come as no surprise that AI or prompt engineers are currently in high demand, with these professionals helping companies to thoughtfully integrate artificial intelligence into their services and business practices.

AI isn’t going anywhere; it’s only going to become more important as technology improves over time. So why not give yourself a head start?

In the same realm, it’s also a good time to be a machine-learning engineer. As one of these, you’re responsible for the development of the actual AI algorithm, training it to behave and respond in the right way.

Alternatively, you could offer your services as a cybersecurity developer, working to assist clients in fending off things like malware and other online threats. This role is crucial in today’s digital world.

Another freelance job on the up is that of financial consultant, where you advise clients on how best to use their valuable assets.

If these roles don’t sound like they match your skillset – classic freelancing roles such as copywriters, digital marketing specialists, virtual assistants and data entry clerks are still thriving into 2026. It’s all about finding what works for you.

Keeping records as a freelancer

Whether you like it or not, bookkeeping is an essential part of managing a business’s financial health. It’s also a requirement!

This process involves recording the daily transactions which take place in your business. This will help you keep track of your income vs. expenses, which is essential for your tax return as well as monitoring what works in your business.

Generally speaking, the amount of tax you pay depends on your profits, which is why it’s important to keep good records.

If you’re a sole trader, there’s no legal distinction between you and your business, so your business’s profits are yours to keep once you’ve paid tax – another reason why it’s so important to keep records!

A good accountant can help make sure you’re doing everything right and operating in the most tax-efficient way possible.

 
Find more help in our online accounting hub, and learn more about how to find the right accountant for your business.

The post Top Freelancing Jobs in the UK appeared first on The Cheap Accountants.

You may need an accountant to take care of your bookkeeping and payroll for you, or maybe you’re just looking for some friendly advice.

Either way, you want to consider all your options before committing to anything, and this includes comparing different quotes to ensure you’re getting the best deal. In this article we’ll explain a few things to consider if you’re trying to decide whether an online accountant or a traditional high-street approach is best for you.

What is the difference between online and traditional accounting?

Nowadays, keeping track of your accounts is easier than ever through online accounting. This often makes the whole process simpler and gives business owners better access to their records.

You can still do your accounts the traditional way though – going to see an accountant in-person on your local high street – and for some people it’s the better choice. It all depends on your specific needs.

Let’s go into a bit more detail to help you understand the key differences between online and traditional accounting.

What is online accounting?

There’s sometimes some confusion between online accounting software, and online accounting services.

The software is just that; it’s accounting software which is hosted online using multiple secure locations, as opposed to being downloaded to a single device. This not only makes data more secure, but also more accessible.

You can update your bookkeeping records anywhere (and on any device) as long as you have the login and an internet connection.

This kind of software deals with record-keeping, so you might still need an accountant even if you use online accounts software.

An online accountant is just like any other type of accountant, but rather than visiting them in-person you can talk to them online, by phone, or with video calls.

How does online compare to traditional accounting?

A traditional (or local) accountant won’t necessarily need to see you in-person, but you’re more likely to have the option to do so. This can be good if you prefer to do things like talk about tax face-to-face.

It might also mean you can just drop off your records and receipts, and they’ll turn this into bookkeeping records and then into a proper set of accounts.

Although at this point it’s worth mentioning that most online accountants offer a bookkeeping service, and lots of high-street accountants will provide you with bookkeeping software. The gap between the two is much narrower these days!

Access to software

This access to online software can be incredibly useful whether you end up with an online accountant or a local one, especially if you need to keep financial records digitally so you can comply with Making Tax Digital requirements.

Without it, you’ll have limited access to your accounts and won’t be able to make changes yourself. Instead, you’re relying on your accountant to get back to you and to send you any reports, which can obviously take a bit of time if they have other clients to look after as well.

Should I choose an online or high-street accountant?

Even with a local accountant, you might find that you don’t need to see them in-person all that often – if at all. Even signing documents and carrying out identity checks can be dealt with online, so the real choice comes down to whether or not you feel more comfortable at least having the option to call in on your accountant if you want to.

It’s a very personal choice!

Before committing to that local firm though, just double-check that they do indeed offer in-person meetings. Lots of traditional sectors are moving to an online-first way of servicing clients.

Tips on finding an accountant

Would you believe that in the UK, literally anyone can call themselves an accountant? Yep, the title isn’t legally protected in the UK. Don’t panic though, because there are ways you can spot legitimate accountants.

Making sure your accountant is appropriately qualified

The easiest way to do this is by looking for specific qualifications.

For example, you could look for a Chartered Certified Accountant (commonly abbreviated as ACCA) or a member of the Institute of Chartered Accountants in England and Wales (ICAEW).

Now, if you’re a freelancer or have recently formed a new company, you’ll probably be more worried about the price than anything else (like experience, level of expertise, etc.)

This is completely understandable, but you still want to make sure the accountant you pick is qualified to do the job and can be trusted with your sensitive information. Otherwise, it could end up costing you more – in the form of fines!

You also want to find the right accountant for you.

Consider whether you’d be fine with a generalist accountant who covers all the bases, or whether you’d benefit from having someone with specialised knowledge. For instance, if you need a landlord or forensic accountant.

Lastly, you can also just check things like reviews and comparison pages to give yourself a better idea.

 
Find more help in our online accounting hub, and learn more about how to find the right accountant for your business.

The post Online vs Traditional Accounting: Which Is Right For You? appeared first on The Cheap Accountants.

What is MTD for Income Tax?

MTD for Income Tax is part of the Government’s scheme to gradually digitise the process of submitting tax returns.

It basically means that some people will no longer submit the usual Self Assessment tax returns, and will instead be required to keep their income tax records digitally and submit updates to HMRC on a more regular basis.

Who’s affected?

MTD Income Tax (IT) is rolling out in phases depending on your ‘qualifying income’. You’ll need to comply with MTD rules if your self-employed and/or property income is:

• Over £50,000 in the 2024 to 2025 tax year
• Over £30,000 for the 2025 to 2026
• Over £20,000 for the 2026 to 2027 tax year

What counts as qualifying income?

Qualifying income is made up of the sole trader and property income you reported in the previous year’s Self Assessment tax return. Other sources of income (e.g. dividends, wages from an employer, etc.) don’t count towards your qualifying income, even if they appear on your Self Assessment.

For example, let’s say you have multiple streams of income; dividends, earnings from a side hustle arts and crafts store on Etsy, and you also get income from renting out your spare room.

HMRC uses the total of your side-hustle and rental earnings recorded in your tax return to determine whether or not you need to join Making Tax Digital.

How often do I need to send MTD Income Tax updates to HMRC?

Once you’re registered for MTD for Income Tax, you’ll need to send HMRC quarterly updates to report your income and expenses relating to any self-employed or property income from that period.

Then, after your final quarterly update, you’ll need to submit your MTD Income Tax return. This should include your self-employed and/or landlord income, as well as any other income you might have. For example, any dividends or capital gains from the time period covered by the return.

This is called a ‘final declaration’ and will replace Self Assessment if you’re now using Making Tax Digital. The deadline will still be 31st January following the end of the tax year it relates to (which makes it easier to remember!).

Do I need to keep separate records for each side hustle business?

Yes, because you’ll need to submit a separate quarterly update for each business – just like you’d report your multiple side hustles using different sections on your Self Assessment tax return.

Keeping separate records for each source of income will help to avoid confusion, making it easier to submit quarterly updates and, ultimately, your MTD Income Tax return.

Separating your digital income and expense records for each business is strongly recommended even if you don’t need to follow the MTD rules just yet. Having separate records makes it much simpler to review and understand how each business is performing individually.

At some point down the line, everyone will be registered for MTD, so why not get ahead of the curve and start digitising your records now?

Do I need an accountant to help me with MTD IT?

It’s not a requirement, so you can go it alone or you can hire an accountant to help you with Making Tax Digital (and your tax reporting in general).

Either way, an accountant can break it all down for you and simplify the process of submitting quarterly updates, as well as a final tax return. They’ll also help make sure you’re operating in the most tax-efficient way possible!

 
Find more help in our online accounting hub, and learn more about how to find the right accountant for your business.

The post Does MTD Income Tax Affect My Side Hustle? appeared first on The Cheap Accountants.

Just because you aren’t a gigantic conglomerate organisation with offices all over the world, and countless teams orchestrating an operation cross-continent, it doesn’t mean good project management should be any less of a priority.

If anything, start-ups and SMEs have less wiggle room for error due to limited resources and finance. So, with this in mind, we’ve put together some tricks of the trade to help you improve your project management tactics as a small business owner.

Plan ahead and then plan some more

It goes without saying that effective project management requires lots and lots of planning. Processes need to be put in place and potential problems considered. Contingency plans need thinking about, and sufficient preliminary research needs doing – all before you put your foot on the gas.

You’ll need to think about financial planning, logistics, and timings to help you get the resources you need in place at the right times.

Definte the roles everyone will play – even if it’s just you

Even if you’re the only person involved, it’s still worth defining the roles needed at each stage of a project, and the responsibilities that role entails. It will help you get things clear in your mind, so you can be where you need to be at the right time.

For instance, if you’re supplying wedding cakes to two separate venues on the same day, you need to make sure you turn up at the right place, with the right cake! Plus, are you just handing the cake off to someone in the venue? Who? When? And so on…

Ensure everybody involved is clear on where they need to be, what they need to be doing, when they need to do it by, and who they need to be working with.

Evaluate and evolve as you go

As the project develops, ask yourself the following five questions at regular intervals:

• Are you meeting milestones in sufficient time?
• Are all of your deliverables being executed to a high enough standard?
• Are there any members of the team who would be better placed elsewhere?
• Is your budget still on track?
• Have there been any unexpected elements which now need accounting for?

Answering these questions at various points along the way will help you identify any issues that might arise, or any processes that may need streamlining in some way. You might even find they’re part of a larger issue within the business, prompting you to update your business plan completely.

It’s going to help you evaluate as you go, and sort out any weak spots before they become big troublesome holes!

Don’t be afraid to delegate responsibility

Offloading tasks to people with the right skills for the job isn’t a sign of weakness. In fact, it’s an entrepreneurial strength.

Trying to take everything on yourself will almost always result in underperformance, struggles with deadlines and frustration all round.

A knockout project manager is one who can recognise their own skill gaps and capitalise on the expertise of others. Whether you have staff or need to outsource to freelancers, delegation can save the day.

Manage the budget

A huge part of the project management process is handling finances and making sure budgets are being met.

With so many other elements to consider, it’s easy to take your eye off the ball when it comes to outgoings and spending. You just want the project to go to plan and we get that. However, for a small business, overspending can be crippling if not handled correctly so it’s vital to take measures to avoid it at all costs.

Enlisting the help of a trained professional will help you make sure the numbers stay balanced, and you don’t end up splashing cash on things you really can’t afford.

 
Need help with the accounting and finance side of things? Learn more about how an accountant can help.

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