If this sounds familiar, you probably don’t have a load of spare money to spend on an accountant, but that doesn’t change the fact that you would benefit from hiring one.

So, where does this leave you?

Thankfully, there are many different options available when it comes to hiring an accountant, and some are more cost-effective than others.

Let’s take a closer look.

Is it worth hiring an accountant?

Among other things, building a business from the ground up requires patience, hard work, and significant investment.

Every little counts, and so it’s understandable that you would maybe think twice before choosing to hire an accountant, with any leftover money instead being channelled back into growing your business.

What most people miss, though, is that hiring an accountant is also an investment in your business.

Dealing with HMRC for the first time is a steep learning curve, and managing that experience can be much easier with an accountant in your corner.

Having an accountant on call will also free up time that might be spent on your accounts for you to focus on bringing in new business or promoting your services.

What’s more, an accountant can provide specialist advisory services and spot potential financial issues before they become a problem, reducing the risk of your business being investigated by HMRC.

Not to mention accountancy fees are tax deductible when incurred wholly and exclusively for your business.

Finding an accountant

The first thing you should do is look at your options.

You’ll find that some accountancy firms operate exclusively online, offering low-cost remote services.

These services are mainly targeted at small businesses or freelancers, and offer a full range of accounting services at affordable prices.

Traditional high street accounting is still an option, too, offering face-to-face meetings and a “personal touch” that some really value.

Regardless of the type of accountant you ultimately choose to go with, you’ll also want to make sure they’re appropriately qualified by looking out 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).

Also consider whether you’d be fine with a generalist accountant who covers all the bases, or whether you’d benefit from hiring someone with specialised knowledge.

What are the main differences?

The big difference is how you actually work with your accountant – as opposed to, say, the exact services or expertise you receive from them.

Generally speaking, an online accountant provides support remotely, while a high street accountant offers a local office where you can arrange to meet in person.

There can be some overlap, though.

Some online firms provide a dedicated accountant, and some local firms offer remote or over-the-phone appointments.

As an example, The Accountancy Partnership offers remote support from your own dedicated accountant at fixed monthly fees, starting from £24.50 per month.

You can find out more about how much an accountant really costs here.

Is an online accountant cheaper?

It can be, but you need to do your research first.

The most useful comparison to make would be the total cost of the services your business needs – rather than looking at only the advertised starting price.

Ask whether the quote includes bookkeeping, accounts, tax returns, payroll, software, and ongoing advice, or whether some of these cost extra.

It’s also a good idea to agree how often you can contact your accountant, as well as the typical turnaround times you can expect.

Some other important factors to consider include:

• Scope of work
• Charges
• Communication
• Service levels
• Qualifications
• Experience
• Reviews

Which should you choose?

As with most things business-related, it comes down to personal preference and what’s best for you based on your own unique situation.

An online accountant may be the better option if you prefer remote communication and want to avoid travelling for appointments.

On the other hand, a high street accountant is worth considering if face-to-face communication is important to you, and they may also understand specific regional business challenges.

Remember, though: neither preference should replace doing your due diligence and carefully comparing pricing structures, and as we have seen, the line between online and traditional accountant is becoming increasingly blurred as firms look to provide a personal service in a more convenient way, and at a lower overall cost.

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

The post Is an Online Accountant Cheaper Than a High Street Accountant? appeared first on The Cheap Accountants.

This is actually the first big decision most entrepreneurs face, and it’s an important one, as choosing the right legal structure for your new start-up can affect a wide range of things, from protecting your assets to how tax-efficient your business is.

Of course, there are pros and cons to any kind of business structure, so deciding which is best for you really comes down to your own unique circumstances, as well as your general preferences.

In this article, we’ll break down how being a sole trader works, explaining the key differences from being a limited company, and then walk you through the registration process.

What is a sole trader?

A sole trader is an individual who owns and runs their own business.

As a sole trader, there’s no legal distinction between you and your business, and so you’re personally liable for everything that happens, in both a financial and a legal sense.

This includes things like the business’s finances, taxes, and any debts it takes on.

How does being a sole trader work?

Well, because there’s no legal separation between a sole trader’s personal finances and those of the business, you’ll pay Income Tax on your profits, whether or not you actually use them personally.

This means that, even if you leave them in the business, you’ll pay personal tax on them.

Who can become a sole trader?

Technically anyone can if they set up their own business, but – depending on how much you earn from sole trader income – you might need to register for Self Assessment in order to pay the correct amount of tax.

Sole traders are allowed to earn up to £1,000 from self-employment (known as the trading allowance) in a tax year before they need to register for Self Assessment and start sending tax returns to HMRC.

When do I need to register as a sole trader?

You should register for Self Assessment no later than the 5th October in your second tax year of business.

The tax year runs from 6th April to 5th April.

Failure to notify HMRC that you need to register for Self Assessment as a sole trader can result in a penalty, even if it was a genuine oversight on your part.

These penalties are in addition to any tax which might be overdue.

Why register as a sole trader?

As far as HMRC is concerned, sole traders and their businesses are one and the same.

This might mean there’s more risk for you personally due to the increased liability, but it also means you get to keep all of the profits.

Other benefits include being able to operate your business with relative privacy, as there’s no requirement for a sole trader to make information available to the public.

What’s more, there’s a limited amount of admin when it’s just you, and this saves you time in the long run.

What are your responsibilities as a sole trader?

Your responsibilities as a sole trader depend on how you need to report your income tax.

Paying tax

If you don’t qualify for MTD for Income Tax (MTD IT) yet, you’ll complete a Self Assessment tax return to HMRC each year and pay Income Tax and National Insurance on your earnings.

If your qualifying earnings mean you do need to report your earnings via Making Tax Digital for Income Tax, you’ll submit four quarterly updates, followed by one final declaration, which replaces the Self Assessment.

Keeping records

Either way, you’ll also need to keep detailed and accurate bookkeeping records, and if you are operating under MTD IT, you’ll need to use MTD compatible software.

Sole trader vs limited company: what’s the difference?

As a sole trader, there’s no legal distinction between you and your business – meaning you’re personally liable for everything that happens within it.

If something unforeseen occurs, for example, a client sues you for professional negligence and wins a financial settlement, you could end up losing personal assets to cover the cost.

A limited company works differently. As the name suggests, your personal liability is limited – any debts belong to the company, not to you as an individual.

This generally makes it a more protected structure for directors and shareholders, since business debts stay separate from personal finances.

You’re more likely to align with a sole trader business structure if:

• Your profit figure is below £30,000
• Your business is relatively low-risk in terms of potential liability
• You only have one source of income

If you’re a higher earner, or you work in a high-risk industry, it may be best to opt for a limited company – but speak with an accountant first.

How to register as a sole trader?

Sole traders register by signing up for Self Assessment with HMRC.

You can register for Self Assessment using your online Government Gateway account, or via your GOV.UK One Login – depending on which one you have.

Alternatively, if you have been registered for Self Assessment in the past, you can reactivate your registration using a CWF1 form rather than having to create a brand new account (as this can cause confusion).

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

The post What is a Sole Trader, and Should I Register as One? appeared first on The Cheap Accountants.

While you would traditionally go to a bank for this kind of backing, the growth of technology and online services has given rise to alternative finance options.

Peer-to-peer lending is one such example, giving business owners more choice in how they borrow and invest.

But how does this actually work, and are there any potential risks to be aware of?

Let’s take a look.

What is peer-to-peer lending?

Peer-to-peer (P2P) lending connects borrowers directly with potential investors, usually through an online platform or site.

This obviously cuts out the more traditional route of going through the bank, but the main benefit is increased flexibility, and it also gives you the chance to engage with people who are excited about whatever it is you’re trying to achieve.

An example might be someone borrowing £5,000 to consolidate credit card debt, while multiple investors each fund part of the loan.

Or investors could provide cash to a business against unpaid customer invoices.

Who is involved?

There are three main parties involved in a P2P loan:

• The borrower – the person or business that needs the money and agrees to repay it with interest
• The investor/lender – the individual or organisation that provides the money and hopes to earn interest
• The P2P platform – the online company that connects borrowers with lenders

Other parties can be involved, though.

For example, credit reference agencies, payment providers, or debt collection services if payments are missed.

How do businesses access P2P funding?

You can apply to online platforms, which will assess risk and suitability in order to determine a fair interest rate.

The loan is then listed on the platforms so potential investors can decide whether or not to get involved, and in this respect P2P is quite similar to crowdfunding.

Some popular peer-to-peer lending sites in the UK include:

• Crowd2Fund – a P2P lending platform where investors lend to UK businesses seeking finance
• Rebuildingsociety, which focuses on loans to UK small and medium-sized businesses for purposes such as growth, equipment, hiring staff, cash flow, etc.
• FOLK2FOLK, which provides loans to SMEs across sectors including retail, hospitality, farming, and leisure
• Kuflink – offers bespoke short-term commercial and property-backed lending opportunities

How is the loan repaid?

Essentially, a P2P lending platform functions as a kind of middleman between a borrower and investors.

The borrower applies for a loan, and the platform assesses the borrower’s eligibility.

The loan is then listed or allocated to investors, with the borrower receiving the money once the loan is funded.

In terms of repayments, the borrower makes these as necessary and the platform distributes them to the investors (after deducting any applicable fees).

What should businesses consider?

You may still be weighing up whether to try out peer-to-peer lending or go the tried-and-tested route of borrowing from a bank.

When assessing the potential viability of a P2P platform, you first need to do some research into its reputation to ensure it’s legitimate, and this will also give you some insight into how it operates, as well as its eligibility requirements, etc.

It’s worth knowing that some of the sector’s original big names, including Zopa, RateSetter, and Funding Circle – have since scaled back or exited retail P2P lending entirely, as tighter regulation and thinner margins made the model harder to sustain. That doesn’t mean P2P is dying – smaller specialist platforms like the ones above are still active – but it’s a sign the sector has matured and consolidated rather than simply grown.

In general, though, you should consider the advantages and disadvantages of peer-to-peer lending vs taking out a more traditional loan.

To help you out, we’ll break down the main pros and cons.

Pros

In addition to greater accessibility, P2P lending generally gives you faster access to capital thanks to a quick and convenient process that can be completed over the web.

There are also flexible loan structures, with platforms offering different repayment periods, and competitive interest rates mean there’s more choice overall.

Cons

Some borrowers will face higher interest rates (e.g. those with weaker credit scores), and some platforms may charge arrangement, administration, or late-payment fees.

In this sense – and as with any kind of loan – debt is always a risk.

What’s more, P2P isn’t always cheaper than banks, and some platforms may offer fewer repayment options than a mainstream lender if your circumstances change.

Key takeaway

It’s certainly true that P2P lending can be more convenient, but borrowers should take time to compare the total cost, fees, and repayment terms carefully before taking on a loan they may struggle to pay back.

Compare the P2P loan with bank loans, overdrafts, asset finance, grants, or other types of financial aid before committing.

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

The post What Your Business Needs to Know About Peer-to-Peer Lending appeared first on The Cheap Accountants.

We’ll explain what MTD is, and whether it’ll affect you.

What is MTD?

In simple terms, it’s a government-led initiative to try and modernise the tax system, while also minimising mistakes in the process.

It’s arguably the biggest change since HMRC launched Self Assessment more than 30 years ago. Okay, but… how does it work?

Well, it aims to replace existing analogue processes with digital, or cloud-based, record keeping, the idea being that this will ultimately make it easier for people to submit their tax returns.

Some of the other proposed benefits include:

• The ability to review all your tax information from your personal digital tax account
• A faster, more streamlined process of submitting your information to HMRC
• Increased accuracy and fewer errors

Who does MTD apply to?

Making Tax Digital applies to all VAT-registered businesses, as well as sole traders and landlords who pay Income Tax (depending on their gross qualifying earnings).

Making Tax Digital for VAT

Compliance with the Making Tax Digital rules is mandatory for every business which registers for VAT.

Now, how exactly do you comply?

By keeping digital records, and using compatible Making Tax Digital software to submit your VAT returns.

Making Tax Digital for Income Tax

If you’re a sole trader or landlord, MTD for Income Tax may already apply to you, depending on how much you earn.

The rules are based on your gross income (your turnover before expenses) from self-employment and/or property, not your profit. If your 2024/25 return showed income over £50,000, you were required to follow the MTD for Income Tax rules since 6th April 2026.

If you haven’t yet signed up, HMRC may register you. You’ll receive a letter if this happens, although it’s usually better to sign up yourself, so you can check the details are right from the start.

Further groups will follow in stages:

• From April 2027: Those with gross income over £30,000
• From April 2028: Those with gross income of £20,000 or more

To meet the requirements, you need to digitise all records relating to your business income and expenditure, and make this a habit going forwards. You also need to submit quarterly updates using HMRC-recognised software and provide a Final Declaration by the 31st of January following the tax year it relates to.

If you’re already over the £50,000 threshold and haven’t yet set up compatible software, it’s worth speaking to your accountant as soon as possible.

Read our guide to choosing a property accountant if you need more help in this area.

How do I prepare my business for MTD?

Making Tax Digital is being rolled out in stages, so what you need to do depends on which group you fall into.

If MTD already applies to you

If you’re VAT-registered, or you’re a sole trader or landlord with gross income over £50,000, you should already be keeping digital records and sending your information to HMRC using approved software. If you haven’t got this set up yet, speak to your accountant as soon as you can so you can get compliant.

If MTD applies to you soon

If your gross income from self-employment and/or property is over £30,000, your start date is April 2027. If it’s £20,000 or more, it’s April 2028. You’re not in scope yet, but now is a good time to:

• Move your bookkeeping into digital software
• Get into the habit of recording income and expenses as they happen
• Try out quarterly reporting before you’re required to do it

What is MTD software?

MTD accounting software allows you to create digital records and make submissions to HMRC. Lots of software providers offer an all-in-one solution which can be used to both create the records and submit them.

This type of software is often hosted online, with data stored on several servers in multiple locations, meaning it’s protected from things like power outages, or hardware and software malfunctions.

A note on bridging software

In some cases, you may need bridging software to make the actual submission. Bridging software is basically just a means by which you can link your financial records to HMRC in a way that’s compliant with the MTD rules.

After all, not all digital record-keeping systems (such as spreadsheets, and even some bookkeeping software providers) include a direct connection to HMRC, so you may need a way to “bridge” the gap.

Will my accountant make sure I’m MTD compliant?

Online accounting software means you can give multiple people access to your data, simultaneously and in real time. This means your accountant and anyone else in your business is always kept in the loop and knows what’s what.

This in turn makes it easier for them to help you maintain good and accurate bookkeeping records, as there’s no need to transfer files manually. Everyone is always working on the most up-to-date versions of things, which helps in terms of collaboration.

So, yes, your accountant can absolutely help make sure you’re complying with the Making Tax Digital rules if you need to be.

What are some other benefits of digital record keeping?

We’ve established that online accounting software provides an extra layer of security, with your data being hosted on multiple servers in multiple locations at any one time, but what are some other benefits to using it?

Well, one of these would undoubtedly be increased collaboration, as every change is universal and real-time data can be seen by anyone with access.

Your data is also generally more accessible, with you being able to view it from anywhere with a secure login and access to the internet.

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

The post Are You Ready for Making Tax Digital? appeared first on The Cheap Accountants.

You may even feel like there aren’t enough hours in the day to do everything you need to.

Thankfully, while you might not be able to time travel, there are some steps you can take to free yourself up to focus on the most important tasks in your business – and ultimately stay on top of your workload.

These include coming up with a robust plan, prioritising tasks, and accepting help (in various forms).

Let’s get started.

Plan ahead

First and foremost, good financial planning and management (especially in the early stages) can help give your business a solid foundation, which will allow you to rest easy and focus on the immediate future.

The knowledge gained from undertaking thorough market research can be used to set clear goals, and this ensures your business is always making progress in the background – almost without you even having to think about it.

With the big picture taken care of, you’ll have the mental space needed to crack on with the tasks at hand, giving them the level of attention they deserve.
Speaking of which…

Prioritise tasks

If you have a to-do list, determine which tasks most need your attention and aim to tackle these first, in order of importance and/or urgency.

This is part of being well organised and should ensure you never fall behind.

Know when to delegate

Being a business owner, you may feel it’s your responsibility to handle everything yourself, and, while this kind of thinking is certainly admirable, it won’t help you save time.

Rather, you should look to delegate certain less crucial or urgent tasks (e.g. admin) to other people in your business, so you have the time to focus on the most important ones.

If you don’t already have other people in your business and feel your workload is becoming difficult to manage, you might want to consider expanding, as this will allow you to share the burden.

Outsourcing

It’s important to think about the long-term before deciding to bring on other people full-time.

For example, if your workload is just heavy right now because of a specific project, deadline or period (for example, Christmas), then outsourcing may be the smarter, more cost-effective option.

Outsourcing is where specific business tasks or functions are given to external service providers (like freelancers) to handle, typically on an ad hoc basis.

On top of saving you money, though, outsourcing generally affords more flexibility, allowing access to specialist skills if and when you need them.

This in turn can help to streamline projects, with freelancers tending to be highly experienced in their chosen field (and thus very efficient).

Make use of technology

As a business owner today, you simply can’t afford to ignore the digital tools and platforms available to you, which can be a huge help.

One of the major pitfalls of running a business is that there’s rarely enough time to handle tedious administrative tasks, like scheduling meetings, sending reminders, and keeping up with routine follow-ups.

But thankfully nowadays, something like an AI scheduling assistant can sort everything out for you, saving you precious time and freeing up your schedule for more pressing matters.

An AI calendar app like Reclaim.ai can be another nice, easy option to help you stay organised.

Generally speaking, the technical nature of AI means it’s best utilised in various admin roles and can enable you to work faster and more efficiently.

If it’s the financial side of things that’s slowing you down, consider using cloud-based software like Pandle, which offers powerful automations that eliminate the hassle of manually entering every business transaction.

Hire an accountant

The main benefit of hiring an accountant is they’ll be on call to answer any questions you might have, which saves you having to conduct your own research into HMRC’s constantly evolving rules and regulations.

Instead of trying to track down the correct information all by yourself, simply consult an expert, who will break everything down and also ensure you’re being as tax-efficient as possible.

What’s more, online accounting can significantly speed up this process, as every change to your records is universal and applies to all devices (so there’s no transferring files manually or emailing attachments back and forth).

Your data can be accessed by everyone, simultaneously, and in real time, which means your accountant is always in the loop.

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

The post Time-Saving Tips for Small Businesses appeared first on The Cheap Accountants.

That means you must’ve done something really wrong, right?

Not so fast.

There are many possible reasons why HMRC might want to take a look at the inner workings of your business, ranging from something minor to the more serious.

It certainly doesn’t help that tax jargon is confusing at the best of times.

Don’t fret, though, as we’ll explain exactly what a compliance check is, as well as why HMRC may have chosen your business specifically.

Let’s get started.

What is an HMRC compliance check?

Simply put, HMRC carries out compliance checks to ensure businesses and individuals are paying the correct amount of tax, at the right time, and claiming the correct reliefs.

They can be completely random, or they might be triggered by something in particular, for example – mismatches in your tax data.

Ultimately, the aim of a compliance check is simply to make sure your records are accurate and up-to-date, and also a true reflection of your business activity.

Why might HMRC ask to carry out a compliance check?

Contrary to what you may have thought, compliance checks don’t only affect those trying to avoid paying tax.

Any business can be investigated at any time, and for any number of reasons.

What are the most probable reasons, though?

Random checks

HMRC will sometimes perform a random check on a business, whether anything has triggered an investigation or not.

With this in mind, it’s important to remain levelheaded, as while it’s obviously scary being contacted by HMRC, it doesn’t necessarily mean there’s cause for concern.

Discrepancies in submitted information

For example, mismatches between your returns and HMRC’s own records, or involving third-party data from banks, employers, etc.

HMRC also look out for potential anomalies, such as low profits despite a high turnover, or a big fluctuation in figures.

Late or inconsistent filings

Frequently submitting your tax returns or accounts after the deadline is another surefire way to get HMRC’s attention, as is making regular mistakes on these.

Industry-specific risk factors

Another way your figures can be inconsistent is if they aren’t consistent with the industry you work in.

Some sectors are more likely to be reviewed, with cash-based businesses generally facing the most scrutiny.

Tips, reports, or external information

HMRC also sometimes receive tip-offs from individuals with inside knowledge.

An example of this could be a tip-off about company directors earning significantly more than employees (and not receiving dividends).

Alternatively, it could simply be noted that you aren’t registered with an accountant, which might raise some eyebrows depending on the size of your business.

What happens during a compliance check?

After initially contacting you, HMRC might request additional documents or ask to arrange a telephone interview.

They may even request access to your home, business, or agent’s office – though this is usually reserved for more extreme cases.

In terms of your records, there are several areas HMRC may want to take a peek at, including your bookkeeping, accounts, payroll/HR data, and your tax returns.

How far back will investigators go?

Generally speaking, HMRC will look over several years of records, but there are limits based on the type of tax and the reason behind the investigation:

• 4 years for genuine mistakes
• 6 years for careless errors
• 12 years for an “offshore matter or offshore transfer”
• 20 years for deliberate tax evasion

This is why it’s recommended that you retain financial records relating to your business for a minimum of five to six years depending on your business structure.

Possible outcomes

In an ideal world, there will be no further action required.

You might even be owed some kind of repayment if you’ve paid more tax than you should’ve.

If you haven’t paid enough tax, however, then you’ll be asked to make up the difference.

HMRC might also issue a penalty, but your own unique circumstances will be taken into consideration (especially if you made a voluntary disclosure, which is where you come forward of your own accord and inform HMRC of a mistake you’ve made).

How to respond to an HMRC compliance check

First and foremost, ensure you communicate clearly and meet any deadlines they set for you.

If your records aren’t already organised, consider investing in good bookkeeping software to help streamline the process.

You may also want to seek professional advice from an accountant, who’ll help you stay compliant and check you’re operating in the most tax-efficient way possible.

What are your rights during a compliance check?

Apart from the obvious, like having a right to be treated fairly, kept informed, etc., you also have a right to representation in the case that HMRC decides to issue a penalty of some kind. The good news is that your accountant can fully represent you (just ensure that’s something you have within your package).

You’ll normally need to make your appeal directly to HMRC, but this can be escalated to a tribunal in some instances.

How to reduce the risk of future compliance checks

Compliance checks aren’t fun, and so it’s worth doing everything in your power to reduce the likelihood of them occurring.

The two main things you can do are to keep accurate and up-to-date records (ideally using MTD-compliant bookkeeping software) and file your returns in plenty of time.

Again, you can also think about seeking professional support where appropriate.

A good accountant will keep you compliant and tax-efficient, and may even be willing to represent you if HMRC do decide to investigate.

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

The post Why Are HMRC Asking to Do a Compliance Check? appeared first on The Cheap Accountants.

No, times have moved on, and people pretty much expect to be able to purchase things online, or at the very least using their debit or credit card, if not contactless.

If you’re a business owner who has yet to make the switch to online payments, there’s simply no time to lose, and waiting any longer could result in you getting left behind.

But what exactly constitutes an online payment, and how do they work?

Also, what’s the cost involved?

Let’s take a look.

What are the benefits of online payment?

First and foremost, your business risks losing a sale if there’s no way for someone to pay via card, as they simply might not have cash on them (an increasingly common occurrence).

Like it or not, people have been conditioned to rely on online payment methods, and so carry less and less cash every year.

Being able to take card payments also means people will be inclined to spend more, as they’re not eating into any emergency cash reserves they do have.

Security is another big factor.

The reality is that businesses which deal in cash are more vulnerable to things like robbery attempts, putting staff at risk unnecessarily.

Conversely, when everything’s in the ether, it’s safe from physical threats.

Perhaps the biggest benefit, though, is simply convenience and accessibility, with online payments enabling customers to make purchases from anywhere in the world, and at any time.

This means businesses can receive payments instantaneously.

How do online payments work?

Online payment generally refers to when businesses accept electronic payments for goods or services purchased over the internet (or via card/contactless).

There are different types of online payments to be aware of as a business owner.

These include:

• Debit and credit card payments
• Bank transfers
• Digital wallets

Typically, payments go through a payment gateway and payment processor, and these authorise online payments by encrypting and transferring data securely.

Choosing the right online payment method

When it comes to choosing an online payment method, there are actually quite a lot to choose from, and some work better for different types of businesses.

It really comes down to what’s best for your business, based on your own unique needs.

With that in mind, the most common types include the following:

Credit and debit cards

These are undoubtedly the most common forms of online payment processing, mainly because of how easy they are to use.

To make an online purchase, customers simply enter their credit or debit card information into a payment gateway.

Or, if the sale is in person, they can use their pin or even just tap their card for smaller purchases (known as contactless).

Bank transfers

As the name would suggest, this method involves the transfer of funds directly from the customer’s bank account to the business’s bank account.

Bank transfers can be completed two main ways: either via online banking or with mobile banking apps.

Alternatively, they can be initiated and authorised through a retailer’s website or app.

Digital wallets

These offer a convenient alternative, allowing customers to store their payment details and make online payments quickly and easily.

Popular examples include PayPal, Apple Pay, and Google Wallet.

Direct debit

This is a recurring payment method where the customer gives permission for the business to withdraw a set amount from their bank account at regular intervals, much like a subscription.

Cryptocurrency

Crypto is a digital currency that can be used to make online payments in certain countries.

Although this is a newer option, it’s becoming more and more popular, and regulations around it are constantly evolving.

Setting up a payment system

For businesses, choosing the right online payment processing provider is key to being able to accept online payments.

There are some important factors to consider when looking for one, though.

For example, you’ll want to look for providers that offer advanced security features like fraud detection and prevention, as well as data encryption.

You’ll also want to consider the costs (transaction fees, setup fees, etc.) and also check how easily the payment processor can be integrated into your website or e-commerce platform.

Depending on the size of your business (and your plans for future expansion), you may also need a provider that supports multiple currencies and languages.

Popular online payment platforms and tools

Generally speaking, you’ll find that most online payment processors share similar features, and so your final choice is likely to be based on which you think best aligns with the unique needs of your business.

Whichever route you go down, the goal is the same – to make it as easy as possible for customers to hand over their money. Weigh up your transaction volumes, your customers’ preferred payment methods and how much control you want over fees and contracts, then pick the provider that suits you best. It won’t always be the one with the flashiest offer.

Get the basics right, and online payments stop being a technical hurdle and start being what they should be – one less reason for a customer to walk away.

Let’s compare some of the best payment processors for businesses in the UK to give you somewhere to start.

WorldPay

• Offers specialist payment packages for small and medium-sized businesses
• Supports a wide range of global payment methods
• A choice of countertop, portable, or mobile card machines
• Pricing split into two main tariffs (Simplicity and Custom), usually tied to an 18-month terminal hire agreement

Revolut Business

• Provides a wide range of payment processing solutions for small businesses, including in-person card readers, a free POS app compatible with iPhones, Macs, etc.
• Gives you the ability to accept online payments in up to 32 countries
• No hidden fees, and no set-up charges
• Fast access to money with 24-hour settlement, even on weekends
• To use Revolut Business’s payment solutions, you will need an account
• Prices start from £10 per month

Tide

• Banking and payment solutions for small businesses, including card readers, online payments, and Tap to Pay
• Standard and Plus card readers, both of which have Wi-Fi and lifetime free 4G connectivity
• Plus model allows you to print receipts
• You can rent or buy the device
• Alternatively, you can choose the pay-as-you-go model, with no monthly fees but an upfront cost of £159 and transaction fees from 1.39% + 5p

PayPal

• Offers a point-of-sale, card reader, invoicing, and an ecommerce platform
• Allows you to manage your inventory, send abandoned cart emails, and track your performance with real-time sales analytics
• Compatible with iOS and Android, accepting Samsung, Google, and Apple Pay
• 1.75% transaction fee
• Custom rates for businesses that take over £10,000 every month

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

The post How Do I Take an Online Payment? appeared first on The Cheap Accountants.

But should you hire an IT contractor or go through a recruitment agency? The reality is there are benefits to both, and which you should choose really depends on the kind of support you feel you need, and how long for.

In this article we’ll look at your options for outsourcing your business IT to a contractor of taking on an agency.

What is an IT contractor?

Essentially, an IT contractor is a self-employed specialist, hired by businesses to complete a range of projects – normally to work in fixed blocks of time (e.g. 3, 6 or 12 months). This could include things like IT support, or software development and network administration.

This arrangement allows them to enjoy flexibility and freedom in their work, moving between different organisations once their contract is up.

Advantages of hiring an IT contractor

If you’re looking for an IT contractor for a specific project or busy period then the contract only needs to cover that time. This means you don’t have to worry about any hidden overhead costs like you would with a permanent employee in your business – such as pension payments, National Insurance contributions, sick pay, etc unless your IT contractor is working inside IR35.

Another big advantage is that you have greater flexibility, as you can engage the contractor for however long you need them, and compared to a larger agency it’s often easier to terminate their contract if your strategy changes for any reason.

It’s also true that not every business requires a full-time, in-house IT specialist. By contracting the work out, you can pay a fixed rate for the duration of the project, as opposed to keeping someone on your books unnecessarily.

Disadvantages of hiring an IT contractor

You can generally expect an IT contractor to charge more in the short term, owing to the lack of job security and employment benefits.

They may also specialise in a particular area of IT, in which case the service they offer could be considered more bespoke (and so worth more).

In addition, while you can obviously read reviews and look at their CV/portfolio, there’s no getting away from the fact that hiring a contractor is still a bit of a shot in the dark, as you don’t know what they’re going to be like to work with.

It’s also worth noting, if a project runs over schedule and requires renewals, businesses must be careful not to blur the lines between a contractor and a permanent employee.

If the working relationship shifts to mirror regular employment, the role risks falling inside IR35. This would require your business (or the fee-paying agency) to process them via payroll, deducting income tax and National Insurance, while also paying Employer National Insurance on top of their rate.

What is an IT agency?

An IT recruitment agency specialises in connecting IT professionals with job opportunities at companies looking for talent.

They handle everything from sourcing candidates to screening CVs, so employers only see people who actually fit the role.

Advantages of using an IT agency

First and foremost, you’ll have access to a broader talent pool, as recruiters actively source potential candidates through various channels, such as job sites, social media, and professional networks.

This not only gives you more options, but also saves you a load of time which you can spend on other important tasks in your business.

Recruiters also assess candidates by looking at their CVs and conducting interviews, and so the risk of you hiring the wrong person is significantly reduced. Consider for a moment the hidden cost of a bad hire: months of salary paid for underperformance, as well as management time spent resolving issues.

An IT recruitment agency can also provide insights into things like current salary trends, competitive intelligence, and other job market-related information that can help inform your hiring strategy.

Increased confidentiality might be another possible advantage depending on your situation, as you don’t have to advertise job openings when going through an agency.

Disadvantages of using an IT agency

One of the tradeoffs of the agency handling everything for you is you therefore have less personal involvement, and if you’re used to making all of the decisions in your business, then you may struggle with this.

Whilst you can choose how long you want the contract to be, you’ll be bound to the Terms of Business (ToB) contract with the agency – which could include things like restrictive clauses, where you can’t hire the individual directly without paying the agency a ‘transfer fee’.

On top of this, the agency will usually charge a percentage of the candidate’s first-year annual salary.

• For standard or entry-level roles, this typically falls between 15% and 20%
• For specialist or senior roles, fees can sometimes range from 20% to 30%

Exact recruitment fees can vary, and will be influenced by factors like location and role complexity (e.g. entry-level or specialist), with hard-to-fill roles requiring more targeted search campaigns.

So, should I go with an IT contractor or agency?

There’s no one-size-fits-all answer here – it really comes down to what matters most to you. If you’ve got a specific project in mind, a tight budget, and don’t mind doing a bit of legwork to find the right person, a contractor could be the way to go. But if you’d rather hand over the sourcing and screening to someone else, want access to a wider pool of candidates, and value the extra reassurance that comes with it, an agency is probably worth the fee.

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

The post Should I Hire an IT Contractor or an Agency? appeared first on The Cheap Accountants.

Here’s how to work out your tax residence status, what it means for your tax bill, and how to avoid being taxed twice on the same income.

Understanding UK tax residency

A general rule of thumb is that if you spend 183 or more days in the UK in a given tax year, you are a UK tax resident – no questions asked.

But even if you spend less time here, you can still be caught by the Automatic UK Tests.

• The Home Test: If you have a UK home available for 91 days or more in a row and you spend at least 30 days in it, you could be classed as a resident. This applies if it’s your only home, or if you have an overseas home but spend fewer than 30 days a year in it.
• The Full-Time Work Test: If you work full-time in the UK over a 365-day period that overlaps with the tax year, this can also make you a resident. To trigger this, more than 75% of your ‘substantial’ work days (days where you work more than 3 hours) must be spent in the UK.

If none of these tests give a clear answer, HMRC uses the ‘Sufficient Ties’ test.

This looks at your connections to the UK – such as family living here, available accommodation, or work, and weighs them against the number of days you’ve spent in the country.

It works on a sliding scale – the more ties you have, the fewer days you can spend in the UK before you are classed as a resident.

Paying UK tax while freelancing abroad

If you find that you are in fact considered a UK tax resident, you most likely need to pay UK tax on all your income.

This rule applies even if some of your freelance income comes from clients based in other countries.

You’ll have to declare worldwide income through your Self Assessment.

Paying tax in another country

On the other hand, if you’re not considered a UK tax resident, then you’ll probably only need to pay UK tax on the portion of your income you earn in the UK.

You’ll still need to pay tax on your foreign income to the local tax authorities, though, so make sure you’ve done your homework and understand the tax rules for that country.

Conducting thorough research into the country you’re planning to move to is also just a generally good idea, as it will allow you to take advantage of any unique marketing points, and also connect with potential new clients.

If you’re feeling a little lost, an accountant can help simplify the different tax rules for you, and they can also help when it comes time to submit your returns.

Read our guide to hiring an accountant for your freelancer business.

Avoiding double taxation

If you pay tax in another country, you may be able to offset this against your UK tax return, so you don’t end up paying tax on the same money twice.

This is possible if the other country has a double-taxation agreement with the UK.

To make sure you have all the information you need (and pay the right tax to the right authority), it’s imperative that you keep detailed and accurate freelancing records.

Bookkeeping is the practice of recording all your transactions (coming in, going out, and moving from one part of your business to another) to help you stay on top of your finances and see where you’re earning.

It not only keeps you compliant but also gives you clarity and control over your freelance career.

Key things freelancers should consider before travelling

Keeping good records

Good bookkeeping software streamlines your record-keeping while you’re on the move, saving you valuable time (which you’ll no doubt need when travelling).

Online accounting is entirely remote based too, meaning you can access your records anywhere you have an internet connection – ideal for digital nomads who don’t want to stay in one place for too long.

Permission to work

It’s also worth looking into your destination’s visa and work permit rules before you go, since “remote work” doesn’t automatically mean you’re allowed to freelance there long-term. Some countries require a specific digital nomad visa, even if you’re only working for UK or other overseas clients.

Track your travel

Keep a record of your travel dates too. Since UK tax residency often comes down to day counts, knowing exactly when you entered and left the UK (and other countries) will make it much easier to work out your status if HMRC ever asks.

Communications

You’ll also want to make sure you maintain good communication with clients while on your travels, as some may feel more comfortable if they know your general whereabouts and current time zone.

And hire an accountant!

And lastly, don’t hesitate to contact an accountant if anything feels unclear – even if you’re travelling.

They’ll be able to help you work out exactly what you owe (and where), and also ensure you’re being as tax-efficient as possible.

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

The post Freelancing and Travel – Do I Still Have To Pay Tax in the UK? appeared first on The Cheap Accountants.

It’s easy to get a bit complacent once you have an accountant, thinking they’ll just take care of everything for you, but it’s good to try and maintain an active role in the management of your business’s finances.

As a starting point, we’ll look at some of the best questions to ask your accountant to make sure you stay in the loop and on top of everything. Read our guide to finding an affordable accountant.

Is my current business structure tax efficient?

Your business structure is simply a way of classifying the legal status of your business for tax purposes.

For example, operating as a sole trader means there’s no legal distinction between you and your business. A limited company, on the other hand, is a separate legal entity.

Choosing the right business structure is perhaps the most important decision you’ll make, impacting how the business operates, as well as how much tax you need to pay.

Choosing what’s best for you depends on your individual circumstances.

For example, if you’re a sole trader with a high profit margin, it may be more tax-efficient to switch to a limited company so you can pay yourself a mixture of salary and dividends.

An accountant can take away the stress and break down the pros and cons based on your specific circumstances. They’ll also look at things like whether you have a high or low risk business for liability purposes.

If it turns out you do need to switch, they can walk you through the process.

What taxes do I need to pay?

The simple answer is, it depends.

Your accountant will make you aware of all your tax obligations, which vary depending on your business structure. So it’s a good question to ask.

As an example, sole traders pay Income Tax on their self-employed income, whereas in a limited company, the profits stay in the business until you pay them to yourself (e.g. in the form of a tax-efficient salary if you’re a company director). You can also pay yourself in dividends, if there’s available profit within your business.

Evidently, it can all get a bit convoluted, which is why having an accountant on hand is so helpful!

Do I need to register for VAT?

Value Added Tax (VAT) is a type of sales tax on all products and services deemed non-essential by HMRC.

If you’re a business owner, you only need to worry about it when your VAT taxable turnover reaches the £90,000 registration threshold in any 12-month period.

Now, some businesses choose to register for VAT voluntarily (to either start reclaiming it or simply to boost the business’s reputation), but be sure to speak to your accountant before making a decision on this.

What financial records do I need to keep?

Good record keeping is essential – both for HMRC compliance and managing your business.

Your records will generally show every transaction that happens in the business, and this allows you to track your spending.

At a minimum, you’ll need to keep records of your:

• Business expenses
• PAYE records (wages, tax, and National Insurance deductions)
• VAT records
• Financial documents (balance sheets, cash flow statements, and forecasts)

With Making Tax Digital (MTD) slowly being rolled out, it’s more important than ever to start keeping digital records using special purpose-built software.

Records also need to be kept for a specific period of time after submission, and your accountant can advise you on how long exactly, as it’s different for everyone.

How can I make my business grow?

First and foremost, you’ll want to set clear and actionable goals for yourself in both the short and long term.

Plan ahead (especially in the early days), and make sure you understand all of your tax obligations so you don’t get caught out.

It’s important to remember that a good accountant is more than just a tool to help you stay compliant.

They can also give input on things like cash flow management, tax efficiency, and your overall growth strategy.

Are there any upcoming changes I should know about?

Tax laws and regulations are constantly changing.

For example, the standard multiplier for business rates has decreased from 55.5p to 48p in 2026/27, and the minimum rate per hour for employees 21 or older has increased from £12.21 to £12.71.

These changes were announced as part of the 2025 Autumn Budget.

It’s part of your accountant’s job to keep you informed, but there’s no harm in asking directly if there’s anything you’re unsure about.

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

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