Here’s a look at the role cash plays in today’s economy, and how to build a payment strategy that works for your business and your customers.

The ongoing demand for cash

It’s important to remember that not everyone knows how to use the latest technology.

Many older people, for example, still rely on cash to pay for their shopping, etc., and so a digital-only business is potentially cutting out a whole demographic.

There are also certain industries where cash is still widely used, mainly for convenience.

These include various hospitality and service businesses where tipping is a key part of the culture.

Benefits of accepting cash

In addition to being more inclusive and convenient, accepting cash means there are no processing fees to worry about, as these can add up over time.

It also helps maintain business continuity during payment outages, with cash being a vital backup when digital payment systems fail.

The UK’s Cashpoint landscape

So, cash still has a place.

But why is it becoming harder and harder to get hold of? And what can you do if your business is located in a more remote area with limited access to cash?

Recent trends

The growth of online banking and services like Apple Pay has resulted in ATM closures across the nation, as well as a reduction in the number of physical branch locations.

This shift towards digital payment methods means cash is scarcer than ever before.

How cashpoint proximity impacts SMEs

In terms of customer spending habits, having a cashpoint close to your business can support impulse purchases, as potential customers have the cash they need on hand.

There’s also usually more general footfall in the vicinity, which can help drive sales.

When it comes to daily operations, you’ll have to manage cash deposits and consider the security implications of transporting cash.

If your business happens to be located in a rural area, you’ll likely be forced to rely on local cash infrastructure (which we’ll get on to).

How to find your nearest cashpoint

Helpfully, there are many online services you can make use of if you’re struggling to locate the cashpoint/s in your area:

• Online ATM locators
• Banking apps
• Local authority and community resources

You should consider factors like the distance from your premises, operating hours, deposit functionality, and also accessibility/safety.

Alternatives to traditional cashpoints

For some business owners (for example, those in rural areas), there may not be many cashpoints left nearby – if any.

There are other options available, however.

Let’s take a look.

Cashback without purchase schemes

Many participating UK shops and supermarkets now support the LINK Cash at the Till network, allowing people to withdraw up to £50 in physical cash from their bank accounts, without having to purchase anything.

As well as giving better access to cash overall, this scheme specifically helps those with limited access to digital banking, and those who use cash to manage a budget.

What’s more, the LINK network keeps cash circulating locally.

Post Office banking services

Customers of a number of UK banks can actually do basic banking at a Post Office counter.

You can typically withdraw cash, pay into your bank account, and check your balance.

For a business owner, it works much like paying your shop takings into a bank branch, except the Post Office functions as a kind of intermediary, accepting the money on behalf of your bank.

The future of cash access for small businesses

New UK regulations enforced by the Financial Conduct Authority (FCA) require major banks to maintain reasonable local cash deposits and withdrawal services for small businesses.

In this sense, the government aims for people and businesses to have cash and services within 1 mile in urban areas and 3 miles in rural areas.

Still, business owners should take a pragmatic approach and come up with strategies to balance both cash and digital payments.

Strategies for SMEs

First and foremost, ensure you don’t get left behind by encouraging digital payments, while still retaining cash options for those who might need them.

When you come to choose an online payment method, consider which you think best aligns with the unique needs of your business.

Building a flexible payment strategy is key to long-term resilience, and so it’s important to regularly assess local cash access and explore alternative solutions where necessary.

This way, you’re supporting financial inclusion while still moving with the times.

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

The post Does Cash Still Matter for Small Businesses? appeared first on The Cheap Accountants.

What are capital allowances?

In simple terms, they’re a type of tax relief which businesses can claim when they invest in long-term assets. They were introduced to give businesses an incentive to invest in themselves over a longer period, benefitting the UK economy.

A long-term asset (also known as a ‘fixed’ or ‘capital’ asset) is one which a business can reasonably expect to use for 12 or more months. Things like machinery or vehicles are often used as an example.

The way it works is that claiming for capital allowances means you’re able to deduct part or all of the asset’s value against your tax bill, which in turn reduces the amount of tax you need to pay.

Depending on the type of capital allowance you claim, your tax savings may be instant in the year you purchase the asset, or spread across several years.

So, as well as claiming the cost of purchasing an asset, you can also claim capital allowances to cover the cost of maintaining it over a period of time. This is what makes capital allowances different from basic expenses, because you’re claiming the ongoing costs of owning the asset, not just the cost of buying it in the first place.

Who can claim for capital allowances?

Sole traders, partnerships, limited companies… Basically, anyone who owns a business, whether they pay Income or Corporation Tax, can claim capital allowances.

That said, the asset you’re claiming for must meet the criteria for the type of capital allowances you’re claiming.

What types of assets are eligible for capital allowances?

You can only claim capital allowances on assets you keep and use in your business, which means you must’ve purchased them.

Some of the rules sound a bit confusing, because they suggest you can claim capital allowances for lease items. This just means you can claim allowances for assets you own in order to lease out, rather than items that you’re leasing from somewhere else.

Other exemptions include assets you only use for the purposes of entertainment, in addition to things like buildings and plots of land. Typical examples of things you can claim capital allowances for include:

• Vehicles (cars, vans, trucks, etc.)
• Machinery
• Computers (plus software)
• Office equipment
• Fixtures and fittings
• The cost of renovating a building

Capital allowances can also be claimed if a business donates equipment or assets to charity.

What types of capital allowances can I claim?

Once you know an asset qualifies, the next question is how you claim the relief – because there’s more than one route, and which one applies depends on what you’re buying and what kind of business you run.

Annual Investment Allowance (AIA)

This is the one most small businesses use first. It lets you claim 100% tax relief on qualifying plant and machinery in the same year you buy it, up to £1 million a year. It’s available whether you’re a sole trader, in a partnership, or running a limited company, and it covers both new and second-hand assets.

Full expensing

Full expensing works in a similar way to AIA – 100% relief in the year of purchase – but it’s only available to limited companies, and only on new (not second-hand) main-rate plant and machinery. It doesn’t apply to assets you’re leasing out. For most businesses, AIA and full expensing land you in the same place, but full expensing becomes useful once you’ve gone over the £1 million AIA limit, since it has no cap of its own.

Writing Down Allowances (WDAs)

If an asset doesn’t qualify for AIA or full expensing – or you’ve used up your allowance for the year – you can usually still claim relief through Writing Down Allowances. Rather than getting the full deduction in one go, WDAs spread the relief over several years. Most assets go in the “main pool” and attract relief at 14% a year (this dropped from 18% in April 2026), while certain assets – like higher-emission cars – go in the “special rate pool” at 6% a year.

Why is it important to claim capital allowances?

In short, doing so ultimately reduces your tax bill.

Beyond that, though, the general purpose of capital allowances is to give businesses relief from the cost of wear and tear on their capital assets, and also stimulate investment in assets that will provide a boost to productivity.

Even if you find you can’t use all of your allowance against your tax bill, you may be able to carry over whatever’s left to the following year and reduce the next year’s bill instead. This is especially relevant with Writing Down Allowances, where relief is designed to be spread over several years anyway.

Does my accountant claim capital allowances for me?

It doesn’t have to be your accountant, and you can opt to do it yourself when filling in your tax return. It’s your responsibility to get it right!

Alternatively, you can enlist the services of a qualified accountant and have them do it for you.

Either way, it’s generally a good idea to have an expert look over your capital allowance calculations. They can be horribly complicated.

Your accountant will also be able to advise you before you make a purchase. They can walk you through the whole process and ensure you’re operating in the most tax-efficient way possible (which includes making the most of any allowances you may be entitled to), and timing your purchases to make the most of your allowances each year.

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

The post An Overview of Capital Allowances 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 choosing how to set up your business impacts all sorts of things, from how to register it, paying tax, and even attracting investment and funding.

So how do you know which path to follow? Here we take a look.

Why do I need to choose a particular business structure?

The structure of a business dictates (amongst other things) its tax status, who is liable for any debts, how to take money out the business, and how it’s run.

So what are the different types of business structure?

First off, it’s well worth familiarising yourself with the main types of businesses available, their features, and advantages.

Sole Trader

You and your business are essentially one and the same, so you own all assets and profits, as well as being responsible for any debts. You are your own boss with no shareholders to answer to.

Limited Company

A limited company is a separate and distinct legal entity with its own assets and employees. Shareholders only have liability up to their own share value.

General partnership

A general partnership is where two or more partners share the profits of the business. Partners might be individuals, a limited company, or even another partnership.

Limited liability partnership (LLP)

Very similar to a general partnership but with limited liability.

I’m a start-up looking to grow. What structure is best for me?

Think carefully about the goals of your business. Are you looking to attract new customers, expand, and perhaps sell it later on? If so, a limited company might be easier to sell because it’s legally separate to you as the owner.
 

What about sole traders?

If you plan to stay small, or your business isn’t likely to be that risky, then operating as a sole trader might be more straightforward. There are over 3 million sole trader businessesin the UK – that’s about 57% of all UK businesses!

It’s a really popular way of doing things as it’s not only quick to set up but is pretty stress-free too. Just don’t forget Making Tax Digital for Income Tax has offically started to roll out!

Many sole traders offer fairly low-risk services such as freelance writing or run artisan businesses. Whilst you do have full personal liability for the business, you may also be able to insure yourself against some of the risks with things like professional indemnity insurance.
 

What kind of scenario would best suit a partnership?

There are lots of reasons why a partnership might be useful, for instance if you decide to join forces with another business without needing to set up a limited company.

Another business might offer different products or services, but with a similar goal – such as two lifestyle brands working together. Forming a partnership can also help to you share costs and develop new ideas on a less formal basis, but with the benefit of some sort of agreement in place.

We could go back and forth with the pros and cons of each structure all day, but really it very much depends on your business and what you’re trying to achieve. It’s well worth a chat with an accountant if you’re not sure!

Find more help and accounting support in our online hub, or learn more about finding an accountant.

The post How Do I Choose a Structure for My Business? 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.

The post Questions to Ask Your Accountant appeared first on The Cheap Accountants.

Not only do you want to try and find the right person, but you should also make doubly sure that you actually need to be hiring someone new in the first place – especially if you’re a small business where every penny matters.

If you do decide you need to hire someone, you need to consider things like where to find your candidates, how much you want to pay them, and if you want to offer any perks.

We’ll break all of this down for you, and even explain what to do if a candidate makes a counter offer.

Identify the need for a new hire

It can sometimes be obvious that you need to begin the process of finding someone new. For example, if a previous employee hands in their notice.

For smaller businesses this can difficult to avoid, and talent retention can be a struggle if you’re up against bigger companies offering higher salaries. This means you may have to face the reality that people will come and go – at least until you grow your business to a point where you can offer clear progression.

Other times, it’s less obvious that you need to take on new staff.

You may just notice that your workload is getting a bit much, or that employees are missing deadlines. These can be indicators that it’s time to start looking for help.

It’s important to think about the long-term. If work is heavy at the moment because of a specific deadline or project, but this isn’t expected to last, then it may be better (and more cost-efficient) to outsource instead.

If that isn’t the case, and it’s busy around the clock – it’s time to look for your new hire.

Define the role clearly

Once you’ve decided you need to recruit, write up a clear job description which can be used to help advertise the role. This should outline things like:

• Key responsibilities
• Required skills and qualifications
• Experience level

You’ll also want to explain the reporting structure, as well as what success might look like in the role.

Lastly, if there are any particular benefits or perks to working in your business, be sure to list these too, as they may help entice potential candidates. An example might be free parking, or a catered lunch.

Determine salary and employment terms

The next thing to do is undertake some market research into average salary levels for the kind of job you’re looking to fill.

You’ll need to decide on the following:

• Salary range
• Benefits and incentives
• Working hours and flexibility
• Contract type (e.g. full-time, part-time, temporary, or freelance)

Again, if your resources are limited then you may need to place more emphasis on something like flexibility in order to still appear like an attractive option.

Choose where to advertise the role

Conduct more research and figure out which channels or sites will allow you to reach your target demographic.

Examples include job boards like Indeed, professional networks like LinkedIn, recruitment agencies, social media, and of course your own company website so that people can apply directly.

Internal referrals can be another good option given that an employee is unlikely to risk their reputation by referring someone who isn’t a good fit.

Conduct interviews

After drawing up a shortlist of suitable candidates, looking for both technical ability and also cultural fit, you can start the process of interviewing them.

Try to prepare structured interview questions, and in the interview itself, assess such things as the candidate’s skills and experience, problem-solving ability, and their alignment with your company’s values.

Don’t be afraid to hold multiple interview stages if necessary, and do your due diligence as an employer: contact previous employers or professional references, confirm the candidate’s employment history, etc.

You really don’t want to get this decision wrong, so feel free to take your time.

Make an offer

Think you’ve found the one?

Great.

Make them your best possible offer, including things like the salary, start date, and contract details.

Now, when you interview somebody for a job vacancy and offer them the role, they might sometimes respond with a counter offer, so be prepared to negotiate.

Their counter offer could be regarding hours, location, or responsibilities – but let’s be real: it’s usually about pay.

This may have always been their intention, and now that they know you’re interested in hiring them, they feel emboldened enough to try their luck.

Ultimately, it’ll be up to you to decide whether it’s worth it. You could come to an agreement with them. Say, for example, they’re asking for £5k more; you might agree, once they’ve completed their probation period.

Onboard the new employee

All that’s left is to provide a structured induction for your new hire, introducing them to the team and company processes. If it’s your first hire, make sure you’re registered for PAYE, and you understand how payroll works (when it comes to deducting things like NI and income tax).

Reiterate your expectations of them and even set some early goals to get things started.

Of course, you should also make yourself available to offer support and guidance during the early stages.

Before you know it, they’ll be part of the team!

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

The post How to Recruit Someone to Your Business appeared first on The Cheap Accountants.