Outbooks

As we welcome a new financial year, it would not be incorrect to say that a fair share of tax worries has already started troubling us. In the UK, a majority of income tax is deducted at the source via the Pay-As-You-Earn (PAYE) scheme. Most employed individuals, as well as pension receivers are familiar with this system. Thus, the important question here is that are there any legitimate tax strategies that can really help save money. Irrespective of whether one is an individual taxpayer or a business entity, everyone is interested in saving cash. Offshore accounting in UK and bookkeeping service provider help individuals in saving cash up to a level. The UK self assessment tax returns online also makes it easier for tax payers to file returns online. Other than these let us have a quick look at some strategies that can help you save chunks out of your tax bill. 

Deductible taxes 

Business taxpayers can claim a number of deductible expenses against the purchase of common items, such as travel expenses, business operations-related expenses and bills (rent and heating), business equipment and materials expenses, certain employee-related expenses (social and Christmas functions), employee salaries and bonuses, National Insurance Tax, insurances and financial services-related expenses and marketing expenses. Not just business entities, individuals can also claim expenses such as donations to charities, income related to properties and healthcare-related purchases. A drawback is that most individuals fail to claim everything and end up paying unnecessary taxes. Therefore, plan in advance, retain purchase receipts and monitor expenses to be tax-ready for this new financial year. 

Allowances for spouse 

This is a commonly ignored tax strategy, but one that we highly recommend. However, it only applies to spouses that are business owners or self-employed. The optimum scenario is if there is only one earning partner, although it is not necessary. What is essentially done is that one partner is introduced as a business partner. This helps split earnings so that, technically, both spouses become equal earners, which assists in saving more taxes. 

Pensions and savings  

Private pension plans are great tax savers as the contributions made are not taxed by the government. Thus, what you spend to secure your future later also helps you save money now. Savings accounts can also help save taxes, especially individual savings accounts (ISAs). ISAs are free of income and capital gains tax. Investment and capital gains made through ISA contributions are non-taxable. Moreover, even the interest earned on ISAs is tax free. Though there is a £20,000 limit on ISA contributions, these can help build large-scale investments in the long term. 

National Savings and Investment (NS&I) and single premium bonds  

Though NS&I premium bonds do not provide a steady return rate, they are tax free and can even help you win £1 million. The more you invest in these bonds, the more likely you are to win. On the other hand, single premium bonds assist in deferring income to subsequent periods wherein payments are taxed at a lower rate.  

Other tax-saving means 

Apart from the above-mentioned strategies, there are also a few other means that can help you save taxes. 

• Venture Capital Trusts (VCT)  
• VAT claims 
• The Enterprise Investment Scheme (EIS) 
• Paternity pay 
• Seed Enterprise Investment Scheme (SEIS) 

Bookkeeping service provider who also take care of services like offshore accounting in UK and tax return online are another options that can help save money by managing books accurately. 

Any new business owner of a limited company must understand the basics of Limited Company Tax along with any other tax obligations as it is crucial for the daily operations of a company. Business heads of companies have to come across different types of taxes while setting up operations, but that doesn’t mean they can’t be conquered. Companies can avail numerous tax benefits, by corporation tax return outsourcing, year-end account outsourcing and other bookkeeping companies in UK, therefore they must be well-versed in the intricacies and nuances of limited company tax requirements and their implications. Firstly, it is important to bear in mind that when owning a company, a distinction has to be drawn between personal and business taxes. The taxes will be separated between the taxes that have to be paid on personal finances such as salary and income and the taxes the company has to incur. The company has to be responsible for managing their obligations and register promptly to pay taxes on company income.

Here is a guide on the various taxes that companies will come across:

1. Corporation tax: All companies have to pay corporation tax on the profit they make. They have to register to pay corporation tax annually and complete the company corporation tax return formalities. Companies must keep accounting records and prepare a company tax return to work out how much Corporation Tax needs to be paid. The tax must be paid by the deadline which is nine months and a day after the end of the accounting period. The current corporation tax for company profits is 19% which is a standard rate for all businesses. They can also get it managed by corporation tax return outsourcing.

2. Value Added Tax: As per the 2018-19 accounting threshold, companies are obligated to register for Value Added Tax with HMRC if their annual income is over 85,000 pounds during the twelve- month period. Once a company registers for VAT, it has to add the current VAT rate which is 20% to their invoices and has to deduct that amount before paying the rest to HMRC. Small businesses with annual income less than 15,000 pounds can benefit from the Flat Rate scheme which provides simple accounting with a fixed rate which can be easily deducted. There is also the cash scheme where the VAT only has to be paid to HMRC after they received payments.

3. PAYE/ National Insurance Contributions: The company will be required to set up payroll. If the employees receive a salary, then income tax and National Insurance Contributions will be deducted and paid to HMRC on a monthly or quarterly basis. If there are no taxes due for that period, HMRC must be notified of that information.

 Apart from the above taxes, Tax has to be paid on personal income in the form of salary or dividends from the company. The Self-Assessment has to completed by January 31st, which is the deadline every year. The year-end accounting outsourcing services comes handy here. Although the tax seems complicated, it is imperative to create a solid business plan, keep all paperwork organised and employ an efficient accountant to invite success to the business. 

It is no doubt that the operations of the accounting firms in UK have witnessed consistent transformations on its journey through the information era. Right from the physical ledgers for tallying accounts to the tremendous digitisation that has been infused in accounting, there is a constant surge in its operational excellence.

This massive scale of digital evolution has been continuously reinventing itself to open doors to the infusion of outsourcing and Information Technology in all industries. Businesses have been reaping the benefits of digitisation and outsourcing for the past two decades to produce phenomenal operational excellence in their respective fields.

However there have been and there still is a resistance from the accounting ecosystem to accept accounting digitisation and adapt outsourcing a standard business practice. This has stunted the growth of the digital accounting landscape significantly.

This resistance can be attributed to lack of clarity of digital accounting systems and several myths surrounding the outsourcing of accounting services. One can understand as how digitisation of accounts is eliminating the reasons to believe various myths of outsourcing accounting services from the below paragraphs.

What is Accounting digitisation? 

Accounting digitisation can be defined as the process of converting physical accounting records and documents from any physical form like ledgers, notebooks or a paper based system into an organized electronic format. In the earlier days of computing, spreadsheets were used to store, manipulate and retrieve accounting data.

Today there are multiple software, tools and web applications that are exclusively dedicated to accounting that include digitization, storing, retrieval, manipulation, organization, indexing and analysis of the accounting data. The capabilities of these tools would exponentially reduce the workload, errors and the execution time of the accounting tasks.

What are the accounting outsourcing myths? 

The critics of outsourcing accounting tasks mainly cite data security to oppose outsourcing. Along with that there are other myths that are contributing to the resistance of the people who refrain from outsourcing. Some most believed myths are mentioned below.

• Outsourcing is a cumbersome process
• Small businesses cannot outsource
• My data security will be compromised
• I would need to invest extra on digital infrastructure for outsourcing
• The idea of taking my business to cloud is intimidating
  
  

How does accounting digitization burst the outsourcing myths? 

Digitisation of accounting and its associated tasks has been simplified by the accounting services providers by modularising and streamlining the tasks into efficient processes. Accounting and Bookkeeping services like transaction processing, bookkeeping, filing Self assesment tax returns/VAT returns, payroll processing have been restructured into simple workflows with the help of digitisation and the infusion of software/tools for an effective service delivery.

Let us see how accounting digitisation overcomes the myths of outsourcing below

Myth 1: My data security will be compromised 

Accountants and accounting firms are provided access to client’s financial data with a great deal of trust. Hence this is a valid fear of any accountant considering the security of client’s financial data.

There is a good basis to this fear when dealing with accounting data which are physical in nature. The security measures of physical accounting data like ledgers, sheets and papers can be easily bypassed. But it is not possible in the case of digitised accounting data.

Accounting data that is digitised is bound by numerous data security protocols. Companies which deal with financial data are required to be certified with renowned Information Security Management Systems certifications and they are subjected to audits frequently. Also, these companies sign an NDA with the accountants or accounting firms to safeguard client’s data.

And hence, service provider companies give primary preference to data security and honour the confidentiality and integrity of the data they are entrusted with.

Myth 2: Outsourcing and digitisation are cumbersome and hinder business execution 

Many accountants and accounting firms feel that digitisation is a difficult process that involve an extra effort in running the business. But digitisation of the physical records enables the data to be stored in an organised manner bound by security protocols and effective retrieval features.

This kind of data organisation would only help the accountants or firms in propelling forward rather than be a hindrance. What would actually be cumbersome is the huge pile of physical data sitting in the offices taking space and hosting termites.

Myth 3: Small businesses cannot outsource 

Many accountants and accounting firms with a traditional approach for a long term feel that outsourcing is a costly affair and it is unnecessary. This myth arose as only big accounting firms with sizeable revenues and a large client base outsource. But on the contrary, accounting service providers have a wide array of services customised for the Tier 2 and Tier 3 accounting firms as well.

Due to digitisation, large chunks of financial data can be organised, retrieved and stored in a hassle free manner using accounting software and tools. These software and tools have paved way for these companies to redesign their services to suit the requirements of the small businesses at affordable costs.

Myth 4: I would need to invest extra on digital infrastructure for outsourcing 

This is a traditional belief that existed in the 1970s where there were limited or no computers or digital machines to run the business. All accountants and the accounting firms in the 2010s are equipped with computers and faster internet connections which is all that is required for outsourcing. The service provider companies will possess all the required software, FTPs and tools to on-board the acceptors of outsourcing in a cost and time effective manner.

Myth 5: The idea of taking my business to cloud is intimidating 

Incorporating cloud based services for businesses has been in execution for the past two decades. Today businesses are deploying them in full swing with the presence of high end cloud services. Many businesses are migrating from their private servers to run their business on cloud services like Amazon Web Services.

The data centres of these cloud service providers follow state of the art security protocols which ensure maximum security to the client’s financial data. Also a cloud based business model will ensure high levels of efficiency in business operations and moderate costs which eventually benefits the accountants and accounting firms.

We are living in the brightest phase of information era where any business can reap the benefits of digitisation and outsourcing to a maximum extent. This gives a competitive edge for the accounting firms and opens multiple windows of opportunities for them to expand their business. 

For small businesses the day-to-day processes are much easier to handle in comparison to limited companies and entrepreneurs generally have a strong hold on business affairs. But how many of them enjoy working with numbers? Many small businesses struggle when it comes to valuation and accounting procedures and this affects the smooth functioning of businesses. Accounting for small businesses isn’t actually a herculean task and can be easily managed by following the right steps. The accountants who take care of annual return outsourcing for business or provide outsourcing accounting for small business and outsource bookkeeping services, need to keep in mind few tips and methods.

Here are some difficulties that can be done away with while dealing with numbers for the business:

1. Staying organized

It can be cumbersome managing a small business. Clients have to be taken care of and employees have to be trained and remunerated. Between all these activities it is easy to muddle things up. It is very important to keep the business as organized and streamlined as possible. When loose practices are maintained for business accounting, it can lead to mistakes and the business could incur penalties because of this. The business can maintain separate folders and divisions for all its stakeholders and this makes tracking finances and invoices that much easier for the business. The business should have a fixed and core sense of direction. Without this, operations will get scattered and productivity levels will decline. Therefore, it is imperative that businesses stay organized and disciplined.

2. Managing payroll

If the business has employees who have to be remunerated and reimbursed, then it is important for the business to use sophisticated and efficient payroll software that suits their needs. It has to keep track of all the working hours of the employees and provide correct information to them. Failure to manage payroll effectively could lead to frustrated employees and gaps in accounting records.

3. Paying taxes

Accounting issues can arise if the business is not meticulous in handling crucial corporation tax return outsourcing details. Businesses have to file taxes every year to avoid penalties from the IRS. Consulting with a tax accountant is a smart way to go about things as small business taxes vary from state to state. The business also has to adhere to certain formalities based on how much revenue it has generated and its overall structure. Businesses that are unsure on how to handle taxes can hire external specialists to fulfil their work for them. Businesses should close their books on a regular basis to ascertain the actual funds they have which could impact the amount of tax they have to pay.

4. Tracking expenses

It is important for businesses to monitor how much money they are spending. Those businesses that spend more money than they earn might find themselves in tough financial situations due to the backlog of money. This may result in cutting down on expenses wherever possible which includes lesser wages for employees.

These simple yet effective tips help in solving the most common accounting challenges that small businesses face. The accountants or accounting firms should follow these tips to ensure a smooth annual return outsourcing services, outsourcing accounting for small business, and outsource bookkeeping services to make the financial year smoother and accurate for the small business.

Overview 

Modern methods of doing business are complicated. In the corporate world, the investors, executives, as well as board members, rely on numbers to make estimates of the timing, magnitude, and uncertainty related to cash flows. Such estimates help them to make wise decisions pertaining to investments in a company, acquiring a company or business. Such estimates also help in promoting appropriate capital allocation. 

However, in the real world, the picture is totally different. The first corporate financial statements, payroll service  providers in uk depend on proper estimates and they depend on honest judgment calls. The Second-standard financial-metrics help to do comparisons between companies, but they may not be accurate in judging the value of a particular company. There may be instances when executives and managers deliberately inject errors into different financial statements. 

Over a period of time there occurred many reforms in corporate accounting, however, it is still murky. In recent times a number of online platforms have emerged, and they have dramatically changed the business competitive environment. In recent years, financial reporting is mostly guided by new rules governing revenue recognition, continuous expansion of unofficial performance measures. 

Financial reporting in companies is often not accurate. There exist practices of manipulating the operating decisions that create financial reporting. In the accounting profession, finding ways and means to reduce such behavior is a challenge, outsource bookkeeping.  

Problems in Financial Accounting 

Following discusses in detail the various problems in financial accounting: -  

Adoption of Universal Standards 

Accounting outsourcing, a single set of international accounting standards was created many years ago with the objective of uniting the U.S Generally Accepted Accounting Principles or GAAP and the International Financial Reporting Standards or IFRS practiced by European nations. However, the adoption of universal standards has some challenges and they include comprehending the actual value of a firm, comparing various company accounts across countries. 

However, in this context, it is important to say that the implementation of IFRS regulations varies from one country to another. Observations reveal that each country has its own set of IFRS regulations. In many countries the compliance, as well as enforcement, is weak. The independence and quality of the accounting profession are often not up to the mark.  

Revenue Recognition 

Revenue recognition is important and tricky in the corporate world. When certain products are sold in the market then it may be difficult to determine the profits that are generated from the product sale. 

Under the new GAAP rules, if there exists no objective way to calculate product costs in advance, a business is not permitted to do recording revenue from sales until the different upgrade requirements are delivered and the cost of the upgrades are known. Observation reveals that determining the costs of the upgrades can take a few years. Many are of the opinion that such type of a system can results in accounting rules influencing the way business is done. However, there are several shortcomings of the revenue-recognition system and the shortcomings obliged companies to use unofficial practices to report financial performance. Businesses and companies are trying to incorporate new and effective revenue recognition standards under the GAAP and IFRS.  

Unofficial Earnings Measures 

All types of businesses are using non-GAAP and non-IFRS measures of earnings for a long period of time. One of the popular ways is the EBITDA which is a favorite among the private investors as it is known to be quite useful in the corporate world. 

However, in this regard, it is to acknowledge that the alternative measures are usually idiosyncratic. Investors, accountants in U.K and analysts require exercising caution in interpreting unofficial earnings measures and they should look closely at different corporate explanations that may depend on managerial judgments.  

Fair Value Accounting 

Investors, accountants in U.K and executives rely on two measures to determine a firm’s asset values. First one is the original price that is paid and that can be the acquisition cost. Secondly, a fair value which is the amount the assets bring if they are sold today. During the financial crisis that occurred a few years back, the objective was to guide the auditors on the methods of determining the fair value. However, in those days, the result was quite confusing. The measurement process was quite controversial and was difficult.  

Over-provisioning and Under-provisioning 

Analysts, accountants in U.K, investors often focus on the manner in which the costs are accrued in a company’s reports. The managers often overstate expenses deliberately and that they do to fulfill certain objectives. They often choose to under-provision of an expense or a loss. Recent alterations with GAAP and IFRS rules have made overprovisioning and under-provisioning activities less egregious. Many believe that recent changes in regulations have weakened companies’ ability to manipulate various financial reports. Nowadays, managers try to alter numbers by manipulating the operations instead of the reports.  

New Analytical Tools Helps 

Nowadays, investors, accountants in U.K and company board members are more responsible as they comprehend well that manipulating operating decisions to report higher earnings in the short-term can compromise the company’s long-term competitiveness. With the changes in accounting regulations, accounting fraud is a story of the past. Nowadays, since fudging in accounting reports is very rare, the focus is on to ensure that the investors, directors are more transparent on the various operating decisions that can adversely affect accounting reports.  The various new techniques are being used by the investors and the analysts.  

Verbal Cues 

Yet another tool for detecting unscrupulous accounting practices is the verbal cues. There are many words as well as practices that are used to detect unscrupulous practices. 

Observations reveal that the financial result manipulation is prevalent in the early part of a CEO’s tenure in the office and it diminishes with time. Early years of a CEO’s tenure are periods of great uncertainty about the ability of the CEO. Sometimes, if the CEO’s engage in corrupt practices then they may distort earnings with the objective to keep their jobs. In any business, the board members, as well as the investors, require to be extremely vigilant regarding a company’s accounting practices whenever a new CEO assumes office. 

In recent times, observations suggest that more and more auditing firms across the world are failing to execute their duties. Firms like Carillion and House of Fraser are not up to the mark as far as financial reporting is concerned. They often fall short of the standard quality and because of which they are quite ill famous and unpopular. Online contents on these two firms speak volumes of their inefficiency and shortfalls. Many raise doubts on the smooth functioning of the firms because every now and then these firms give a picture that they are shutting down. For additional detail regarding financial reporting and why it falls short often, visit relevant resources available online. 

  BY: AMIT AGARWAL 

Website: outbooks.co.uk 

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Is your self-assessment tax due soon, or are you facing difficulties with your annual return? These uphills are a few of the most common challenges faced by companies in the UK. Self-assessment tax and annual return are the top challenges, and many companies in the UK, small and large, start worrying about these once the tax season comes around the corner. Some companies, especially SMEs, do not have a budget set aside for hiring Accountant outsourcing with the required skills, and the inadequate resource pool doesn’t help any further. If you are one of these companies, have you considered outsourcing your accounting and bookkeeping function to stay clear of these complications? Self-assessment tax and annual return outsourcing, tax returns outsourcing is not a new concept in the UK market. It helps businesses focus more on their core processes, staying away from tedious manual tasks. 

Why outsource? 

Outsourcing is on a rise in the UK accounting space, with the primary driving reason being cost savings. Not all companies can afford to have a dedicated team for managing internal finances and accounts. Moreover, nothing is better than having a team of experts at your disposal to handle the tax function, resulting in continuous growth for your business. Therefore, outsourcing a long-term business investment. The reasons to outsource accounting and bookkeeping can be many; we have compiled some of the top ones in the below list. 

1. You can focus more on your core competencies 

When you run a business, you need to take care of several processes; accounting is only one of the main aspects. However, if you are an IT guy, you will take time or even face difficulties with self-assessment tax and annual tax returns. This will also be time consuming. So, it’s better to outsource bookkeeping to a specialist provider who can do the taxes on your behalf. Self-assessment tax and annual return outsourcing will free up more time for you to focus on your core competencies and the other core processes of your business apart from outsourcing. 

1. You can reduce employee costs 

With outsourcing, you can completely eliminate employee costs, including money spent on training, wages and benefits. When you decide to outsource accounting and bookkeeping, you save 30-40% of the costs spent on hiring new employees. With reduced employee costs, you will have more capital on hand to fulfil other business requirements. 

1. You will face fewer frauds and risks 

Employees are your assets, but they could also be your biggest liabilities. Many companies across the UK have reportedly faced employee frauds. According to Action Fraud, UK businesses faced employee frauds amounting to £88 million in losses in 2017-18. Therefore, it is a smart move to outsource accounting and bookkeeping to a specialist provider so avoid losses due to frauds.    

1. You will shoulder less tax burden 

If you don’t know when or how to file your self assessment tax or prepare your annual return, your business can face severe risks. There are tight deadlines to follow and several other timely formalities to fulfil. All of this can be really time consuming as well as confusing. Therefore, it is a safer bet to resort to self-assessment tax and annual return outsourcing rather than struggling to make things right. Using the services of an expert will also help you easily get over tax hiccups (avoid penalties) and even deal with the constant changes made to state and national tax laws. 

1. You will have access to the latest software and technologies 

The business landscape is continuously changing, with new technologies and software tools being introduced every day, but these come at a cost that is not always possible for every company to manage on its own. When you outsource accounting and bookkeeping to a specialist provider, you get seamless access to these technologies and financial tools, on a usage basis, without having to invest in installation and maintenance. All you pay is a subscription fee to the service provider.  

Conclusion 

The idea of outsourcing the accounting function is often associated and marred by several negative connotations, but the benefits of outsourcing far outnumber the grey undertones. Therefore, the decision to outsource your accounting work will not only help grow your business but also result to more profits.   

Website: outbooks.co.uk 

In the tax season, many reputed accounting and bookkeeping companies are adopting to tax returns outsourcing. These companies are otherwise kept occupied because of the immense pressure on them to deliver outstanding accounting and bookkeeping services. At the same time, it is of critical importance that they maintain sufficient control over their tax processes. Because of this, they have no other choice but to hire trained individuals to complete this complex task for them. By doing so, it saves them a lot of time and money, as they can focus more on their core responsibilities. The companies won’t be training their in-house staff but will have another complex job at hand i.e. to train external workers. They have to train them in the rules and procedures by which the company operates. 

There are several things a company should incorporate into training to ensure the outsourced staff are well-prepared for the tax season. Sometimes there will be a delay at the start of the tax season. This extra time should be utilized to make sure the staff know what they are doing. Just like any other field, changes also occur in the tax industry. Companies should keep up with those changes and ensure the staff are informed as well. They should hold sessions with the tax preparers before the start of the season on tax laws that have been changed and deductions that have ended to provide accurate results to the authorities. If the company has made any software updates, workers have to be briefed on them and trained in their usage to ensure efficiency. 

Companies have to go over any new policies or policies the office might have developed. It is always beneficial for companies to reflect on their shortcomings or opportunities to work on for the current season. Staff should be asked to go over customer surveys and review them to understand the mission and goals of the company. This way they can become more attuned with the work they are doing for the company and develop a sense of belongingness. If any new staff come in, time has to be taken to explain to them and train them in the office procedures, IRS Due Diligence and customer service based on the tax office operations manual. Companies which don’t have operations manuals can purchase prescribed standard manuals and modify them to meet the business needs. 

To be effective, the systems and processes of the company have to be complete and accessible. Workers should be given employee manuals which elaborate on the the rules and operations of the company. Instead of a written manual, it is more recommended to supplement a combination of written, audio and video procedures to capture the entire essence of the company’s modus operandi. A systematic approach to making the workers aware of the systems and processes will ensure that each task is completed conforming to the same standard, regardless of whoever performs the task. 

However qualified the staff may be, the office should have a designated person they can go to for help. The person should be a veteran with years of experience to give the staff members a helping hand and advice when they need it. Sometimes it is daunting for new staff members to quickly assimilate to the new work environment and know who to ask for help. It will make things easier for them if they have someone to show them the ropes and answer all their doubts and queries. 

To sum up, before the tax season ends, it is imperative the workers are trained in the following areas: 

1.  
2. Learning to prepare federal and local income taxes properly and efficiently. 
3. Pre-work training in the firm’s policies, procedures and customer service. 
4. Computer tax software training. 
5. On the job training under the supervision of a veteran expert 
6. Training in new tax laws. 

If the company is cognizant of all these steps, they will face no problems in training the outsourced staff. They will get through the tax season without any difficulty and paying taxes will not seem like such a herculean task anymore. 

Website: outbooks.co.uk 

accounting and bookkeeping services are offered by firms specializing in the same to companies which require their unique repertoire. Companies have deadlines to meet such as filing their tax returns. Because of this, many companies are opting for tax returns outsourcing. All such services come under accounting outsourcing. Outsourcing of bookkeeping and other expert services is gaining a foothold among business owners because of the efficient expert services and reduction of costs. Some business owners might be hesitant to take the leap because of the related myths surrounding bookkeeping services. The concept has been frequently regarded with confusion, indifference and even outright fear by numerous entrepreneurs because of the misconceptions and myths regarding outsourced services.  

Bookkeeping is an essential and integral, yet time-consuming part of a business and outsourcing the service offers a great range of benefits. However, various myths and untrue facts pose a barrier that could prevent the successful bookkeeping of a company. Fortunately, there is enough evidence to show that these myths can be debunked. 

Here are five facts about bookkeeping accounting services that are not based on fact, but purely myths: 

1. Loss of control: 

 Losing control of the business is one fear which every entrepreneur has. However, it must be understood that outsourcing requires a tighter rein on the business. Once the bookkeeping task has been completed, business owners will have more time to focus on other aspects of the business and take control. They will be in a better position to take informed decisions. Many entrepreneurs think that outsourcing their bookkeeping requirements will ultimately lead them to relinquish their hold over the business. On the contrary, availing bookkeeping services will help them gain control of the business as they will have an enhanced understanding of the financial position of the business. 

1. Security concerns:  

As business accounts are highly confidential, it is only natural for the entrepreneur to worry about the security of the critical financial information, especially when the books are shared with an external accounting company. Here, it is important to note that no data is 100% safe regardless of whether it is offline or online. The security measures implemented by the services are based on the existing technology. Due to this, it is very likely that security breaches can happen when business is conducted anywhere, whether it is the office or home environment. 

1. Bookkeeping and Accounting Software are adequate:  

Technological progress has changed the face of accounting culture. Different software has specially been created for accounting and bookkeeping purposes which has made work easier. However, the software may be insufficient because of the lack of expertise required to capitalize on the equipment. Also, finances will need more work and attention as the business grows. Therefore, it will be more economical for the business to invest in outsourced services. It is important for proprietors to capitalize on the full potential of their software as they can avoid spending more time on bookkeeping. 

1. Trust concerns 

Many entrepreneurs think that nobody cares about the company more than them. They fail to realise that the workers employed also have an obligation to do right by the company. Some of the experts are business proprietors themselves and are equally concerned with maintaining the highest degree of customer service. The expert contractors are also better equipped to propose more efficient ways of managing the financial affairs of the company. 

1. Outsourcing is only for huge companies 

This fact is untrue as the concept of outsourcing was initialized to help small companies as they couldn’t deal with all the work by themselves. Recently, it has become a profitable alternative for big companies which want to lower their costs. 

Bookkeeping is a vital part of running any business. The task can get stressful and time-consuming, at times. Businesses which don’t prefer outsourcing can try out the venture to see if it fits their needs. Outsourcing is worth the money in majority of the cases and businesses don’t have to hesitate to go for this option. 

Website: outbooks.co.uk 

This is a common question running through the minds of most of the accountants in the UK. It mainly depends on the kind of client payroll which is being outsourced. The prices for accounting payroll differ according to the kind of client payroll outsourced. There are two pricing models which are applicable in this aspect. The first one is the same salary model which is useful for the simple payroll scheme which uses the same salary details and amount every month. The second one is the Variable salary model which is tailor-made for more complex payroll requirements such as when the client has different types of employees(for example part-time or full-time)  or pay frequency or variable pay amounts. 

But what are the costs which accountants have to incur?  The most important one is the Set-up cost which is the fee to initially make arrangements to avail the payroll with a supplier. This payroll will vary according to the size of the accounting firm and the accountant’s requirements. For a new company the set-up charges will be 10 pounds per company as a one-off cost. The second cost to be incurred is the Running payroll cost which varies based on how many pay-slips are processed by the accounting firm. A firm can be expected to pay between 2 to 3 pounds per pay-slip. Many  accountancy outsourcing services companies give a discount when there are more pay-slips to process each month. 

  The third cost is the Auto-Enrolment cost. Accountants usually offer Auto-Enrolment services which are made up of three components which are the Initial review stage, the Registration stage and Compliance respectively. The initial review stage incurs costs of 15 to 25 pounds per client. The registration stage incurs costs of 25 to 35 pounds per client. Up to a maximum of 10 employees. In the compliance stage the firm could pay 0.75 pounds per pay-run to the employee. HMRC has made year-end filings very simple for each time the payroll is processed. However the final FPS or EPS has to be submitted before the 19th of April each year.  The firm might be expected to pay 20 pounds per EYU for client set-up and processing. 

How can a firm determine if? payroll service providers in uk is suitable for their accounting practice?  In order to work out whether it is cost effective one has to ask this question. The main reasons to choose this are: 

1. Saves time:  It will be beneficial to small companies where the owner of the business will deal with the administration of the business as well. The time element will be very minimal in such cases as there might too many things to handle at once. For employers with more staff, it makes sense to have a designated accountant who will deal with payroll. 

1. Proper expertise: Payroll is ever-changing and continues to change as more regulations are added. It is a very expansive exercise and involves a lot of time and cost. It will make the job easier for a firm if they delegate this responsibility to professionals who are well-equipped with the skills to perform this task. 

To make the maximum profits, accounting firms should move to a model that addresses their accountancy and bookkeeping requirements and an accountancy outsourcing services and outsource accounting and bookkeeping service provider helps here. Such organizations can also take care of personal tax returns outsourcing as well.  It is a straight-forward and level-headed way to turn a low-margin service into something very lucrative, while remaining cost-efficient in terms of hiring experts and saving time. 

Website: outbooks.co.uk 

The deadline for filing the online Self- Assessment tax return for the tax year ending 5 April 2018 is midnight on 31st January 2019. There are other deadlines as well which tax-payers have to keep in mind so that unnecessary penalties won’t be incurred. A self-employed person or a person earning income from personal property will have to file their online tax return by 31st January of every year. Those who miss these deadlines will have to deal with fines and the worst part is, they keep piling up with delay.People have to be vigilant of this fact and pay off their taxes well before the deadline. Or they can take help of an accountancy outsourcing services provider to outsourced bookkeeping services and to take care of tax returns outsourcing.

The previous tax year ended on 5 April 2018. For any untaxed income earned during the 2017-18 accounting year, the deadline for filing Self-Assessment tax return is midnight of 31 January 2019. The next online deadline will creep around before anyone realizes, so it is important to be prepared with the dates.  Here are some of the important dates: 

1. 31st July 2018: This is the deadline for payers to make the second ‘payment on account’ installment to HMRC. This will only be applicable if a person is self-employed during the 2016-17 tax year and a tax amount of over 1000 pounds is owed when the tax return was submitted.  

1. 5 October 2018: This is the deadline for self-employed persons to inform HMRC that they are self-employed, so they are aware of when they have to file the tax return the following year. The process does not have to be repeated if one is already registered as self-employed. 

1. 31 October 2018: This is the Self-Assessment deadline for the tax year 2017-18 if one wants to file a paper return rather than filing it online. However, most businesses find it easier to file their returns online. Under the government’s new Making Tax Digital plans, filing paper returns may not be an option anymore. 

1. 30th December: It is the deadline for filing the tax return when one wants the tax owed to be collected through PAYE via the tax code. This is only an option is one has already has income that has already been taxed through PAYE. It is applicable if one is employed or self-employed and if the Self-Assessment tax bill for 2017-18 is 3000 pounds and the bill has not been settled yet. 

If one continues earning untaxed income from 6th April 2018, it will fall into the category of the tax year 2018-19 which ends on 5th April 2018-19. The deadline for filing the 2018-19 Self-Assessment tax return will be midnight on 21 January 2020. Taxpayers should keep an eye on Making Tax Digital announcements in the case there are any developments. 

Taxpayers should start thinking about their tax return as soon as they start earning money. It is a good idea to open a business bank account to keep personal and business accounts separate and to maintain receipts for all deductible expenses. Nowadays it has become much easier to use an app or an online spreadsheet to keep track of income earned. This will help with organization and make everything more streamlined when the time comes to file the tax return. 

Website: outbooks.co.uk

Any firm, no matter how big or small it is, is always competitively determined by its efficiency, its ability to differentiate between competitors and the capacity to recruit and retain suitable personnel. With new technology and technological developments being churned out every day, even small to mid-size firms can increase productivity without losing money. Accountant outsourcing is another way to derive productivity.

Accountants in a small to mid-size firm can make their way up the compensation scale without making any changes to the size of the firm. Accounting firms can leverage technology to their advantage, increasing productivity and profits in the process. 

Tax returns are very exhaustive and ensuring an error free self-assessments tax return outsourcing is compiled can be a daunting task. With firms cutting down on manpower with automation and multi-tasking, handling this herculean task becomes further difficult. Accountants are under immense pressure due to high client expectations and managing this monotonous, yet critical task is difficult. Efficiency is what is at stake here, as a result of which accountants have to deliver results.  

How Technology has helped accountants become more productive 

Technology has helped smoothen operations and made work easier for accountants. A lot of firms are moving towards the digital space and utilizing digital workflows, bookkeeping company in uk. Cloud particularly has been useful in the areas of tax preparation, compliance and workflow processes as multiple members can access the work from anywhere or work on it at the same time. 

Using cloud, firms can reduce their initial costs as opposed to the high costs incurred using traditional software. Accountants have open access to a client’s data at all times. This makes it easier for them to work, without any interruptions and backlogs. A noteworthy feature of this technology is that it is maintained by the host vendor with a disaster recovery system built-in, so that it gives more incentive to accountants to focus on their expertise. Data entry and information are brought together in one place. This provides for easier access. A special portal allows clients and accountants to upload files and communicate with each other. This reliability and productivity in turn, ensures added value for the client. 

The role of digitalization  

Firms can stand apart from the rest by using social media effectively. The main ingredient in the formula to reap more profits is differentiation using social media and immersive online content. Firms can be successful if they have a strong online presence. This can be achieved by creating and maintaining attractive websites and social media pages. It is a requisite for firms to have an interface to update relevant information and actively connect with clients. It becomes easier for firms to establish themselves this way. If a firm does not have a social media presence, then the client might have to research about it multiple times before settling for its services. This has in many instances, lowered the reputation of firms. It is not necessary that only large firms enjoy social media exposure. Even small and mid-range firms can distinguish themselves by frequently posting on social media. It all boils down to how each firm is able to build an authentic relationship with their clients. 

The most important rule firms have to follow is to earn the trust of their clients. It is not enough that they have colorful websites and snazzy social media posts. Clients need to be satisfied with the services rendered to them. The biggest mistake firms can commit is losing the faith clients have in them. This will be detrimental to their long-term success. Firms have to be dynamic in order to taste success and that comes with careful planning and resourcefulness.  

Website: outbooks.co.uk 

There is a huge surge of jobs for accountants across the UK and many firms are resorting to accounts outsourcing and external contractors to meet their various needs.  Accountancy has entered a new dimension in the first-quarter of 2018 with a lot of firms searching to include audit, advisory and tax, and self-assessment tax return to their services. This has created a lot of job vacancies in the sector all over the country and has equally provided opportunities for tax outsourcing services.  Newly qualified candidates have a variety of appealing positions to choose from and the job market is opening its doors wide open for them. There are many choices ranging from commercial sector services to financial services. The increase in advisory and project services has created opportunities for employees to hone and advance their skills. 

Audit partners and HR directors who need qualified personnel for the upcoming accounting season have to expect a challenging recruitment process ahead of them. Competition remains as cut-throat as ever and firms cannot afford to be under-staffed. Recruiters have to be mindful of this fact and carefully select from among the available candidates, those who have the specific skills and expertise required to perform the jobs. Most of the time, conditional offers are issued after the candidate clears the interview and this is based on the successful completion of the written exam. 

Outsourcing continues to be on the rise, with a significant increase in the number of jobs registered during the first quarter. Earlier, these positions were occupied at the home front, but nowadays specialization and diversification have come into play. Firms and companies are choosing to perform work only in their core competency areas and majority of the other work is being outsourced to firms specializing in them bookkeeping company in uk. Accountancy work in companies is completed externally by accounting firms who need competent professionals to meet all the demands. 

The software arena has experienced game-changing innovation with the introduction of cloud computing tools. The use of these tools has become highly popular. Those who are skilled in the use of these tools and the areas of the software will be in huge demand. Good and sound knowledge of Xero, QuickBooks and Sage Business Cloud will put candidates at an advantage. 

A major problem the industry is facing this year is the restrictions placed on the non-EU workers securing roles which are under sponsorship in UK firms. In the past years, many areas struggled with the dearth of staff and these gaps were filled by non-EU workers. The reason for this is that, under the current system, there is an annual cap of 20,700 restricted sponsorship certificates available to sponsor non-EU workers. This cap has been divided unequally among the workers and there aren’t enough roles for everyone, hence the restrictions have been imposed. 

The Big Four firms are expected to increase their recruitment for the next quarter and managers will finalise their staffing members for 2018 and 2019. A significant challenge for the group of clients could be the on-boarding of candidates requiring the sponsorships. With respect to other markets which need candidates, the industry will continue availing the services of professional contractors until recruitment is completed. The need for accounting and outsourcing professionals will continue to rise throughout 2018. Job seekers must keep in mind two things: work culture and job benefits.

Job benefits are comforts designed for more efficient performance such as flexible work timings and the option to work from home. It is important for employers to offer and provide both. 

Website: outbooks.co.uk 

Outsourcing services during tax season help firms of all sizes.  Firms can cut costs up to 60 percent by substituting in-house workers with professionals who are trained for the job. Firms are constantly challenged with balancing the completion of conflicting tasks like bookkeeping and accounting. Due to this they need all the help they can get when the tax season arrives. The more tactical, administrative functions are time-consuming and complicated. This is why firms find it necessary to hire specialists to handle one of their yearly obligations: that is the filing of tax returns. Firms do not have the manpower or time to go over their books and calculate this amount which is why they don’t mind spending a little extra to fulfill this task. Partnering with a reputed accounting and bookkeeping outsourcing company is all the better as firms can be assured of quality service. 

There are many plus points to outsourcing this task. They are: 

Firms can increase their morale and productivity by reducing long working hours and weekend staffing requirements. 

It helps reduce peak season overtime costs. 

Firms can shift their focus to their core competency areas and leave the other work to trained professionals. 

The professionals will convert the variable cost of tax preparation to a fixed cost. 

It will lead to improvement in document management processes. 

Partnering with a provider of bookkeeping and accounting services will help them manage the heavy workload of tax season as they will utilize the expertise of specialists engaged for the purpose. 

There will not be any requirement for heavy investment in permanent staffing as the specialists are hired on a temporary basis just to complete the task. 

They will deliver unique and customized services based on the firm’s tax requirements. 

The experts save the clients from tax filing penalties by giving them an accurate result of the existing cash flow, self-assesment  returns outsourcing. 

When considering outsourcing partners, firms have to make sure the data of their clients is in safe hands. Before availing any outsourcing service, firms have to ensure that the outsourcing firm maintains a comprehensive non-disclosure agreement. The outsourcing partner has to come equipped with a fully trained staff, possessing extensive knowledge and essential training on all federal and state tax laws. A high-level final review process also has to be submitted by them. 

The technology used by the outsourcing firm makes all the difference.  A benefit of outsourcing is the ability to leverage the technology investment of the outsourcing provider. Most of the outsourcing providers have migrated to a cloud-based platform which facilitates the provider to share their technology investment with the clients. A good provider will use the latest and most effective technology and manage upgrades when needed. Outbooks is the best accounting and bookkeeping company in the UK. The data security measures set up by the provider have to be comprehensive and powerful as the operational infrastructure relies heavily on the technology infrastructure. 

Outsourcing providers are the best examples for model business practices and process optimization. Efficiency is directly proportional to profitability and leveraging skilled professionals to manage and execute tasks will lead to increased productivity and profitability. It is also highly cost-effective in the long-run when considering the bigger picture. If the outsourcing provider can provide a service more cost-effectively than the in-house staff it will allow the firm to focus on its more important, income-generating activities. 

Website: outbooks.co.uk

Within hours of GDPR taking effect, Google, Facebook, Instagram and WhatsApp were facing the prospect of being fined to the tune of $ 9.3 billion. It is hard to imagine that the tech giants had fallen foul of the data protection regime. This brings the spotlight on organizations that deal with data of EU entities. Regardless of the location of companies, the privacy law can impose penalties in either of the two tiers.  Before we take a look at the implications of working with a non-compliant partner for outsourced bookkeeping services, let’s first look at the relevant provisions and definitions of the GDPR regime. 

Data controllers – any business or organization that holds EU data, becomes a data controller. This effectively means that an organization that outsources any task to a third party, will be deemed to be a data controller if the task comprised EU data in any form. It is important to note that this will apply to any company regardless of its location. 

Data processors – any business or organization that processes EU data will be deemed to be a data processor, regardless of location. An interpretation of this definition means that all third parties that function as outsourced bookkeeping services, and handling the data of EU entities, will fall into the category of data processors. 

Responsibility of data controllers 

The regime clearly specifies the data controllers need to rely on the services of only those outsourced accounting companies (read data processors) that are fully compliant with the various provisions of the GDPR act. In other words, the onus of responsibility of ensuring compliance of the outsourced accounting companies (data processor) lies with the data controller. This effectively means that non-compliance by the data processor will also have implications on the data controller and the liability will rest on the data controller also, tax returns outsourcing. 

Extent of penalties 

The two levels of fines that can be imposed on entities – both data controllers and data processors are – 2% or €10 million/4% or 20 millions of total worldwide revenue of previous financial year, whichever is higher. The levels of fines are determined by the nature of violation of the GDPR act. Negligence is on the lower end of the threshold for fines while willful intentions are on the higher end of the threshold. 

Direct implications of dealing with a non-compliant outsourcing partner 

Penalties 

The most direct implication of dealing with a non-compliant partner is the penalties that may be payable in the event of a violation by the data processor (in this case the outsourcing partner). As mentioned earlier, the data controller (organization outsourcing the task), will also be held liable for the actions of the outsourcing partner. Irrespective of the level of fines, it is important to note that a 2% or 4% penalty on the worldwide turnover can be debilitating. 

Client confidence 

The imposition of a penalty under the GDPR act will shake the confidence of clients.  In an era of heightened competition, it is hard to imagine a company covering lost ground after having lost its reputation. Clients will certainly not look forward to the prospect of dealing with a company that is compromised on data security, either directly or indirectly. Additionally, clients would certainly not want to find themselves or their operations embroiled in the various processes that may arise as a result of the penalties. 

Impact on routine processes 

The impact of routine processes will be the indirect implications of non compliance with the GDPR act. For instance, a company that has been deemed to be in violation of the GDPR act will have to temporary suspend operations till the processes are set right. This disruption in operations will not only affect the company but will have an impact on the clients.  And clients will never be comfortable with the idea of having to sit out the suspension of operations till processes are set right. 

Will location of data processors make a difference? 

Contrary to perceptions that the location of financial accounting outsourcing services will have a bearing on the compliance, it is a fact that the processes will be the only governing factor.  For instance, a company may outsource to an outsourcing partner in the EU and still be fined, if the partner is not compliant with the regulations. A partner working out of a non-EU nation may be fully complaint and consequently may not attract any penalties. It is therefore the processes that matter and not the location of the financial accountancy outsourcing services. 

Potential intangible effects of penalties 

An organization that has been levied a fine due to the non-complaints of outsourcing partner, will find itself looking up at a steep increase in insurance premiums. Combined with the effect of disruptions in operations, and possible attrition rate of clients, this could deal a debilitating blow to operations. Companies need to therefore carefully consider the capabilities and compliance aspect of outsourcing partners. 

Compliance audit of partners to prove mitigating circumstances 

Organizations and companies that outsource tasks need to carry out a comprehensive compliance audit of partners. This will ensure that the Damocles sword of fines will not hang over the data processor or data controller. By insisting on compliance audit, organizations can preempt it disaster in addition to proving mitigating circumstances. Mitigating circumstances have an impact on the levy of penalties. The 2% and 4% calculations are the upper threshold of the fine. By proving intent to stay compliant organizations can ensure that they are not fined heavily. 

Organizations and companies need to have a robust system in place that will report an incident immediately to the relevant authority. These aspects need to be fully understood and followed to prevent adverse impact on operations. The primary responsibility of an organization that relies on an offshore entity is to ensure that the entity is compliant. In addition to this, it is necessary that resources are tasked with dual responsibilities – discharging the role of a data protection officer. 

BY: AMIT AGARWAL 

London   

Suite 7, First Floor, Amba House,   
15 College Road, Harrow   
Middlesex - HA1 1BA   
Registration No: 10746177   

India   

Gurugram   
Unit No.110-111, Spaze IT Park,    

Tower b4, Sohna Road   

Gurugram, Haryana - 122001   

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When the formal announcement came that the United Kingdom had voted its departure from the European Union (EU), there have been several components of the UK business scope that were shocked, and not the least of them was the accountancy firms. The Brexit decision carries a straightforward link to the accounting industry and the various dimensions in which UK accounting businesses can function in the long run. This is not really a case where we can say that everything about it is unacceptable. 

One particular aspect that will manifest itself as the companies formally disjoint from the EU is that businesses will start reviewing their choices to decide on the suppliers and could even move forward in forging better deals than what they had in place before. Moreover, they may push towards expanding their own lines to fulfill the prospects of the new demand for goods and products made in UK. 

According to a study commissioned by the AAT and ACCA, almost as half of the MPs voiced their affirmation on the imminent positive impact of Brexit on accounting firms. 47% of the MPs asserted that Brexit would be favourable and gain an approving headway as accountants would be in a position to advise their clients on the ramifications involved in getting out of the EU. Only 23% were of the opinion that Brexit does not really put forward an encouraging opportunity for accountancy while the rest 25% remained inconclusive. 

The survey also revealed that 55% of the MPs were convinced that the EU tax legislation needed to be reviewed right away, instead of waiting for Brexit to materialize. Only 18% of the MPs contradicted. 

The study reflected the confidence among the MPs about the possibilities of the accountants rising to the challenges brought forth to business by the unpredictability that ensued because of Brexit. But it is further vital to understand that politicians acknowledge the merits which the accountancy profession can bring about to the UK economy as it sets foot in one of its most significant periods of economic transformation. 

The impact of Brexit on accounting IFRS appears to be limited. This is a good point to know. Listed companies which are reporting under the IFRS standards must continue doing so by the EU regulation. But this is surmised to be included into UK law through the EU repeal bill. The requirements of EU for financial and non-financial reporting by different entities are present in the Accounting Directive and are covered already under the UK law. 

The study also looked into the matter of passport rights, which permits UK companies to render financial services within the scope of EEA. 40% of the MPs expressed their agreement over the necessity of securing auxiliary contracts for companies which are holding passport rights. 29% of the MPs were not convinced and 25% showed no inclination about this issue. 

The UK audit profession has undoubtedly benefitted from the use of globally acclaimed high-quality audit standards. It provides a good measure of international coordination across the audit business which is believed to be relevant to the market environment. The potential impact of Brexit on audit seems low, at least in the short-term. However, Brexit may grant an opportunity in revisiting a few of the amendments set forth by the EU audit reform. Although the probabilities for changes exist following Brexit, UK has been supportive in promoting recurrent retendering of audits of specifically listed systems. 

These changes have now been appended and agreed as part of a good practice. The likelihood and need for more changes, therefore, would appear to be narrow. However, it is conjectured that UK could reconsider the purview of typical facets of the EU audit legislation if these practices turn out to be unnecessarily burdensome. 

A good majority of the accounting laws that have so far been followed in the UK were primarily ordained by several directives that were also executed and administered by the EU. These ordinances comprised of the provisions defining the process of creation of accounting reports, the exact stage of their creation and various other features. The UK government will undeniably offer new directives which are akin to the ones held by the EU, but to what extent the similarities remain needs to be examined. 

It is familiar that opportunities go side-by-side with threats. For accountants, a dearth of relevant skills, post-recession in 2008 was already a big worry. With Brexit, the situation is probably going to be aggravated. Until now, British accountancy businesses employed accountants only from inside the EU without asking for an immigration authorization. But, in the wake of Brexit, employment assents may require an audit. 

Although such chances are bleak, a portion of EU accountants may at last need to surrender their jobs and return to their nation. A majority of accounting and bookkeeping services professionals voiced apprehension over jobs being shifted from the UK to EU. The principal concern seems to be over job stability, constricted opportunities, constraints associated with working abroad and a potential job loss as well when it comes to downsizing and cost-cutting. 

It may be a bit early to evaluate Brexit’s effect on accountancy employment. But it is being broadly revealed that in these questionable circumstances, businesses, more so the ones with solid balance sheets and accounting reports are implementing investment cost-cutting and recruitment freezes. This can kindle a more profound crisis in the UK productivity. 

Numerous reports have suggested outsourcing would be an excellent option and that Brexit would create a boom in the demand for bookkeeping outsourcing services as UK businesses progress forward to understand the situation. There would be a significant surge in workload connected with projections, revising forecasts, analysis of the impact on the markets, assessment of management figures, exchange rate disparities etc. There are many accountants who have already begun hiring surplus staff from outsourced accounting firms to deal with the liability of this extra paperwork. 

Accountancy outsourcing can be extremely advantageous to control the productivity amidst this period of uncertainty. It enables you to access qualified staff at lower fixed costs and flexibly move your practice ahead. This could imply proper sorting out of works related to compliance and self assessment tax  with the outsourced staff and focus on aiding and supporting businesses to tackle the challenges which Brexit has come forward with. Outsourced accounting firms can also assist you in quickly responding to the opportune chances without the restrictions of long-term employment contracts. 

The governance encompassing VAT application was previously decided by the EU since it was their proprietary concept. With Brexit, the VAT policies are most likely to be modified. Hence, this would have a direct influence on the companies’ accounting practices. It is expected that the government would design a system that is distinguishable from the VAT system because of the fact that VAT is a continuous source of extensive income generation for the country. 

Many of the consequences of Brexit remain obscure at this point, particularly around issues that focus on passport rights, tax and compliance. However, amongst all these apprehensions surrounding Brexit, one thing is very clear that in the coming times accountants have a crucial role to play with the sole objective in advising and assisting their clients on the financial and tax implications of the EU withdrawal. 

BY: AMIT AGARWAL 

London  

Suite 7, First Floor, Amba House,  
15 College Road, Harrow  
Middlesex - HA1 1BA  
Registration No: 10746177  

India  

Gurugram  
Unit No.110-111, Spaze IT Park,   

Tower b4, Sohna Road  

Gurugram, Haryana - 122001  

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The journey towards achieving fair value standards has resulted in the loss of prudence and judgment in accounting outsourcing companies. Poor audits and troubled auditors have seeped into the very heart of the corporate system and rendered it dysfunctional. Further investigation into this matter has proved that the problems in the audit market may be perhaps due to some loopholes in the accounting standards in place.  

Recent financial scandals such as the fraud at the Colonial Bank in the US to the disintegration of Carillion, the UK outsourced bookkeeping services group has significantly pointed out the inefficiencies and errors in the system. One of the main problems is the structural dependency on the Big Four firms. Another problem is that auditors have failed to prevent investors from being cheated and to report criminal practices. The rules have become defunct and unnecessary for the practice.  

Three decades ago, banks would manipulate their profits by valuing loans and keeping aside provisions for losses on loans without caring much about the existing economic situation. This incorrect higher scaling of profits was good news for many investors as they would get higher returns. However, these practices were detrimental to the economy leading to the savings and loans crisis of the 1980s and 90s. 

What went or is going wrong 

Managers who are spoilt by the equity incentives and fringe benefits are using the system for their own personal gains. The writing up of asset values in relation to market values, whether real or estimated, have enabled them to get profits, distribute dividends and increase share prices. The fair value system will only work if correct market valuations and proper estimates based on logic are prepared. The credibility of the company is what’s at stake and an auditor’s responsibility is to guard that. 

However, auditors, especially in the Big Four firms, have shed that responsibility, instead of using their lobbying power to make decisions devoid of any judgment. This is where one of the drawbacks of the fair value approach creeps in. Rationale and prudence can only be restored if time is taken to understand the different uses of the models, estimates, and projections. This will help work around the manipulative nature of the historical cost approach. 

There is always a place for new rules and approaches in the market. The problem of non-performing loans in Europe has been dealt with by creating a new rule, IFRS 9. The rule mandates that companies set aside bad debts provisions before incurring any losses, in order to be on the safe side. The rule is a healthy mix of fair value accounting and predecessor standards. 

Principles of modern accounting 

An important principle of modern accounting is fair value. The framers of accounting standards suggest the coordination of accounting rules globally and to do away with system loopholes. This method relates asset valuations with the prevailing market prices. The aim is to prepare accounts according to the current economic situation rather than the historical cost of the assets. It has since been accepted as a fundamental concept in modern accounting. The method has been adopted in the European accounting practices as well. The concept stems from the idea that accounts should be user-friendly. It has been used for volatile and fictitious valuations and extends to non-liquid assets with no certain market price. 

This rational approach should accrue to all areas and regulate cash flows. Also, auditors should keep an eye on decisions made by financial directors and consult with them on important matters. The underlying aim of the audit market is to assure investors and the public of the fairness of accounts and this sanctity should be maintained. Changing the accounting rules is only the beginning. 

What else can accountants do 

It is also important for the accounting firms to include their clients in the discussions and allow them space to share their thoughts too. This helps in building trust as shared below. 

1. Be available proactively – Your clients may not be accounting experts and the words may be jargon to them. They may also be relying heavily on you for your opinion, suggestions, and recommendations.  It is important that you look for opportunities where you can add value to your client and ensure they don’t get stuck with any compliance issues or miss important deadlines. 

1. Give them enough space to intervene – You are an expert, no doubt but your client may also have a fresh view. You can tell them what can be done or what is the right way or wrong anyway. It is important to allow your clients to intervene so that they get the feeling that they have the control of their accounting and this authoritative feel can make them more comfortable to help you in getting their trust built in you. 

1. Breaking down the complexity for them – Explaining each process and accounting details of course is and should be one of your tasks. Accounting is a scary term for many and what an accountant may find a simple concept, could be a nightmare for others to understand. It is important that they know what you mean by the terms you use. Decide recurring meeting slots and discuss the financial data and performance with your client so that they know where you are heading and so that they don’t raise a concern out of the blue one day. We also provide payroll outsourcing services provider. 

A better transparency, ethical accounting, and communication with customers can help get the faith back in outsourcing. 

BY: AMIT AGARWAL 

London  

Suite 7, First Floor, Amba House,  
15 College Road, Harrow  
Middlesex - HA1 1BA  
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India  

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