How to make the leap from employment to self-employment Posted 02/08/2019 by Sophie Cross & filed under Career. If you’ve ever had the desire to work for yourself you’ll know that figuring out the right time to make that leap from employment to self-employment can be painstaking. Michael Beech FMAAT, set up Michael Beech Accountancy in 2013. He talks about when and why he decided to make the jump, and advice for a soft landing. Knowing when the time is right I formed Michael Beech Accountancy in September 2013 after spending the whole summer thinking carefully about it and speaking with my wife. I’d actually been mulling it over for many years but that summer I decided to start doing something constructive towards it. I had a 300 mile a week commute which I didn’t like so the flexibility of working from home really appealed. I mustered up the courage to see if I could make a go of it. Taking some of the pressure off It’s very difficult to make a complete jump from full-time employment to running your own business, and it’s probably best to try and stay in your job part-time for a while if you can. For the first few months, I continued to work reduced hours for my employer whilst I built my business. I worked for a large corporate with French and German clients so there was no conflict of interest, and my employer agreed to it. In early 2014 I went full-time with my business, but in hindsight, I probably would’ve worked part-time for a bit longer for some additional financial support. How to find customers The first big obstacle I faced was how to find customers. When you’re the new kid on the block and nobody has heard of you, it’s tough. Year one was very difficult and I did lots of marketing to try and build a client base. It was mainly a mixture of local networking, leafleting and paid digital advertising. If you can get through that first year you’ll gather momentum and it gets easier but I wish I’d known more about the local market and done more research as to how I was going to find customers initially. Only take on as much work as you feel comfortable with Knowing what to charge The other thing I found challenging at first was knowing what to charge. I looked on the AAT forums where there are some real nuggets of information and tried to gauge from those. As time went on, customers would come to me with their accounts and bookkeeping and I could see how other accountants were pricing themselves from the bills in them. After two or three years I had a good grasp of what competitors were charging and established a personal stance on pricing that I felt happy with – generally charging 5-10% less than other accountants. Practicalities and costs I wanted to become a licensed accountant with AAT. I had to take out professional indemnity insurance for AAT’s programme and AAT were my anti-money laundering supervisors. I also had to sort out ICO data protection. My biggest business start-up cost was setting up my office. I needed to create a working space in my home with a laptop, printer, accounting software and stationary. Another significant outlay was advertising – to build a presence and a brand to attract clients. Five years down the line I don’t advertise anymore, I don’t need to. Time to grow In October 2014 I formed a second company in Worcester with a friend and another member of AAT, Mr Ali Jaw FMAAT, called AM Accounting and Business Advisors. We decided that two heads would be better than one, and we could share our knowledge and expertise. I also felt that it was good to work with someone else because as a sole practitioner you are on your own quite a bit. We’ve now got a few sub-contractors who we work with so we’ve built a little team where we can filter work out in order to cope with the expansion of the business. But the main factor that created success was simply doing a good job for people – be yourself and be honest and word will get around which will lead to growth. Most of our business has come from word of mouth. People, teamwork, technical automation and hard work have been really important in the growth of my businesses but for me, work-life balance is very important. Scale can sometimes overwhelm you if you become too successful. I once went to a talk about having your own business with Henry Cooper, ex-president of AAT, and one of the things he said was to only take on as much work as you feel comfortable with. The best things about being your own boss Having my first ever invoice paid was a really great feeling, but one of the most rewarding things is not monetary, but about lifestyle. You can’t really put a price on the freedom of working when you want to work, where you want to and dressing how you want to dress. See Ali and Michael’s story All AAT professional members offering bookkeeping or accountancy services must hold a valid licence. Check out our Be Your Own Boss pages for useful information about becoming an AAT licensed member. You can also find out more about the benefits of professional membership.
Should new businesses still be maintaining a physical presence? Posted 02/07/2019 by Informi & filed under Run your business, Students. Comet, Maplin, and Toys ‘R’ Us are all formerly major High Street brands in the UK that have had a sad demise during the past decade. Only the grim tale of the state of Britain’s bricks and mortar giants doesn’t end there. Add to the above list, names like Phones4U, JJB, Zavvi, and BHS and we have a list that is less of a consumer confidence crisis and more of a damning statistic. The loss of these seven major brands alone caused an estimated 30,000+ redundancies nationwide, while some £1.5 billion GDP has been lost as a direct result, according to the New Economics Foundation. 2019 has begun with more warnings for the Great British High Street. Patisserie Valerie fell into administration last week; Debenhams is struggling with poor profit figures reported; House of Fraser closed more than half of its outlets in 2018 including flagship stores in Oxford Street and Cardiff; Homebase limps on having shut 58 stores at a loss of more than 2,000 jobs. Glorious retail names such as HMV, 98 years old in 2019 but back in administration, are still ascertaining how to survive the digital age to prevent becoming another giant of the past. Which begs the question, should new small businesses even bother having a physical presence in the hope that they can cope with the various taxes and bills that they owe, or just opt for online? Here are some reasons that suggest that physical stores on the high street are in trouble: The rise of online competition Amidst all the apparent doom and gloom, the success story of setting up a business continues. Official House of Commons business statistics show that 382,000 businesses set up during 2017, contributing to the 5.7 million businesses that make up around 99.3% of all private sector businesses in the UK. Both figures are near record levels. And there’s plenty of appetite for more in the future. An Informi study has shown that half (50%) of the Millennial generation would like to one day run their own business, with over a third (35%) going as far as to call it a life goal of theirs. So why the disconnect between the failures of large and well established businesses, and the keen hunger to become the big businesses of the future? Well, there are plenty of winners in business for every loser, and there’s been a quite dramatic shift into the digital age in recent years. Businesses like Amazon, Google, Youtube and Airbnb will no doubt wish to continue their meteoric rises of the last decade and continue to be well established for many years to follow – indeed as well established as some of those fallen High Street giants that came before them. And there’s been thousands of success stories on a smaller, but still highly impressive, scale. Crippling business rates for bricks and mortar stores While the job losses might be most acutely felt by big brands, the fact remains that many British High Streets are themselves dominated by smaller, family-owned businesses that have strong resonances and pride in their local area, whom they have faithfully served often for many generations, and across all industries. In Brighton, which was named the best place to start a small business in 2018 by Informi, a vegan café was forced to relocate in December due to soaring business rates. Owner Georgina Archer told the Brighton Argus that the Larder, which had been open for four years, was closing due to rate bills of £860 per month, adding that the rates were “crippling a lot of small businesses, which is a shame because Brighton is well-known for having an array of independent shops.” Sidmouth-based Hayman’s Butchers meanwhile told This is Money that they were one of only two surviving businesses actually paying business rates (the rest are charity shops, exempt from most or all of the rates) which cost his firm around £7,800 per year, meaning profit levels are “practically zero.” It appears that the finger of blame is being pointed, by bricks and mortar businesses great and small, squarely at the doorstep of Government taxes – and not at the shift towards online-only spending from customers. The High Street may yet have a place if more businesses have a fighting chance of making a profit. At the last Budget in October, Chancellor Philip Hammond outlined proposals initially announced at the Conservative Party Conference to introduce a new ‘digital services tax.’ The tax is in response to the heavy criticism being aimed at established tech giants, including Facebook and Google, who pay minuscule amounts of tax despite the vast amounts of UK users looking at adverts on their platform. Consumers prefer digital – so should I bother with a physical brand? To answer that question – Informi asked the real experts out there – people who are running their own successful business, or those operating at a senior level within others. Informi has published blog posts for those in favour of new businesses adopting the online-only approach and those who think physical presences are here to stay. Is the ‘out with the old, in with the new’ approach fair? Should we simply accept the gradual death of our High Streets as an inevitability with consumer shopping choices shifting, or should we do more to fight for our local shops? This blog was first published on Informi, For great business tips and information on starting a small business, Informi offers business advice and support, made easy.
Eye on the prize: taking the fast track route to chartered accountancy Posted 02/06/2019 by ICAEW & filed under Career, Students. This content is brought to you by ICAEW. Creating a plan for your future can be a very exciting time, but even better is knowing that it won’t take long to reach your goal. With great benefits, flexibility and opportunity, the AAT-ACA fast track route can be a rewarding journey when establishing your career as an accountant. After completing AAT’s Professional Diploma in Accounting, you can become an ICAEW Chartered Accountant in as little as two years. The AAT-ACA Fast Track route builds on the skills and experience you have already gained. It’s the next step and will give you the skills to think strategically, problem-solve and manage risks, all while maintaining the highest standards. It’s a popular choice that attracts ambitious individuals. In fact, AAT-ACA Fast Track students regularly feature in our annual International Prizegiving Ceremony, which celebrates those who have achieved the highest marks at the ACA exams. Chloe Eldridge ACA won multiple prizes for her exam results. Chloe’s journey to chartered accountancy After finishing her A-levels, Chloe wasn’t sure what to do next. “I didn’t want to commit financially to a university degree, so I began looking into the accountancy profession as I knew that you could enter it straight from school”. At eighteen, Chloe entered the world of work. She started with a small local accountancy firm, during which she completed the AAT Qualification. A year and a half later she joined Saffery Champness as a Trainee Chartered Accountant. While working there, she began ICAEW’s ACA qualification. Because she had already studied with AAT, she had a good grounding for the ACA and had four exemptions from the qualification. New opportunities “I chose the ACA because it really opens doors; you can go anywhere in the finance world. It’s a very prestigious qualification, so when you come in and say I’m a chartered accountant people know you mean business”. Throughout her career, Chloe has never felt at a disadvantage compared to the graduates, as the fact she had started working straight from school put her at a good level. “I just went for it,” Chloe says, “ I knew the ACA would offer opportunities for the future and that my employer would support me through the process.” As part of the ACA, Chloe completed 450 days of work experience. “The work experience has really helped me in my exams as I can apply real life situations I have encountered to the questions.” “With exams like Financial Accounting and Reporting and Audit and Assurance, I can apply what I’ve read to work, and I can also apply what I’ve been doing at work to the exams.” This is one of the key benefits of studying the ACA, as being able to apply real-world situations in exams gives students a deeper understanding of what they are learning. Invaluable training “The exams are not easy, however the courses and the on the job training are invaluable”. Chloe’s employer provides plenty of support to make it as stress-free as possible to balance work and studying. “Study is given priority as the exam date approaches,” Chloe says, “so my workload is eased and we are given study leave to attend the course and revise”. “When I found out that I was a multiple prize winner I was in shock. The exams were hard and I was over the moon to have passed them, let alone win two prizes on top of that.” Next steps Chloe has plenty of ambition for the future, and the skills she has developed throughout the ACA qualification will allow her to progress to senior-level roles. “I love what I’m doing,” she says, “hopefully I can eventually reach Audit Partner level. After that, I’d maybe become an executive in the City. That’s the thing, the qualification opens up so many doors.” For more information about starting your fast track route to accountancy, ICAEW offer plenty of useful information to help you start your journey.
How does cloud software apply in the real world? Posted 02/06/2019 by Matt Packer & filed under Students. Cloud-based accounting is steadily becoming an operational standard. No accountant can afford to get left behind – especially those who are new to the profession. They need a strong understanding of the latest technological trends. So it’s time to put the ledger to one side and apply your knowledge in the cloud. At a general level, the main difference between cloud-based accountancy and its pen-and paper counterpart is that there’s a significant interactive element to the new systems. Instead of the accountant wrestling with a filing cabinet full of folders containing the accounts of each client, a cloud platform puts all that material on a web-based server, accessible not just to the accountant, but to the client too. In the view of Chris Morford, head of sales at cloud-accounting software provider Clear Books, the whole point of these platforms is to help accountants and their clients have a great working relationship. As such, cloud solutions can be calibrated to suit different styles and ways of working with clients, he says. You’ll use a dashboard Cloud accounting works primarily with ‘dashboards’ – task-orientated home pages. These lead the accountant and client clearly through each relevant process. Chartered accountant Nadia Rossen Mamode, founder of Bee Accountancy, uses QuickBooks and Xero to collaborate with her clients. In a typical cloud-accounting solution, she says, the dashboard is the central area where all the finance functions of the client business – invoicing, expenses, bank accounts, reports, VAT, payroll and so on – can be accessed: “On logging in, the platform automatically generates a to-do list. This could be because a set of bank transactions, for instance, is ready to be reconciled. So, in that case, the dashboard becomes an interactive area between the client and the accountant, in which the accountant queries transactions and the client can reply:’ You’ll read the data The core accounting procedures that you are studying still play a big part in digital accountancy. The steps are the same, but they are expressed in more layered and intuitive ways. When you’re studying, you do the paper-based exercises to understand how the nuts and bolts work. The software automates those nuts and bolts and produces an analytical view – you need to understand the basics in order to read and comprehend it. “Across all the key documents – such as invoices, bills and bank transactions – you use a software interface, rather than writing up a journal and ensuring it all balances;’ Clear Books CFO and head of product David Carr says. “The system does all that instantly and automatically. “For example, if you are recording an invoice, you don’t just have your sales ledger: you are able to see how many invoices are overdue, how overdue each one is and which ones have the greatest financial value attached to them. Rather than just having the nuts and bolts of the accounting, which are the same, you have that extra level of business management on top. That’s probably the key difference between the theory and using cloud-based accounting software.” “During on-paper training, the most common mistakes are entering the wrong figures and missing an entry, so that the accounts don’t balance, Mamode adds. When you use cloud software, however, bank transactions are inputted via direct feeds from banks, or by uploading statements. An auto-entry package such as Receipt Bank can read invoices and load the data straight into the system. You can set up accounting rules so that the platform will automatically assign certain transactions to the correct code. For example, any transactions showing ‘Train’ are assigned to ‘Travel’. You can work quickly Mamode uses cloud software every day for sending out sales invoices, compiling aged-debtor reports and executing bank reconciliations. As Carr points out, a lot of businesses are now operating in a digital environment, and some of them will have hundreds of thousands of transactions per month. “You can’t keep on top of that by hand. It’s physically impossible. So, as well as managing high volumes of transactions, cloud systems add in controls, such as built-in error checking and audit trails, which you can’t achieve with pen and paper.” With Making Tax Digital currently a hot topic in the industry, digital accountancy is only going to become more prevalent. And, with returns to HMRC becoming more frequent over the next couple of years, digital accountancy will become more essential too. “The requirement not just to have more regular interaction with clients but also to get their information into the system as quickly and efficiently as possible will only increase because, ultimately, you need to be compliant,” says Carr.
After GDPR – how Brexit will change data protection Posted 02/05/2019 by Mark Blayney Stuart & filed under Brexit, Members. GDPR brought upheaval and change in data protection – now Brexit is bringing it to the fore again. Last year the letters GDPR become universally familiar across the UK. In a matter of months, the acronym became known to all, due largely to the upheaval from its introduction. But Brexit means that further questions – and possible changes – lie ahead in data protection in order to keep data flowing freely across borders after the UK’s departure from the EU. Ardi Kolah is Executive Fellow, GDPR Programme, at Henley Business School. He warns: “There’s a great fog about what is going to be agreed with the EU commission with respect to international data flows. This fog is compounded by the lack of clarity about the rights of EU nationals living here, and of our nationals living abroad.” As with all things Brexit, the final picture may change, but here are some factors that are emerging. Issue #1: Adequacy As an EU member, the UK is signed up to the GDPR and is regarded as having sound data protection rules. But after Brexit, the EU will have to give the UK a status of “adequacy” for data protection in order to continue smooth data sharing. In December the EU commission issued a warning. If the UK leaves without adequacy being granted, measures will have to be put in place to ensure data can be exported from the EU to the UK. Should this concern accountants? “I would hope common sense will prevail,” says Kolah. “The UK has made a huge contribution to security and privacy laws, we’re held in very high esteem, we were involved heavily in the establishment of the GDPR and we have a good legacy. I would hope that as part of the negotiated exit, the UK will be fast-tracked in gaining adequacy status.” But even if this happens, he says “it’s important that international data transfers continue to be frictionless – it’s in the best interests of both the EU and the UK.” Issue #2: Data flows into the UK Let’s look at particular issues for accountants. For a practice mainly dealing with UK clients, then the changes made to comply with GDPR last year still hold. GDPR (i.e, the EU regulation) has been incorporated in the UK’s Data Protection Act 2018. So the same mechanisms regulating data remain in place – albeit with some deckchair-shifting: fines are now in pounds, rather than euros. If you have clients in the EU however, be aware that data flowing from the UK to the EU is different to data coming in the other direction. Duncan Smith, Director of iCompli says: “If you’re a data controller and you’re sending to the EU, that’s fine; you’re sending to a safe territory. But the issue with data coming into the UK is that until we are gain adequate territory status, we are in something of a no-mans-land. I think we might be made to suffer a bit on this because it could be a whole before the European Commission determines that the DPA is adequate – and in the meantime, we don’t have a privacy shield in place.” Issue #3: Temporary measures The answer might need to be standard contractual clauses (SCCs). “Any data coming in will have to be under a model contract,” says Smith of iCompli. “This presents something of a headache for the EU. Imagine you are Mercedes and you have your head office in Munich. If I send information to my dealership in the UK, I’ll need different, stronger controls, to ensure I’m not breaking data privacy rules.” Issue #4: It doesn’t just affect Europe If you have data flows between the US and the UK, you also need to be aware of this – strange as this may sound when we are talking about Brexit. “With the US, we do have a privacy shield in place,” says iCompli’s Smith. “But, we can send data to the US because the EU and the US came to an agreement. The UK won’t be part of that agreement any more, so there will no longer be a mechanism.” The good news is that a pragmatic solution is likely to take effect. The World Trade Organisation has said that the UK has always been on top of data protection. Rather than leaving the UK in limbo, it has agreed to ask US companies to amend their policies – from ‘data flow to and from Europe’ to ‘data flow to and from the UK.’ It still adds to the paperwork. And Smith predicts “I suspect there will be legal challenges on the basis of this. But such a scenario is likely to be an issue for multinationals, and not something that UK accountancy practices should worry about too much for now.” Are there any practical steps accountants should take? “Go back to your data flow diagrams that you should have, from the time of GDPR compliancy last year.” Look for where it flows from the EU to the UK, or from the UK to non-EU countries, especially the US. “You then have two choices – a privacy shield, or jumping through the particular hoops required by the country.” Issue #5: Longer term steps “If you are an accountancy practice with significant EU clients,” Ardi Kolah says, “it might be worth considering having a presence inside the EU – set up an office there, or at least have a representative there.” Even in the most favourable situations, being outside the EU will inevitably lead to the need for more compliance, “and could be very damaging for trade. We do have clarity on data flow from the UK to the EU now, but there is still that lingering fog in the other direction – and we are weeks away from leaving.” But don’t panic. “It would be anomalous if we were not granted adequacy.” And in the case of no-deal? Kolah thinks long and hard about his answer. “You can make just one certain prediction,” he says, “and that is that everything will become more expensive. It will add costs and ultimately the customer will suffer from that.” The ICOs 6 steps to take ahead of Brexit Continue to comply. Apply GDPR standards and follow current ICO guidance. If you have a DPO, they can continue in the same role for both the UK and the Europe. Look at data flows. Identify where you transfer data from the UK to any other country, not just the EU, as these will fall under new UK transfer and documentation provisions. Look at data into the UK. Identify where you receive data into the UK from the EEA. The ICO also recommends considering what GDPR safeguards you could put in place to ensure that data can continue to flow post-Brexit. If you operate across Europe, review your structure, processing operations and data flows to assess how Brexit will affect the data protection regimes that apply to you. Ensure documentation is up to date – this means reviewing privacy information to check compliance. Make key employees aware of the ongoing issues.
Defining the values, vision and purpose of your business Posted 02/04/2019 by Neil Johnson & filed under Members, Run your business. Values, vision and purpose, three things that you’ll get round to when you have the time, which let’s be honest, as a young practice or business, with everything you already have to do and worry about, will be when? After all, values, vision, purpose are nice and all, but aren’t they just luxuries, marketing speak? Think again! Vision & values “A company’s vision and values are its single most important assets; it transcends the organisation’s purpose, its approach to business and its ethos in all situations. Without a vision and a set of values, a company is meaningless and almost certain to fail,” says Paul Jarrett, director and co-founder of finance recruiter Renaix. “When setting a vision, a company must consider a range of factors. It’s not just about where the company wants to be in one, five or ten years’ time, or profit levels and key metrics; it’s more powerful than that. When twinned with values, the vision adopted by a company gives everything a direction. It guides customer interaction, it steers product or service development, it even informs HR policies and treatment of staff, hence it’s vital that a company’s vision is articulated early and clearly.” Carry out research around your values and vision, recommends Helen Campbell, a coach working with SMEs. “This could include insights from customers, feedback from employees and other stakeholders, as well as a look at what competitors are doing (or not doing!). Don’t be afraid to have some fun with it – there’s no rule that it has to be dull, but it should be genuine and something you live, not a marketing exercise. “Once you have your values and vision, it can be valuable to gain some feedback, such as through a focus group, before rolling them out – the focus group might spot something you haven’t.” Values in action Vivien Fuhrer, co-founder of online accounting platform EZYcount, has first-hand experience of how useful defining values as a startup can be. “We made a two-page word document in which we stated our mission and our values. We made two groups of values: firstly, how we want to operate in the market: professional, reliable, accurate. Secondly, the values we want to differentiate us: innovative, personal, happy and easy-going.” This may sound simple, but having made this a priority early on, the company has a strong identity. “ When we create material – a website, an article, telephone behaviours, onboarding new customers – we have a clear direction for how we act. When we came to employing a company to create our brand, they did it based on our values, it was very easy for them and a lot less expensive than I think it would have been if we’d not had the values in place. “If someone needs to make a decision, like are we going to give a free six months to someone because X, Y or Z happened, but none of the co-founders are there, they can make a decision based on our values, they’d know how we’d make the decision. And we live those values. To crowdfund our blockchain initiative, we gave participating customers a lifelong license to our software. While our customer reviews in French, English and German consistently feature similar words that represent our values.” You have to understand that running a business is more about fulfilment, which drives motivation Purpose Purpose should form a central driving force for a company. Where traditionally a purpose was to maximise profits for owners or shareholders, in an era defined by insecurity, threats to the environment, reducing poverty and building fairer more inclusive societies, this is under pressure to modernise, especially form the younger generations. “The younger generation truly want to work with companies doing good in society (not just those who say they’re doing good), rather than the largest, and they’re choosing to want to purchase from companies with an ethical approach, rather than the cheapest. That dynamic is driving a need to change, and those companies that don’t change will be the dinosaurs in the years to come,” says Mike Jennings, author of Valuable: how a values-enabled culture can inspire you to sustainable profit. The new approach to business is driven by the desire to want to help people lead a healthier and happier life. “Purpose has to be social in nature,” he says. Jennings believes accountancy firms have some catching up to do in this area. “You have to understand that running a business is more about fulfilment, which drives motivation, than it is about numbers and maximising profit. It’s not to say those things aren’t important, it’s just that no one gets excited about building profit for somebody else. When you’re trying to build a team of people who are motivated, profit motivation is not a good method of doing it anymore.” Having a purpose and a set of values that you stick to may mean making tough decisions, for example, missing out on a short-term profit because it goes against your values, or letting go of a supplier because their values do not align with yours. But this can lead to stronger long-term financial sustainability. “If you’re true to your purpose, your customers and staff will be more likely to work with you and to buy from you, to be motivated by your purpose,” says Jennings. “By doing the right thing by the community and the environment, we’re building long-term financial sustainability, as it’s more likely people will want to buy from us and work with us, which means we’ll get the best staff and loyal customers. Ten years ago I was concerned about this approach, but I’m not now; people are catching up to what we’ve been doing for years. Business is changing, the culture is changing.” For great business tips and information on starting a small business, Informi offers business advice and support, made easy.
Study tips: learn how to love your assessments Posted 02/04/2019 by AAT Comment & filed under Students, Study tips. We spoke to an AAT tutor: Gill Myers, memory expert: Michael Tipper and stress coach: Sarah Connell about the best ways to love assessments . The AAT tutor – Gill Myers Don’t cram during the month before the assessment The synoptics are at the end of each qualification but, if you leave revision until the end, you’ll be scuppered. Revise as you go along instead. Engage with the material as you learn, week by week You need more than six hours of course materials a week. Get into the habit of spending six hours studying in addition to that. Revise the things you don’t like We tend to do what we feel comfortable with. Instead, seek out what you don’t like doing. Among the best things students can use to revise are the examiners’ reports, which are available on aat.org.uk. These focus on what students struggle with, plus common pitfalls. There is no best way to revise I handwrite revision notes and sticky notes, but I know students who watch YouTube videos, have mind maps stuck on walls, and record notes and listen to them while commuting. Do what works for you. The memory expert – Michael Tipper Visual, audio or experience? We learn in one of three ways – seeing, hearing or experiencing. I need to picture and visualise things to understand them, so I write notes in different colours or try to see if equations resemble funny characters. If your modality is hearing, try making a little song or sound based on the formula. It’s much better than repeating the formula. Why? Because you’re thinking about it. Play at being teacher As the synoptic nears, get into groups of three or four and take turns to ‘teach’. You learn so much by teaching, as you’re conversing and talking about the subject. Don’t forget to sleep The brain processes information overnight, so get a good night’s sleep. If you pull an all-nighter before an assessment, you won’t give your brain a chance to integrate the information. This creates the physiology of fight or flight, which shuts down part of the memory and creates assessment stress. The stress coach – Sarah Connell Banish negative thoughts As assessments near, many students think they’re going to screw up. If you have these thoughts, challenge them. Think: what evidence do I have for this? And: is this thinking really helpful? You’ll soon find there’s little evidence to support such thoughts. Try replacing them by repeating positive, helpful statements, like ‘I know I’ve studied really hard’. Use your cranium’s crystal ball Visualisation is a really helpful technique. Imagine yourself being confident during and after the assessment, and also receiving your results. Engage all your senses. What noises will you hear when getting the results? What will you be smelling or wearing? Make it as vivid as possible. Deep breaths If you’re feeling stressed before the assessment, try a mindfulness breathing exercise. Take a deep breath in, saying to yourself ‘This is my in breath’, and then ‘This is my out breath’ on the way out. Repeat for up to 20 minutes, and it will slow your breathing down and lower your heart rate and blood pressure. Read more on preparing for your assessments; Study hacks to help you slay your final assessment The key to success in synoptics How to overcome exam anxiety and succeed Browse the full range of AAT study support resources here
How to become a successful entrepreneur Posted 02/01/2019 by Jessica Bown & filed under Career. There is no such thing as overnight success. So the road to prosperity as an entrepreneur is likely to be long and far from smooth. Having a great idea, or spotting a gap in the market, is just the first step. It’s all the steps you take afterwards that will determine whether your idea translates into a successful business or not. Here, we highlight some of the lessons budding entrepreneurs can learn from the individuals behind the world’s biggest and most profitable companies. Start small – even if you have big dreams There are no two ways about it: a lot of start-ups fail. So while it’s important to be totally committed to the success of your project, it is also sensible to reduce risks by starting small. Debt is a useful tool for anyone starting a business, but only if the money is spent wisely. Trying to grow too fast will often backfire and leave you unable to sustain your overheads. Inspirational entrepreneur: Pierre Omidyar, eBay Computer programmer Pierre Omidyar started auctioning stuff off on his personal website in 1995. AuctionWeb, as it was then known, was a one-man-band that only began charging fees and taking on staff when the amount of web traffic made it necessary do that. Today, eBay employs more than 14,000 people around the world. Recognise the value of experience Most successful entrepreneurs spend years learning a trade and/or how to run a business before going it alone. The experience you accrue as an employee or manager could prove invaluable, especially during any difficult moments ahead. Lee Robertson, a multiple entrepreneur who has built and sold two businesses and is now working on two more, also recommends taking advice from seasoned entrepreneurs. “Use your network to find mentors who want to help you and have the experience you need,” he said. Inspirational entrepreneur: Jan Koum, WhatsApp WhatsApp founder Jan Koum spent more than a decade working in the IT industry – including for Yahoo! – before starting WhatsApp in 2009. Just five years later, he sold it to Facebook for a staggering $19 billion. Look to the future Developed markets offer few opportunities for massive success. That’s why so many entrepreneurs concentrate on the young, fast-moving technology sector. But whatever industry you are in, the key to a successful start-up is to think about how people are going to live in the future, and create a product or service will meet their needs. Inspirational entrepreneur: Howard Schultz, Starbucks Howard Schultz was working for a Seattle-based coffee bean roasting company when trip to Milan gave him the idea to launch a chain of upscale espresso cafes like the ones found in Italy. His employer agreed to finance his plan, and sold him their brand name: Starbucks. Be prepared to work hard Setting up a business takes a huge amount of work. “You will have to work harder than you ever have before,” Robertson said. “Sleepless nights come with the territory.” So if you’re not prepared to put in the hours, you’re probably better not being your own boss. Building a team of people who complement your strengths and can fill in the gaps where you are less accomplished will help. Inspirational entrepreneur: Jeff Bezos, Amazon The world’s richest man Jeff Bezos is famous for his work ethic. In the early days of Amazon, he routinely worked 12-hour days, seven days a week. Don’t fear failure Nobody’s perfect, so you are bound to make mistakes when setting out in business. But many of the most successful entrepreneurs view failure as a positive experience: something to learn from and work out how to overcome. “Go for it,” Robertson added. “The world needs ideas people, innovators and entrepreneurs so follow your passion and don’t be put off.” Inspirational entrepreneur: Sir James Dyson, Dyson Billionaire inventor Sir James Dyson developed 5,126 unsuccessful prototypes before coming up with a bagless vacuum cleaner that worked. The process took him 15 years and all his savings – but it more than paid off in the end. Stay focused As an entrepreneur, you have to continuously learn and adapt as circumstances change and new information becomes available. It is, however, vital to stay focused on your end goal at the same time. Doing a few things well will benefit your company more than doing lots of things badly. Inspirational entrepreneur: Elon Musk, Paypal/Tesla/SpaceX When SpaceX’s third attempt to launch a rocket into outer space failed in 2008, founder Elon Musk put out a statement saying: “For my part, I will never give up, and I mean never.” Seven weeks later, SpaceX launched the Falcon 1 rocket into orbit. Believe in your potential Many of the most successful businesses have sprung from ideas others thought unlikely to work at the time. So don’t let one – or even five – knock backs put you off. If you believe in your idea, you have to be prepared to defend it and carry on, even while taking constructive criticism on board. Inspirational entrepreneur: Fred Smith, FedEx When FedEx founder Fred Smith pitched his original idea for the company, now worth more than $5 billion, in a college assignment, his professor gave him a low grade because he didn’t believe it had a viable business model. Fortunately for Smith, he was confident enough to go ahead anyway. For great business tips and information on starting a small business, Informi offers business advice and support, made easy.
Will robots make accountants redundant? Posted 01/31/2019 by Mark Blayney Stuart & filed under Accountancy resources, Members, Students. A recent McKinsey study suggested that globally, between 400 and 800 million jobs are likely to be automated by 2030. And if the job itself doesn’t disappear, wages will become “depressed to keep them competitive with robots and automated systems.” The developed world will suffer disproportionately more – “in places where labour is cheaper and tech is more expensive, jobs may be less vulnerable than in more developed markets,” the report reads. In the UK, the Institute for Public Policy Research believes that some 10 million jobs – a third of the total – are at risk from automation in the next twenty years. Should you fear an AI takeover? Not all jobs can be automated – but numbers are something computers are rather good at. So should accountants be fearful about the oncoming storm? “The use of AI and machine learning is gathering pace, and over the next five years I think we’ll see more widespread use,” says Steve Collings, Director at Leavitt Walmsley Associates, a chartered accountancy practice in Manchester. “Already, some of the larger practices are using AI for their audits – not just in terms of desk technology, but in using drones to carry out checks on inventories and stocks, as part of the audit process. So yes, it is going to increase.” As well as being able to use AI for tasks that couldn’t previously automated, the use of AI is also changing the way accountants work. Less low-level number crunching frees up time for other activities; but should accountants be concerned about employability? What about bookkeeping, for example – does the rise of automation mean we are likely to be looking at redundancies, long-term? “I don’t think so,” says Collings. “If the whole process could be automated then yes; but that’s not how it would work.” To take an existing technology as an example, “you can take a photo of a receipt and then the app can account for the receipt in the books. So that will change the way bookkeepers operate over the next few years, especially with Making Tax Digital on the immediate horizon.” The traditional way of keeping books – manual cash books and purchase day books – definitely has its days numbered, Collings argues. “And people working in that bookkeeping environment will have to adapt to the change; it will come in whether they like it or not, and will be a huge shift. “ But significantly, this does not translate to robots replacing humans. “It shouldn’t be seen in a bad light. The more efficiently you can work, the better. The industry has been standing still for a long time and the key is to see these changes as opportunities – the question is how you embrace those opportunities and how you adapt the business to meet the changing landscape.” It shouldn’t be seen in a bad light. The more efficiently you can work, the better Disentangling the sci-fi “Arguably, we are moving to a reduced-job economy,” says Emma Waddingham, Director at Emma Waddingham Consulting. “Driverless cars, drones, and increased automation in all areas of society are all emerging. But in terms of job roles, it only reaches a certain level of employment – lower manual work, in effect.” If the job has a personal element, or needs creative cognitive skills, it is unlikely to get replaced by a robot, however sophisticated those robots become. “Secondly, whilst the technology is out there, the uptake by employers is still low. They want to see the benefits of the technology before they invest; so they’re dragging their feet for two reasons. The first is to see how it affects others and what the benefits are; and the second is to wait for costs to come down.” What about the concern that as the technology advances, businesses will increasingly do their own accounts? Won’t that mean accountants will no longer be needed? “Not everyone can be their own accountant,” says Collings, “just as they can’t be their own surveyor, solicitor or heart surgeon. The fact that technology has changed the way accountants work doesn’t mean they will be redundant. Accountants will still have to help clients deal with compliance, tax, legislation and standards.” Arguably, there will never come a time when every business wants the added responsibility of doing their own books – particularly as regulatory changes and HMRC changes increase as time go on, rather than reduce. “Nor do I think you’ll see robots sitting in receptions,” Collings says. “You aren’t going to see robots giving tax advice to a client. I could be proved wrong of course – but I think there is a lot of scaremongering and fanciful imagination at work.” Active responses If accountants are concerned about what the future brings, focus on other differentiators: customer service being probably the best example. If there is a future reduction in the need for accountants, however small, the key will be to ensure that clients come to you instead of your competitors; and strong customer service is far and away the best way to achieve this. Finally, what about the need for accountants to move away from traditional roles and evolve into business advisors? Again, Collings detects overkill. “There’s much talk about the death of compliance work, for example. I don’t agree; I think there will always be a need for compliance work. You still have to produce accounts in a set format; certain disclosures are needed; and these things can only be done by humans.” A robot is “not up to creating a set of financial statements for a PLC yet,” Collings smiles. “Yes, the role of the accountant is changing. Yes, you can (if you are so inclined) do your VAT return as you walk round the supermarket. But there will always be tax, legislation and standards to comply with.” Ultimately, the technology will help companies do things more quickly; but we don’t need to fear the rise of the Cybermen too much. At least – not yet.
Study tips: using a four line journal to correct errors Posted 01/30/2019 by Gill Myers & filed under Advanced Diploma, Students. Accounts preparation is tricky, because to do it successfully we have to understand what we’re doing as well as why we’re doing it. In this article we’re going to focus in-depth on using a four line journal to correct errors. What’s is it? A journal gives instructions to make entries in general ledger accounts. Journals are used to make non-routine adjustments such as the correction of errors. Why is it important to correct errors? The fundamental qualitative accounting characteristic of faithful representation requires financial information to accurately reflect an organisation’s business and, as far as possible, be complete, neutral and error free. Accountants should also comply with the fundamental ethical principle of integrity, which means acting with honesty, transparency and fairness in all professional and business relationships and when carrying out professional work. What specific challenges do we face when identifying and correcting errors? The fact that some are disclosed, due to an imbalance between the debits and credits in the transaction and that fact that some are not, as the debits and credits balance. It is vital to know which type of error you are dealing with, as this affects the accounts used in the correction. The identifying and correcting errors series covers the basic knowledge that this article develops and might be good to read through before you go any further. Suspense account: A temporary account that is created when the debit entries do not equal the credit entries of a transaction. The balance on the suspense account will equal the imbalance in the transactions and can be the result of errors in both debit and credit entries. Once all the errors are corrected the balance of the suspense account will be reduced to zero. Disclosed errors: Entries that have caused the creation of a suspense account. As a consequence, the suspense account must be involved in the correction. Non-disclosed errors: Errors that do not cause the creation of a suspense account because the total debits equal the total credits in the incorrect transaction. The correction will therefore not involve the suspense account at all. How do we best deal with error corrections? Use a logical and structured approach. As errors can be made anywhere and at any time in the accounts unfortunately there isn’t a single way to resolve them. The best we can do is have a method for correcting them once they have been identified: What entries have been made? Are the debits and credits equal? Yes – non-disclosed error, suspense account not involved No – disclosed error, suspense account used What entries should have been made? Compare steps one and three to help identify the correction needed, removing the incorrect entries and then posting the correct entries if appropriate. Using working to help you ‘see’ what is going on can be really helpful, either notes or T accounts.* Worked example with notes: A van was bought for £5,000 cash. The correct amount was debited to the bank account and credited to the motor expenses account. What entries have been made? Bank £5,000 Dr Motor Expenses £5,000 Cr Are the debits and credits equal? Yes – the entries are equal so this is a non-disclosed error and the suspense account isn’t involved. What entries should have been made? Motor Vehicles at Cost £5,000 Dr Bank £5,000 Cr There are two errors in this transaction. An error of principle as the wrong type of account has been used and an error of reversal as the debits and credits are the wrong way round. Compare steps one and three to help identify the correction needed, removing the incorrect entries and then posting the correct entries if appropriate. In this case it is appropriate to remove the original incorrect entries, by using the same accounts identified in step one but reversing the debits and credits. Then write a new journal with the correct entries using the details from step three. Worked example, with T accounts: The bank was debited with £400 which was a payment for rent but no other entries were made. What entries have been made? 2. Are the debits and credits equal? 3. What entries should have been made? 4. Compare steps one and three to help identify the correction needed, removing the incorrect entries and then posting the correct entries if appropriate. Again in this case it is appropriate to remove the original incorrect entries and then to write a new journal with the correct entries. Remember that because there was an imbalance in the original debit and credit entries, the error was disclosed and therefore the suspense account must be included in the correction. How can be certain that our accounts are error free? We can’t. Unfortunately we can never be 100% sure our accounts are error free due to the nature of undisclosed errors. However, we can ensure that the journal corrections made to the suspense account clear each entry that was made in it to rebalance an originally imbalanced transaction. If we know the balance on the suspense account, we can also double check that it clears to nil once we have corrected all the disclosed errors. * Remember if you use T accounts to help you work out the journal entries required this does not mean that the entries will have been made. Entries in accounts only happen after the journal has been posted. Browse the full range of AAT study support resources here