How I went from AAT student to company director in 1 year

Posted by & filed under Run your business, Students.

Being your own boss, working when you want, and not being a faceless minion, is something many people dream about. Samuel Harrison MAAT AATQB did it in 1 year; we found out how.

Samuel Harrison, Director of SH Accounting Solutions, went straight from being an AAT student to launching his own business. The main step in between was applying for his MAAT status to become an AAT Licensed Accountant.

The best thing about running his own business, says Harrison, is that he calls the shots and works whenever he needs and wants to.

“But the worst thing is that you have to make all of the important decisions and, if you’re anything like me, I sometimes worry I’ve made the wrong decision somewhere,” he adds.

Harrison says he knew from a very early age what he wanted to do. “I was always good at maths at school and my uncle was an accountant,” he says. “He showed me the ropes and then I got some work experience at a local accountancy practice.”

He was working as a supervisor at Sports Direct when he started studying AAT in 2010, at the age of 20. Within three years he’d passed his level 2 and 3.

“I then took a couple of years break from studying; working hard and gaining experience in an accounting practice,” he says. He resumed his studies, level 4, in 2016 and finished in 2017.

Read more about the courses available from AAT.

Making the leap

In February last year, Harrison took the leap and set up on his own practice.

“I saw a few emails from AAT about the Be Your Own Boss event and signed up to the course,” he notes.

He did, however, have a few reservations.

“I suppose the main thing everyone thinks about when setting up on your own is that you have to pay the bills and if you have no clients, you don’t have enough money to live,” he says. “I started self-employment as something of a side-hustle, while working at an accountancy practice and gaining further experience.”

Read more on what you need to do before going self-employed.

Harrison found that the event gave him a few helpful pointers and practical tips on everything he needed to get his business up and running.

Starting out as the boss

“I gained my first few clients through reaching out to friends who had businesses, to see if they needed an accountant,” he says. “I used social media as well.”

After Harrison completed the Professional Diploma in Accounting, he applied to become an AAT Licensed Accountant. Applying is simple and you’ll receive help and support from AAT to help you run your business and ensure you’re compliant.

“The biggest advantage of having a licence with AAT is that you’re recognised as a licensed accountant with one of the biggest accounting professional bodies in the UK,” he says.

“It took me around eight years in total to get my licence but I did take several years out when gaining experience at an accounting firm.”

Thinking of becoming self-employed?

Harrison, who now has over 60 clients in the IT, construction, photography and advertising industries, says he would advise any other students thinking about launching their own business to get some work experience first.

“If you haven’t had any experience working in a practice, I’d recommend maybe working at least a day a week,” he advises. “If you’re an AAT student, I’d also recommend the Be Your Own Boss events or webinarsto get an idea of what’s required when planning to start a business.”

AAT runs a wide range of events on a regular basis, and the Be your own boss events specifically focus on how to set up your own practice, providing you with tools and guidance to hit the ground running.

In summary

Running your own accountancy practice may seem like a distant goal, but when you break it down into manageable steps, you can make it happen sooner than you think. It started for Samuel Harrison with an AAT Be your own boss event, which laid out the steps towards self-employment. He transitioned slowly, keeping his full-time job alongside his new start-up until he was financially ready.

He now has over 60 clients. And as an AAT Licensed Accountant, Harrison has access to 18 AAT services from bookkeeping through to payroll, corporation tax, internal audit and forensic accounting.

If you’re an AAT student wondering how to take things to the next level, we’re here for you. Get in touch about becoming a licensed member and running your own business today.

Further reading on starting your own business:

How government u-turns will impact accountants

Posted by & filed under Members, News.

Accountants react to the new Chancellor’s emergency statement reversing much of the recent ‘mini-budget’.

Following uncertainty and market turmoil in the wake of former chancellor Kwasi Kwarteng’s unsuccessful “mini-budget”, new chancellor Jeremy Hunt gave a television address summarising the main components of a brand-new budget, which is expected to be set out in full at the end of October.

The new budget, which was announced two weeks early in an attempt to bring stability back to the markets and the UK economy, reverses the majority of tax measures put forward by Mr Kwarteng including corporation tax, income tax, NI and IR35.  

Help AAT improve ethical guidance

AAT is conducting a major review its Code of Ethics. This is your chance to tell us what you think of our resources and what would help you in your working life.

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Under the initial plans set out by Mr Kwarteng, the increase in corporation tax from 19 to 25% was due to be scrapped from April 2023 along with abolishing the highest rate of income tax for those earning £150,000 and above. IR35 was also set to be reversed.

Following intense pressure, Mr Kwarteng reversed his own policy to abolish highest rate of income tax.

Highlights from Mr Hunt’s budget preview include:

  • Corporation tax — the previously planned increase to 25% from April 2023 is no longer scrapped but will be implemented.
  • Income tax  — the basic rate of income tax will remain at 20% indefinitely.
  • National insurance  — a planned increase from 6 November will no longer happen.
  • Stamp duty  — cuts to stamp duty will continue as planned.
  • Energy prices  —  The energy price guarantee promise for consumers was initially intended to last for two years but will now last until April 2023 and will be replaced with ‘targeted help’ for the most vulnerable.

So will these changes help or hinder accountants and their clients? And what impact has all this volatility had on year-end accounts? To find out, we asked accountants across the UK.

Constantly-changing policies make it extremely challenging to give comprehensive advice

Joanne Thorne, Technical Compliance Manager, SJD Accountancy

Limited company contractors are set to be hit hardest, with a triple whammy from higher dividend rates, the IR35 reform staying in place and the U-turn on Corporation Tax.

Corporation Tax cut was one of Lizz Truss’s flagship tax cut promises during the leadership campaign, so the decision not to scrap the increase is a huge U-turn.

We therefore revert to Sunak’s proposed corporation tax increase whereby a limited company that ends their financial year with profits over £50k will be faced with an increase in corporation tax from 19% to 25%. This assumes that the tapering tax charge will revert back to the previous tax rules, and won’t just be a blanket increase for all company profits earned.

There is still a huge amount of uncertainty, making it difficult for accountants to provide long-term tax advice and planning as policies are changing by the minute.

For example, clients who considered closing their limited companies due to IR35 may have been swayed by the potential of a repeal mentioned in Kwasi Kwarteng’s Mini Budget. However, now that it has been confirmed that the 2017 and 2021 IR35 reforms will remain in place, it will be challenging for accountants to give comprehensive advice with constantly-changing guidance.

Verdict: An accountant’s ability to provide advice is usually based on long-term legislation, but in this unpredictable time, accounting teams across the UK are being forced to react quickly to new information to ensure they provide the best possible guidance to businesses and individuals.

It’s difficult to make long-term investments based on the latest announcements

Laurence Field, Corporate Tax Partner, Crowe UK

Four chancellors have been in office since the beginning of July – Sunak, Zahawi, Kwarteng and now Jeremy Hunt. This suggests there is a fundamental lack of agreement on how to deal with the current economic situation.   We are basically back to where we started with tax policy with the reinstatement of the increase in corporation tax.

Businesses will need to look closely at any statements from the new team over the next few weeks, review their impact, but also consider whether any proposed changes will actually make it to the statute book. There will be a temptation for businesses to take a ‘steady as she goes’ approach given recent events and serious doubts about how long the current team will be in power. The reversal of the corporation tax cut increases the complexity of the tax system and many relatively modest-sized businesses will find themselves paying the 25% rate of tax.

Verdict: Whether it is prudent to make long-term investment plans on the basis of these latest announcements will depend on how companies view politics as much as the business environment.

Corporation tax increase is a double-edged sword for manufacturers

Jonathan Dudley, Head of Manufacturing, Crowe UK

After a period of extreme political turmoil, it’s vital for the good of business and the country that we get stability and certainty. Hopefully, the announcements made by Jeremy Hunt will achieve this.

It has corresponded with the news that manufacturing output is shrinking and it’s no surprise given the uncertainty around how manufacturers will pay their power bills when the promised energy business support package ends in the spring; as well as spiralling costs caused by interest rates, wage rise demands and steel ‘safeguarding’ quotas.

At least the removal of the additional NIC seems to be sustained. Effectively a tax on employment, it is hugely inflationary and otherwise would have certainly ‘influenced’ key business decisions.

The confirmation of the corporation tax increase is a double-edged sword for manufacturers; it means that future investment, innovation and R&D will obtain a higher reward in terms of tax incentives.

That all said, I’d really like to see more enhanced reliefs for investment in ‘green’ technologies and processes. This is strategically essential if investment is to be made in the UK, but likely to be expensive.

Verdict: Corporation tax increase is a double-edged sword but future investment will create higher reward for tax incentives.

Given the uncertainty, its crucial businesses are cautious with investment plans

Richard Godmon, Tax Partner, Menzies LLP

The political and economic uncertainty of recent weeks has done nothing to aid businesses and accountants, and the confusion has hindered their ability to plan. When the tax changes were first announced, many will have started to make plans that would benefit their business. Now, with most of these measures unwritten, businesses and accountants will likely be reverting to their original plans.

The rise in corporation tax is a massive set back to businesses who may have been hoping to increase growth-driving activities such as increasing staff and pay or investing in machinery or equipment, but this may now be put back on hold.

However, in times of turbulence, maintaining a positive cashflow remains the most important factor for any business. Considering the level of uncertainty business owners have faced, ensuring that any potential investment plans fit safely within the business’ afforded budget is crucial as they prepare for the rise in corporation tax. Having a strong understanding of where the business is now, and where it is likely to be in six to twelve months’ time remains crucial as this will give owners the clearest outlook on their finances.

Verdict: Ongoing economic confusion has hindered ability to plan but maintaining positive cash flow remains essential.

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Corporation tax increase will exacerbate the strain on businesses

Lee Murphy, The Accountancy Partnership

Never have businesses been forced to keep up with such rapidly changing government leadership and fiscal policy. While some of the changes announced never actually came into practice, businesses will have still altered their strategies based on the terms set out by each chancellor.

Deciding to U-turn on the September mini-budget and increase corporation tax to 25% is going to exacerbate the strain placed on businesses. This is going to be very unpopular amongst businesses of all sizes and will likely encourage many businesses to consider moving offshore. Businesses facing financial strain are unlikely to be able to afford to continue to operate fully in the UK, adding to the number of companies filing for insolvency – now at the highest rate since 2009.

This change is going to squeeze profit margins even further, but there are steps businesses can take to make savings. It is now more important than ever that businesses are on top of tax deadlines. Missing deadlines can be very costly for businesses and can lead to paying more tax than is necessary. Companies should also be re-evaluating their overheads and budgets to reveal where any savings could be made. This might involve anything from changing office space to reconsidering suppliers.

Verdict:  Corporation tax increase will exacerbate existing strain on businesses and squeeze profit margins further.

AAT members must be brave and evidence-based in their advice

Christina Earls (FMAAT), AAT President

AAT members want to give strong advice to help businesses stay afloat in these difficult times and be sustainable into the future. This is very challenging when there is so much instability.

The disruption is going to last longer than this reversal by the new Chancellor because people making investments will wait and see what the lasting impact is on confidence.

There will be a degree of people holding their breath until the statement in a fortnight’s time.

I have a lot of sympathy for our colleagues working in the public sector and local government who may face new financial pressure – both on pay and service levels.

There is no more fat to cut. Balancing the books is going to involve hard decisions. AAT members working in this environment have an unenviable task. But they also have a vital role to play. They must provide full evidence-based professional advice to the decision-makers. It is then up to them to choose between a rock and a hard place.

It may mean reappraising priorities, such as long-term investments in wind farms and solar energy. AAT members need to be brave enough to point out when the evidence shows decisions need to be revisited or new options considered.

How to be an ethical accountant in a connected world

Posted by & filed under Ethics, Members, Students.

Technology, digital accounting and new ways of working create new ethical challenges. Are you keeping up with the pace of change? 

In January this year, umbrella payroll company Parasol Group temporarily shut down part of its service after it identified unauthorised activity from an ‘online intruder’. The incident caused major concern not only for the firm – but also for those businesses using its services. 

The company’s MyParasol portal, through which timesheets are submitted, suffered a multi-day outage, with company CEO Doug Crawford emailing customers to explain the “root cause” of the issue was “malicious activity on our network”. 

Help AAT improve ethical guidance

AAT is conducting a major review its Code of Ethics. This is your chance to tell us what you think of our resources and what would help you in your working life.

Email the team

Privacy is an ethical issue

But cases like this are not just a cyber security concern. They are not even just operational nightmares to be overcome. They are also an ethical issue.

As one party posted concerning the Parasol outage: “If it is a cyber attack wouldn’t it be good to let us know so we can take the necessary measure to protect our personal information?”

Such incidents demonstrate the growing complexity of ethics and accountants’ responsibilities when it comes to behaving ethically. The days of ‘ethical behaviour’ broadly being about avoiding pressure from bosses or clients to misrepresent tax returns are long gone. Today, ethics is far more complex – and far more wide-reaching. Are the digital systems and technologies you rely on ethical – or are they jeopardising your clients’ data and personal information? Are the ‘decisions’ that technology is making appropriate and accurate – or do they risk creating errors? 

Are they facilitating or creating opportunities for fraudsters, unethical individuals, and firms? 

While tech-driven automated services have the power to deliver great efficiency and to streamline business processes considerably, it is clear they also bring a far greater challenge when it comes to ethics – leading many organisations, including AAT, to issue guidance around the risks of managing data and ethical issues in the digital world. 

Technology and ethics 

While new technologies have been helpful, giving rise to new ways of working – Trudy Bray, founder of Steer Accountancy, confirms “going paperless has been better for business” overall – they have also created new pressures and challenges.  

The Cambridge Analytica scandal, and reported bias in recruitment and financial services algorithms and models, are two examples of ethical breaches that have undermined trust in businesses and caused real-world harm. 

With accounting processes increasingly facilitated by digital tools and systems – cloud computing, AI, robotics, and big data mean businesses can respond more quickly and cheaply than before – it’s now more complex to maintain human control and make sure decisions can be explained. 

Tech is capable, but only humans are accountable

However, human accountability is imperative to promote and maintain trust in a business and avoid potential harm. Data breaches and personal data being stolen, or sold without consent, can harm a firm’s reputation, for example – especially after a business has tried to deny or cover it up. 

Maintaining human accountability in digital processes is important for Bray. She and her staff manually check what their software has done ­rather than assuming all is well. “Obviously, you can’t always check every item of data,” she notes. “But you still need to do some checks.” 

It makes sense: suppose a firm were to use, say, a financial algorithm to make decisions normally made by qualified and regulated professionals – who should ultimately be accountable for the decision the algorithm has made? What checks are happening to ensure the decision is the best or correct one, or that the data or decision is free from bias or manipulation? How will it be viewed by customers or users? 

The lines may blur at the bleeding edge

It can be difficult to rely on regulation where innovation and technological changes are happening quickly, and where there’s no past example to fall back on.

And with ethics being so context-specific, a blanket ‘one-size-fits-all’ approach is not always helpful, and cannot be easily regulated for. Additionally, ethical business behaviour is generally not driven by compliance, but based in an organisation’s culture. 

Banking example

For example, Steer Accountancy’s website lists Bray as responsible for its privacy policy, and sets out how personal data will be stored and used. Clients were concerned at first by the feeds that were set up between their bank and her firm when she put them in place. 

“Some clients worried I could get into their bank accounts,” Bray notes. “So I had to reassure them that all the bank feeds did was feed the data from their bank accounts into our firm’s software – I had no access to their actual bank accounts.”

Solution 

Bray’s solution was to be completely transparent with her clients about how the system worked, what she could (and could not) access, and how data was used. Clients have to authorise their banks to feed the figures securely into her firm’s systems. 

“I show them what I use, and they can see what I see – I show them what my system does and how we will both benefit from it,” she says.  “I’ve used software in the past that caused problems, but when I implemented new digital systems, I tested processes on a few clients first before bringing it in, as well as testing it on myself, then asked for feedback.” 

Making ethics front and centre

As the world evolves rapidly, staying ethical requires constant maintenance and focus. It cannot be considered an add-on; it must be fundamental to how businesses and individuals operate daily.

AAT is about to embark on a major review its Code of Ethics to ensure that members are fully supported in this area  – details below. We are keen to know what you think and need, so do get in touch to share your views.

AAT reviews its ethical code

In 2022/23 AAT will undertake a full review of the AAT Code of Ethics, including all supplementary guidance. AAT’s current Code of Ethics and all supplementary guidance can be found by visiting aat.org.uk/membership/standards-requirements/professional-ethics 

Why is this happening? 

It is vital that the Code is a living document that members can interact with easily as part of their everyday professional lives, not just a reference document when problems arise.  

Can members help? 

AAT wants to hear members’ feedback and comments. Tell us what you think about the content, relevance, guidance and usability.  

Share your views  with us at [email protected] by the end of October 2022.

Energy price guarantee – is six months enough for businesses?

Posted by & filed under Energy crisis, Members, News.

Will the Government’s Energy Bill Relief Scheme give struggling businesses the support they need?

Businesses and other non-domestic energy users including schools, hospitals and not-for-profit organisations are now eligible for a new government scheme known as the Energy Bill Relief Scheme (EBRS), which caps the amount energy companies can charge per unit.

The Government Supported Price has been set at £211 per megawatt-hour (MWh) for electricity and £75 per MWh for gas.

Although unit prices per MWh are still over double than they were a year ago, the scheme ensures that energy bills will still be considerably less than they would otherwise have been over the 2022/2023 winter months had nothing been done.

The scheme is similar to the initiative for domestic households, but with one significant difference: it will only last for six months.

After that, struggling industries such as hospitality and leisure and tourism could benefit from an extended scheme, depending on the outcome of a government review in three months’ time.

The Government has already announced that a new Energy Supply Taskforce has been launched to negotiate reduced charges via long-term contracts.

As it stands, the price cap per unit amount will depend on the type of energy contract:

• Fixed-term contracts agreed on or after December 2021 for the period 1 October 2022 to 31 March 2023: the automatic discount will be applied retrospectively, providing the wholesale unit price is above Government Supported Price (£211/MWh for electricity and £75/MWh for gas). Cost will therefore be reduced by the relevant unit price per kilowatt.

• Businesses entering new fixed-term contracts after 1 October 2022 will receive the same discount.

• Flexible contracts: The per unit discount amount will depend on the difference between the monthly weighted average baseload price and government supported price.

• Default, deemed contract or variable tariff: The per unit discount amount will be up to the maximum difference between the government support price and the average expected wholesale price over the six-month period. Although these customers may pay lower bills, these are likely to fluctuate over time.

The scheme is intended to help businesses and non-domestic energy users over the winter months, but is six months enough?

Six months isn’t enough for businesses suffering cash flow issues from Covid

Jessica Middleton, co-founder and CEO, MPAS UK

Businesses have just faced the most challenging two years of their existence: COVID, an impending recession and now energy costs. Many businesses have built up debt and are still suffering the impact of major cash flow issues, many of which aren’t truly felt until months later. The energy cap is no different. Whilst it may take the sting out of winter, it hasn’t changed the fact that businesses are still struggling to meet rising costs. 6 months is a start, but it’s not enough.

Our clients are panicking about how to meet the cost of energy. Customers aren’t coming in quick enough to outpace the rising cost. They are grateful some of the cost has been reduced but feel it won’t be enough in the long term. Just today, a client contacted us in a panic about how they were going to afford to make payment of their energy bill alongside other bills such as rent, which has also increased. It’s definitely causing distress, even with a cap.

Next steps:  Take weekly meter readings if you have an accessible meter and start a spreadsheet, recording dates and amounts based on the letter sent by your energy company explaining your p/kwh.

Verdict: Businesses are still suffering with cash flow issues due to Covid and concerned the support won’t be enough long-term.

 

No – crisis planning requires 12-24 months to weather the storm

Kevin Johns, MD, Prime Accountants Group

All businesses know that when undergoing a crisis, you create a 12 to 24-month plan to help weather the storm.

With people having spent months already worrying about energy prices, a mere six-month deferral for the real repercussions to hit households and businesses is not enough. This delay encourages further worry and speculation, which comes with its own problems, such as reduced expansion investment from businesses, due to the uncertainty of future finances.

We have clients coming to us weekly worrying about finances, with some experiencing cash flow issues as a direct result of the energy crisis. More of our clients are being asked to provide an energy deposit in order to rent office spaces and buildings, with one client needing to provide a deposit for office space they rent on a 12-month lease to prove they can afford the estimated 271 per cent increase in the cost of energy to run the building.  Some businesses are putting in flexible energy surge prices when invoicing, to match the rising cost.

Next steps: The advice for businesses remains similar to those in households – turn off lights, turn off computers when not in use and remember to keep doors and windows shut to keep the heat in.

Verdict: Crisis planning requires at least 12-24 months – six months will be of little help.

No – businesses are struggling with every aspect of the cost of living not just energy prices

Simon Thomas, MD, Ridgefield Consulting

Businesses are not only struggling with energy prices but every aspect to do with the cost of living, from cost of supplies and stock, long lead times to procure them and paying employees a fair wage, not to mention customers who are reining in spending and counting every penny. The energy price guarantee barely scratches the surface of support that businesses need to survive.

We have a specific client that came to us for advice as he was looking to purchase a fleet of electric vehicles. With the rising cost of fuel and now energy, he wasn’t sure whether it was a good time to invest and expand his business. Ultimately, we advised that he go ahead and make full use of the first-year capital allowance to reduce his corporation tax as much as possible.

Next steps: Take advantage of the Annual Investment Allowance which will be kept permanently at £1million and invest in energy-efficient products for your business if possible. Whether that’s insulating offices/warehouses or just upgrading appliances to more energy-efficient products, if you have the means to do so, it’ll be worth it in the long run.

Verdict: The scheme barely scratches the surface of the support businesses need to survive.

It could be a case of kicking the can down the road

Nick Paterno, Managing Partner, McBrides Chartered Accountants

The welcomed help for the next six months over the winter could be a lifesaver for SMEs whose energy costs form a large part of their overall business running costs.

However, many SMEs and owner-managed businesses may be forgiven for asking whether there are sectors more vulnerable than others, when the act of running a business requires so much more than mere faith and ability, especially during the last two unprecedented years of pressure. It’s difficult to know if this is just a case of ‘kicking the can down the road’ or if it provides substance for future planning.

Speaking to clients, many need to know more about government plans to support business this year and want to hear as soon as possible whether National Insurance rises will be revoked not just for individuals but for businesses too.

Next steps: The government are encouraging firms to move from variable contracts to fixed-term ones.

Verdict: The effectiveness of the 6-month scheme depends if it provides substance for future planning or if it’s just kicking the can down the road.

MTD for ITSA: How practice management software will help

Posted by & filed under Making Tax Digital.

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Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is the biggest shake up to the administrative foundation of the UK tax system since self assessment was introduced in 1996. Despite delays and speculation the impending industry overhaul is absolutely on its way.

There’s no denying that MTD for ITSA will increase your workload. As well as the quadrupled frequency in filing for affected clients, you’ll also need to be both efficient and effective in gathering receipts and invoices regularly. If not, you could quickly fall behind and the whole process could become much more stressful than it needs to be.

In this guide, we take a look at five ways practice management software will help you handle MTD for ITSA.

Task management and workflow

The increased workload of MTD for ITSA necessitates organisation across your whole team. Practice management software provides comprehensive task management that means you can forget endless to-do lists and reshuffling your day. Using your clients’ period end dates and deadlines, AM automatically generates task lists for each person on your team. You can set internal target dates and create your own tasks for any non-compliance work. Break tasks down into subtasks and assign them to individual team members. With everyone across your practice updating their progress as they work, AM becomes your one-stop-shop for checking the progress of any job.

By utilising practice management software to ease your workload you’ll lessen the burden of MTD for ITSA and might even find you’re able to take on more clients and grow your firm.

Technology adoption: Old dogs, new tricks

MTD for ITSA is also going to increase the workload of your clients. They’ll need to get into the habit of submitting information regularly – just like your team will need to. And it isn’t easy to break old habits and form new ones. Change is hard, and the nature of clients’ returns is changing drastically. Is your practice already digitally set-up? What about your clients – do they favour paper-based record keeping methods? What are the opportunities and limitations of your existing softwares and processes? These are all questions that you’ll need to consider as soon as possible.

In April 2022 HMRC published a report that explored the preparedness of Income Tax Self Assessment customers for the MTD mandation in April 2024. The population was comprised of unincorporated small businesses, self-employed people, and landlords with income over £10,000. Research found that 33% of the population thought using software would be difficult. As you’d expect, their views on their ability to comply with MTD and utilise software were shaped by their age, current practices, and comfort with technology. In terms of sending quarterly summaries, only 4 in 10 thought it would be easy. Primary concerns were in relation to using MTD-compatible software, and reluctance to change long-established practices.

It’s clear that it will take time for your clients (and your team) to adapt. The upheaval requires you to take a step back and look at the big picture. This isn’t just about specific MTD work; it’s about reviewing your entire process to make the changes feasible. A solid digital set up for you and your clients will bring simplicity. It’ll ease your workload, but also make technology the norm. If it’s part of the day-to-day within your practice and your clients’ businesses, habits will change. Practice management software sits at the heart of your firm and is an integral part of your firm’s workflow. It becomes an environment for the team to see what assignments are due and when, the current status of a task, and the latest interaction with the client. Clients connect with the firm via a GDPR-compliant online portal where they can upload and sign documents, update their details and check deadlines. It will digitise your whole process from onboarding, AML checks and risk assessment to task management and profitability.

Communication: keeping everyone on the same (paperless) page

With the shift from one submission to four, clients are going to have to engage with you, the accountant, more. Many accountants don’t communicate with their clients on a regular basis, because they simply don’t need to. This won’t be the case anymore. Make sure that as well as clarifying new procedures and introducing technology, you also outline the benefits of the new system.

Practice management software makes it easy to communicate with your clients regularly. Automatic communication features plus time-stamped records of all correspondence keep everyone in the loop. It means any member of your team can pick up the client work and provide a seamless experience. It’ll also protect your liability – when emails that have been opened by clients are tagged, you can guarantee that your practice has followed the correct procedures if any disputes arise.

Pricing your services: making data-based decisions

There’s no denying it: if you’re doing more work for your clients, it’s going to cost more. Many practices will need to review fee structures to ensure that additional work and additional software licences are reflected in service prices. Don’t be afraid to charge more if you need to. But how do you decide price points? These are business-critical decisions and need to be based on data.

Practice management software includes time tracking tools so that you can analyse staff costs against specific client work. Keep an eye on productivity, track profitability and create instant invoices from work in progress. See where profits are coming from – identify which clients and team members are generating the most profit

Many firms recognise MTD for ITSA as an opportunity to move clients to regular billing. Historically, annual billing on completing a job has been the industry standard, but this hasn’t always been to the benefit of an accountant’s cash flow. In the future you’ll be providing services on a more regular basis and you’ll be communicating on a more regular basis. This gives you an opportunity to bill on a more regular basis.

Take AccountancyManager for a spin

The quickest way to find out how practice management software can help your firm tackle MTD for ITSA is with a free 30-day trial. Our sales and support teams will be on hand every step of the way via phone and email to ensure our fully-customisable system works in a way that’s best suited to the needs of your firm.

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23 reasons why you should become an accountant

Posted by & filed under Students.

Aside from being one of the most trusted professions, there are many other great reasons to become an accountant; here are 23 of our favourites.

1. It will allow you to work across any industry and role.

“One of the things that appealed to me was not only the breadth of opportunity in accounting but also the height. You can work in treasury, purchase or sales ledger, or work your way up to the board of an FTSE 100 and not even just as a Chief Financial Officer, but you could be an Operations Director, Commercial Director or CEO. Because all business decisions are driven (at least in part) by accountancy decisions, having a depth of financial understanding can lead you in many directions.” – Gareth John, Director at First Intuition

2. You’ll learn the language of money.

3. You can be self-employed.

“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.” – Michael Beech, Michael Beech Accounting

4. You can grow your own accountancy company.

5. There is excellent earning potential.

6.You’ll get a foundational set of skills that will set you up to be a good business person.

7. You’ll be known as the person who helps the business make better decisions.

“I like to work with the type of client who wants someone who’s been there, who knows what it’s like to be in an entrepreneur’s shoes and who understands a lot of the pitfalls that can occur. I have that experience to share.” – Sharon Burrows, STB Accountants

8. You don’t need to be brilliant at maths.

“I am personally terrible at mental arithmetic. What is needed is an understanding of how to get to an answer mathematically, not necessarily being able to work it out in your head – we have spreadsheets for that!”- Rob McClay

9. You don’t need a degree.

10. You can work remotely from home or as a digital nomad.

11. You’ll be able to get a job in another country if you’d like to live and work abroad.

12. You can specialise in a particular area if you want to, like tax or a specific industry.

13. There will always be work for you, and your skills will always be in demand. As recession-proof professions go, it’s up there.

14. It’s a job where you’ll be helping people and can be seen as the go-to expert.

15. You’ll be valuable if you want to volunteer for charities or social enterprises.

“Start Small Think Big would not be who we are without our volunteers. Finance volunteer Justin Sabatino has provided financial clarity to and worked directly with small business owners on their entrepreneurial endeavours, including during the pandemic. It’s also always great to hear that our volunteers like Justin find this work to be challenging yet rewarding. His pro bono work has challenged him to explain and apply financial concepts on different scales across different businesses, which has improved his communication and overall business acumen. – ”Start Small Think Big

16. There are plenty of development and promotion opportunities.

17. You can have exposure to every department in the business and all levels of people that you’re working with.

18. It’ll make you happy! In general, accountants report feelings of high job satisfaction.

19. You’ll never be bored with things constantly changing and so many avenues that you can go down.

20. Your soft skills like communication, attention to detail, problem-solving and time management will all improve.

“You have to be very engaging and communicative with the people you work with to help to translate finance for non-finance colleagues.” – Rob McClay

21. There’s a clear educational path for you to take if you’d like to continue your qualifications.

22. You can work with brilliant teams of people or, if you prefer, on your own.

“I have a huge sense of pride for the team and hearing them say that they love their jobs. They work like a machine, get on like a family, and it’s so nice to have them to hand it down to.” – Laura Whyte, Whyfield Accountants

23. You’ll feel a real sense of purpose in your work.

“I love what I do and enjoy helping people.” Sharon Burrows, STB Accountants

We must hold politicians to account to develop UK skills

Posted by & filed under Policy.

Government and opposition MPs agree over the need for stronger skills – it’s just getting them to act that’s the problem.

Making sense of the party conference season in these tumultuous times has been more difficult than usual. But, amid the grandstanding and glad-handing, one of the most telling themes to emerge from the numerous speeches and fringe sessions I attended this year was that of skills: specifically, how to reform and improve the quality and provision of skills in the UK.

The positive news from the party conferences was that politicians are actively engaged in this debate. Across the board, there is an acknowledgement that sustainable economic growth will only be achieved by sufficient investment in the country’s skills infrastructure. There is also a widespread acceptance that current approaches are not working.

It’s clear that some recent policies have, despite the best intentions, failed to deliver on their promises. While the introduction of the vocational T-levels has been perceived by some as a welcome step, the UK’s economic challenges and the impact of the increased cost of living being felt by businesses require a broader menu of solutions that provide appropriate levels of funding and flexibility.

Evidence of the shortcomings can be seen in the Apprenticeship Levy. Introduced in 2017, the Levy was feted as a way for the Government to support business investment in a whole range of work skills by sharing the cost burden. The mechanics of the Levy have been the subject of much debate, but the foundational idea of incentivising employers to invest in upskilling and reskilling workers has a great deal of merit.

As a champion of open-access qualifications, AAT is fully supportive of apprenticeships. We want to see them opening new routes to successful careers in finance. Yet, overall, apprenticeships fail to give help and opportunities to those who most need them. A Social Mobility Commission report from 2020 states the situation bluntly:

“The apprenticeship levy, introduced in 2017, has disproportionately funded higher-level apprenticeships for learners from more advantaged communities, rather than those from disadvantaged socio-economic backgrounds, who would benefit more.”

“Disadvantage gaps exist at every stage of the apprenticeship journey, from initial selection of candidates by employers to the quality of training disadvantaged apprentices get. Geography is also an issue. Lack of opportunities in deprived areas can force disadvantaged learners to undertake expensive and difficult journeys to reach work.”

Further Education (FE) is another area with an unsatisfactory report card. FE and HE (Higher Education) should be contrasting but complementary pathways leading to successful careers. Instead, FE is deprived of investment in comparison to HE, is beset with struggles to recruit and retain teaching staff, and, unfairly, is widely viewed as second-best.

It’s vital that FE and HE enjoy parity of esteem. That includes levelling up the funding available and the promotion of FE in schools, colleges and in business. Legislators must find ways of making further education a viable and more widely accessible option.

Again, MPs are willing to support this. YouGov research commissioned by AAT showed two-thirds of MPs (66%) believe that FE learners should be funded on a similar level to HE students.

The problem is that political expediency is the enemy of progress. A long-term skills policy requires time and effort and is not as attention-grabbing as a hike in public spending or a cut in taxes. It is tempting for new administrations to do little more than close down or rebrand what the last government did as a shortcut to ‘progress’ rather than properly grapple with the problem.

As an organisation committed to equality and opportunity, AAT will press the case for sustained and coordinated action. We need a joined-up approach that brings in legislators, employers, professional bodies and learners themselves to develop clear and sustainable solutions.

To that end, we are in the process of bringing together a collection of key players in the skills and education arena to help us identify the ingredients for a sustained breakthrough. Through this next phase of our ‘Time for change’ campaign activity, we intend to keep skills firmly on the agenda.

How the Co-op is helping small business start apprenticeships through levy-sharing

Posted by & filed under Apprenticeships.

The Co-op’s successful Levy Share project is providing funding and advice for small businesses to get started with apprenticeships.

When the Government’s apprenticeship levy was introduced in 2017, it had a bold aim: to create 3m apprenticeships within three years. Five years on, it’s fallen short of this figure (the pandemic clearly hasn’t helped matters here) with the number of people undertaking entry-level apprenticeships slumping from 494,900 in 2016/17 to 321,400 in 2020/21, according to research by the Chartered Institute of Personnel and Development (CIPD). 

Despite this, the levy can be hugely beneficial for SMEs: they can draw on this pool of money to fund 95% of an apprentice’s training costs. Even though these companies can access apprenticeships for less money, the levy is supported by just 17% of employers surveyed by one recent CIPD poll. Apprenticeships may also be failing on diversity too: in 2020/21 ethnic minority 16-18-year-old apprentices made up 8.1% of new starts (although the same communities make up 14.4% of the UK population), according to analysis from further education newspaper FE Week.

Unused levy up for grabs

The problem isn’t a lack of funding, but rather, large companies paying into the levy (employers with a pay-bill of more than £3m each year are required to pay 0.5% of their payroll into the fund) and not spending the funds efficiently enough. Any unused levy expires after 24 months and is returned to HMRC. In 2019, 45% of firms surveyed by accounting firm Grant Thornton had yet to spend a single penny of the money they had paid into the levy. More than £250m was handed back to the Treasury in 2020-21, a sum which could have funded over 25,000 apprenticeships.

The Co-operative Group may have found the perfect solution. In February 2021, it launched the Co-op Levy Share scheme. By persuading large companies such as Boots, Mastercard and the Royal Mail to pledge their unused levy funds into the programme, it can allocate this money to SMEs hoping to establish an apprenticeship (under current rules, levy-paying companies can donate up to 25% of their unused levy to other companies to fund apprenticeships). Just 18 months after launching, over £15.4m has been pledged, creating over 1,000 apprenticeship opportunities.

“It’s very common for these levy funds to be unspent,” says Louise Timperley, apprenticeship manager at the Co-op. “Many companies we speak to want to be proactive rather than just having this sum sitting there and having nothing to do with it.”

Breaking the mould

So far, the Co-op’s scheme has led to apprenticeships in industries traditionally populated by male workers. In Wales, for example, a female teenager from Pakistani heritage has started a welding apprenticeship at a company which couldn’t access enough levy funds to pay for another new-starter. As Timperley explains, “It’s like the film Flashdance but in real life.”

The Co-op Levy Share scheme is also available to help fund accountancy apprentices.  

The Co-op started exploring the idea of a levy transfer scheme in 2020. “At the time our levy pot was around £5m a year, but we were only spending £2m on our own apprentices,” explains Timperley. “We knew many other large businesses also had spare [funds in the] levy, but also ethnic minority backgrounds weren’t being represented across apprenticeships. So, we decided to pool our unspent funds together and make some inroads into tackling some of that underrepresentation.”

£20 million raised so far

When the Levy Share scheme was launched, the Co-op set the ball rolling by putting £500,000 into the kitty. It initially set a target of £15m in donations (Timperley: “we thought we’d get £5m a year”). Thanks to a flood of levy-paying firms wanting to get involved, this bar has since been raised to £20m. Part of the scheme’s success is the way the algorithms of its website pair larger firms with those smaller companies seeking apprentices.

The Co-op Levy Share website has been compared to a dating app. In the same way users of matchmaking services can find the perfect partner by narrowing down criteria to age or hair colour, levy-paying firms can specify a geographic area or industry where they would like to support apprentices. Then, the algorithms weave their magic and the levy-paying firm is hopefully paired with an SME which has already registered with the scheme and entered its details. After the two companies are linked, funds are transferred directly from the levy donor’s digital apprenticeship service account to the SME. Apprenticeships can start more-or-less immediately.

Larger companies can also choose an individual firm, perhaps one in their supply chain or in the same sector. The Direct Line insurance group, for example, donated £325,000 in unspent levy funds to finance apprenticeships at autism charity Autism Initiatives.

More help and less bureaucracy than dealing with the Government

The simplicity of the Co-op Levy Share’s website has been praised by SMEs who have found the government system too complex and lacking a human touch (accessing levy funds is done entirely online through the Government website). By contrast, the Co-Op Levy Share has a dedicated support person (Sandra Kelly) who businesses can talk to over the phone or on video and be ‘hand-held’ through the process. It’s a boon for time-pressed companies, says Timperley.

“Many businesses don’t have large HR teams or a dedicated resource to look after apprentices: quite often it’s the boss who organises this,” she says. “With the government system, there’s no personal side; SMEs can’t just tick a box and something happens… Small business owners can have real conversations with Sandra, or on email, and receive the specialist support which the government system is currently lacking. Instead of watching YouTube videos [to figure it out], she can get you started within 10 minutes.”

The Coop Levy Scheme can also reduce SMEs’ admin burden by matching them with a suitable training provider.

Hands-on help

Once the larger firms have transferred their funds, the relationship doesn’t end there. “The scheme can be an arms-length arrangement or as hands-on as you wish,” says Timperley.

Many levy-paying firms actively choose to fund SMEs in their supply chain, such as accountancy practices. Others may choose to finance businesses working in their sector. Timperley cites the example of the scheme’s largest donor, BT, who have pledged over £4m to support talent in the tech sector “helping small/independent businesses flourish and build pipelines.” Many of these larger firms now offer mentoring and coaching with the firms they’ve been coupled with.

Then there are those levy-paying businesses who, according to Timperley, “aren’t necessarily fussy about who they’re matched with – they just want to make a difference,” she says. “In terms of corporate social responsibility [CSR] and public relations, it’s proved invaluable to many larger firms.”

Last year, the Co-op funded apprenticeships for 42 firefighters in Greater Manchester. “Of course, firefighter apprentices are very different from Co-op apprentices,” says Timperley. “But it’s great for us to extend our reach into the community to work with apprentices that have nothing to do with Coop”.

Access for all to apprenticeships

Above all, it’s hoped the Co-op Levy Share scheme will realise its ultimate goal: to address the paucity of underrepresented groups in apprenticeships. Timperley says that 40% of the apprentices supported through the scheme are non-white British. The Co-op is working with Business in the Community’s race advisory board to ensure BAME candidates who secure positions thanks to the scheme can receive support.  “We’ve also got a number of apprentices who have declared accessibility and have caring responsibilities, which are often barriers for people to get into apprenticeships,” adds Timperley.

The Co-op – which has long been recognised for its pioneering community-led programmes – currently has more than 1,200 apprenticeships across the group, spanning its Manchester HQ to food stores and funeral homes. Timperley sees the Share Levy scheme as an extension of that.

“Within five years, we’d like to see that we’ve not only supported thousands of apprentices, but also they’ve moved within their own businesses, become leaders themselves and perhaps hired more apprentices,” she says. “For any small businesses who haven’t got apprenticeship schemes but think it’s too difficult, I’d encourage them to jump in and take a look. We’d be more than happy to give businesses that support.”

How do I choose the right job? 

Posted by & filed under Career.

In the midst of the ‘Great Resignation’, when many people are ditching their current roles for shiny new ones, it can be difficult to know if a new job will be the right choice for you. Here’s what you need to consider.

It’s important to do a job you love rather than stick with one you just tolerate to pay the bills, but on the other hand, you don’t want to turn the ‘Great Resignation’ into the ‘Great Regret’. The job satisfaction/security conundrum is something that many professionals face. 

Zena Everett, executive coach and author of Mind Flip: Take the Fear Out of Your Career, says if you are considering whether or not to make the switch to a new job, it’s important first to ask yourself the following questions: 

Who do I want to be like?  

“Look at the people with jobs you really want,” says Zena. “What experience would you need to get to become that person? Check their career history on LinkedIn. What qualifications do they have? Did they spend time working in a particular industry?  

Next, think about what you need to tick these boxes. Do you need to retrain? Maybe you need to specialise by building a side-hustle. Or you could acquire these skills – such as more client work – in your current role.” 

What does a perfect working day look like? 

“When do you really look forward to a day at work?” asks Zena. “Is it when you’re talking to clients about their business? In the office or at home? Understanding your perfect day is important – it feeds into the gut instinct of what your right job might be.” 

What am I good at?  

“Think about what your best skills and attributes are,” Zena suggests. “What things do tutors or employers praise you on? What are you proud of in your career? Once you’ve worked this out, put it into your LinkedIn profile – it works much better than the ‘I’m a passionate team player’ guff.” 

Job-hunters need a good LinkedIn profile, she adds, but don’t waste loads of time liking and commenting on other posts. “Also, rather than a profile showing you’re a jack-of-all-trades, drill down on your specific skills. Businesses don’t want all-rounders – they’re looking for people with unique abilities who could hit the ground running in their first three months. Reinvent yourself as that person.” 

Starting your own business 

“During the pandemic, many people left their jobs to pursue their passions,” notes Zena. “What they didn’t realise is doing their hobby seven days a week soon takes the joy out of it. If you want to turn your pastime into a full-time job, start doing it as a side-hustle in the evenings and weekends. 

It won’t happen overnight. 

If you’re going freelance, realise work will come in peaks-and-troughs, and it’ll sometimes involve boring jobs to pay the bills. Get your first client and throw the kitchen sink at it. If it doesn’t work out, remember the skills gained as a freelancer – running your own business and selling to clients – can be spun into a great story to impress future employers.”   

Further reading:

How will AAT help in the cost-of-living crisis?

Posted by & filed under Members, News.

The recent ‘mini-budget’ was the Government’s attempt to begin turning the tide on the cost-of-living crisis. But sweeping tax cuts did not make our problems vanish. Indeed, initially things became more difficult and now we will need to wait to see the longer-term impact.

Addressing the immediate fiscal and economic problems is, of course, essential.

But I believe it is only part of the answer. One day we will have to pay for all the support. If we want to put this crisis in the rear-view mirror, we must become more efficient, effective, and productive as a country. 

Part of the solution to our predicament lies in building sustainability for our families, businesses, and economy. Financial skills are a great aid to resilience. Equipping individuals with basic financial skills could help them manage their own budgets and household economies. At the same time, empowering businesses with skills appropriate to them will make them more sustainable, more productive, and more resilient.

So how is AAT providing support at this time?

We give small businesses free advice on financial management through Informi.co.uk – the web platform we fund as part of our charitable activity.

For those ready to take more formal steps, we deliver a variety of short courses and e-learning, which could be used to upskill anyone to a basic level, and or be used as a pathway to our full accounting qualifications and a career in finance. Then – most importantly – there is the support you, our members, provide to your employers and clients.

AAT Essentials: Finance training courses

AAT’s one and two-day finance training courses are designed to help businesses upskill quickly and cost-effectively. Ideal for finance and non-finance staff, they deliver practical skills you can use at once.

Learn more

For their part, employers also need to think about supporting skills.

Many will be unable to offer a hefty pay rise to counter double-digit inflation. Instead, they will need to go to another level in terms of looking after their staff. Part of this should be investing in their skillset. 

I am not arguing that simply doing more training is the answer to the cost-of-living crisis. But it is a part of the puzzle. Give staff appropriate support and they will feel they are taken seriously. The business will not only stand a better chance of retaining them but benefit from an enhanced skill base, which in turn contributes to the UK’s competitiveness. 

Meanwhile, at AAT, we know our members, licensed practices, and students are feeling the squeeze from the financial pressures. That’s why I’ve asked our teams to look at all ways we can help on your behalf.

Our actions will range from using our influential voice to campaign for macro-economic benefits we know would benefit our members, to obtaining funding through the education sector and looking at our offer to ensure it gives the greatest value. As with all organisations, some decisions were already in train. But be assured, we will look at everything we can do to support our entire community through this challenging time.